Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172020
or
¨

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                     
Commission File Number: 000-55434

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
(Exact name of registrant as specified in its charter)

Maryland46-1749436
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
18191 Von Karman Avenue, Suite 300,
Irvine, California
92612
(Address of principal executive offices)(Zip Code)


(949) 270-9200
(Registrant’s telephone number, including area code)


Not Applicable
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
NoneNoneNone
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     x☒  Yes    ¨☐  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x☒  Yes    ¨☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨☐Accelerated filer¨☐
Non-accelerated filer
x (Do not check if a smaller reporting company)
☒		Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐  Yes   x☒  No
As of November 10, 2017,13, 2020, there were 199,510,901193,889,887 shares of common stock of Griffin-American Healthcare REIT III, Inc. outstanding.


Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
(A Maryland Corporation)
TABLE OF CONTENTS
 
Page
PART I — FINANCIAL INFORMATION
3
Condensed Consolidated Balance Sheets as of September 30, 20172020 and December 31, 20162019
3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 20172020 and 20162019
5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 20172020 and 20162019
6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172020 and 20162019
89
Notes to Condensed Consolidated Financial Statements
1112
4749
6367
6569
PART II — OTHER INFORMATION
6670
6670
7276
7276
7276
7376
7377
7478



2
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 20172020 and December 31, 20162019
(Unaudited)
September 30,
2020		December 31,
2019
ASSETS
Real estate investments, net$2,326,942,000 $2,270,421,000 
Debt security investment, net75,037,000 72,717,000 
Cash and cash equivalents133,332,000 53,149,000 
Accounts and other receivables, net127,837,000 144,130,000 
Restricted cash36,284,000 36,731,000 
Real estate deposits75,000 223,000 
Identified intangible assets, net154,672,000 160,247,000 
Goodwill75,309,000 75,309,000 
Operating lease right-of-use assets, net207,753,000 219,187,000 
Other assets, net133,948,000 140,175,000 
Total assets$3,271,189,000 $3,172,289,000 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans payable, net(1)$800,170,000 $792,870,000 
Lines of credit and term loans(1)855,634,000 815,879,000 
Accounts payable and accrued liabilities(1)170,627,000 171,394,000 
Accounts payable due to affiliates(1)4,699,000 2,321,000 
Identified intangible liabilities, net416,000 663,000 
Financing obligations(1)29,576,000 30,918,000 
Operating lease liabilities(1)196,395,000 207,371,000 
Security deposits, prepaid rent and other liabilities(1)128,144,000 48,105,000 
Total liabilities2,185,661,000 2,069,521,000 
Commitments and contingencies (Note 11)
Redeemable noncontrolling interests (Note 12)44,850,000 44,105,000 
Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; 0ne issued and outstanding0 0 
Common stock, $0.01 par value per share; 1,000,000,000 shares authorized; 193,889,887 and 193,967,474 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively1,939,000 1,939,000 
Additional paid-in capital1,727,850,000 1,728,421,000 
Accumulated deficit(861,889,000)(827,550,000)
Accumulated other comprehensive loss(2,475,000)(2,255,000)
Total stockholders’ equity865,425,000 900,555,000 
Noncontrolling interests (Note 13)175,253,000 158,108,000 
Total equity1,040,678,000 1,058,663,000 
Total liabilities, redeemable noncontrolling interests and equity$3,271,189,000 $3,172,289,000 
 
September 30,
2017
 
December 31,
2016
ASSETS
Real estate investments, net$2,158,882,000
 $2,138,981,000
Real estate notes receivable and debt security investment, net100,133,000
 101,117,000
Cash and cash equivalents35,876,000
 29,123,000
Accounts and other receivables, net110,488,000
 127,684,000
Restricted cash29,734,000
 26,554,000
Real estate deposits3,344,000
 3,173,000
Identified intangible assets, net182,639,000
 200,827,000
Goodwill75,309,000
 75,265,000
Other assets, net100,785,000
 91,794,000
Total assets$2,797,190,000
 $2,794,518,000
    
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:   
Mortgage loans payable, net(1)$615,346,000
 $495,717,000
Lines of credit and term loans(1)593,035,000
 649,317,000
Accounts payable and accrued liabilities(1)125,868,000
 105,145,000
Accounts payable due to affiliates(1)2,013,000
 2,186,000
Identified intangible liabilities, net1,708,000
 2,216,000
Capital lease obligations(1)17,857,000
 45,295,000
Security deposits, prepaid rent and other liabilities(1)48,315,000
 44,582,000
Total liabilities1,404,142,000
 1,344,458,000
    
Commitments and contingencies (Note 11)
 
    
Redeemable noncontrolling interests (Note 12)33,352,000
 31,507,000
    
Equity:   
Stockholders’ equity:   
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding—
 —
Common stock, $0.01 par value per share; 1,000,000,000 shares authorized; 198,369,180 and 195,780,039 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively1,983,000
 1,957,000
Additional paid-in capital1,776,787,000
 1,754,160,000
Accumulated deficit(574,590,000) (490,298,000)
Accumulated other comprehensive loss(2,052,000) (3,029,000)
Total stockholders’ equity1,202,128,000
 1,262,790,000
Noncontrolling interests (Note 13)157,568,000
 155,763,000
Total equity1,359,696,000
 1,418,553,000
Total liabilities, redeemable noncontrolling interests and equity$2,797,190,000
 $2,794,518,000



3
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
As of September 30, 20172020 and December 31, 20162019
(Unaudited)

___________
(1)Such liabilities of Griffin-American Healthcare REIT III, Inc. as of September 30, 2017 and December 31, 2016 represented liabilities of Griffin-American Healthcare REIT III Holdings, LP, a variable interest entity and consolidated subsidiary of Griffin-American Healthcare REIT III, Inc. The creditors of Griffin-American Healthcare REIT III Holdings, LP do not have recourse against Griffin-American Healthcare REIT III, Inc., except for the 2016 Corporate Line of Credit, as defined in Note 8, held by Griffin-American Healthcare REIT III Holdings, LP in the amount of $432,000,000 and $391,000,000 as of September 30, 2017 and December 31, 2016, respectively, which is guaranteed by Griffin-American Healthcare REIT III, Inc.
(1)Such liabilities of Griffin-American Healthcare REIT III, Inc. as of September 30, 2020 and December 31, 2019 represented liabilities of Griffin-American Healthcare REIT III Holdings, LP or its consolidated subsidiaries. Griffin-American Healthcare REIT III Holdings, LP is a variable interest entity, or VIE, and a consolidated subsidiary of Griffin-American Healthcare REIT III, Inc. The creditors of Griffin-American Healthcare REIT III Holdings, LP or its consolidated subsidiaries do not have recourse against Griffin-American Healthcare REIT III, Inc., except for the 2019 Corporate Line of Credit, as defined in Note 8, held by Griffin-American Healthcare REIT III Holdings, LP in the amount of $573,500,000 and $557,000,000 as of September 30, 2020 and December 31, 2019, respectively, which is guaranteed by Griffin-American Healthcare REIT III, Inc.
The accompanying notes are an integral part of these condensed consolidated financial statements.

4
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three and Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended September 30, Nine Months Ended September 30,2020201920202019
2017 2016 2017 2016
Revenues:       
Revenues and grant income:Revenues and grant income:
Resident fees and services$230,768,000
 $218,107,000
 $682,300,000
 $651,565,000
Resident fees and services$263,931,000 $273,800,000 $808,474,000 $814,554,000 
Real estate revenue31,980,000
 30,823,000
 95,422,000
 87,191,000
Real estate revenue30,333,000 27,962,000 90,564,000 93,197,000 
Total revenues262,748,000
 248,930,000
 777,722,000
 738,756,000
Grant incomeGrant income740,000 0 30,730,000 0 
Total revenues and grant incomeTotal revenues and grant income295,004,000 301,762,000 929,768,000 907,751,000 
Expenses:       Expenses:
Property operating expenses199,047,000
 187,240,000
 596,099,000
 568,726,000
Property operating expenses240,989,000 241,858,000 730,920,000 716,700,000 
Rental expenses8,299,000
 7,653,000
 24,925,000
 21,582,000
Rental expenses7,795,000 9,188,000 24,112,000 25,839,000 
General and administrative9,270,000
 7,232,000
 24,642,000
 21,379,000
General and administrative6,969,000 7,675,000 21,324,000 21,104,000 
Acquisition related expenses71,000
 15,936,000
 532,000
 24,184,000
Acquisition related expenses54,000 4,000 307,000 (292,000)
Depreciation and amortization27,579,000
 71,384,000
 88,442,000
 212,596,000
Depreciation and amortization24,591,000 36,778,000 74,250,000 87,149,000 
Total expenses244,266,000

289,445,000
 734,640,000
 848,467,000
Total expenses280,398,000 295,503,000 850,913,000 850,500,000 
Other income (expense):       Other income (expense):
Interest expense: 
     Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)(14,773,000) (13,027,000) (45,356,000) (32,350,000)Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)(17,229,000)(21,046,000)(53,415,000)(59,665,000)
(Loss) gain in fair value of derivative financial instruments(59,000) 989,000
 44,000
 (54,000)
(Loss) gain on dispositions of real estate investments(9,000) —
 3,370,000
 —
Gain (loss) in fair value of derivative financial instrumentsGain (loss) in fair value of derivative financial instruments1,763,000 (1,169,000)(5,671,000)(5,846,000)
Gain on dispositions of real estate investmentsGain on dispositions of real estate investments1,037,000 0 1,037,000 0 
Impairment of real estate investments—
 —
 (4,883,000) —
Impairment of real estate investments0 0 (8,335,000)0 
Loss from unconsolidated entities(1,494,000) (2,355,000) (3,668,000) (6,916,000)Loss from unconsolidated entities(2,855,000)(766,000)(3,065,000)(1,713,000)
Foreign currency gain (loss)1,384,000
 (1,502,000) 3,697,000
 (6,544,000)Foreign currency gain (loss)1,945,000 (1,464,000)(1,303,000)(1,654,000)
Other income210,000
 42,000
 673,000
 411,000
Other income203,000 1,923,000 1,279,000 2,377,000 
Income (loss) before income taxes3,741,000
 (56,368,000) (3,041,000) (155,164,000)
Income tax benefit (expense)720,000
 2,000
 1,498,000
 (173,000)
Net income (loss)4,461,000
 (56,366,000) (1,543,000) (155,337,000)
Less: net loss attributable to noncontrolling interests176,000
 13,921,000
 6,051,000
 39,245,000
(Loss) income before income taxes(Loss) income before income taxes(530,000)(16,263,000)9,382,000 (9,250,000)
Income tax (expense) benefitIncome tax (expense) benefit(150,000)(840,000)2,942,000 (1,150,000)
Net (loss) incomeNet (loss) income(680,000)(17,103,000)12,324,000 (10,400,000)
Less: net loss (income) attributable to noncontrolling interestsLess: net loss (income) attributable to noncontrolling interests1,375,000 (201,000)(7,779,000)(2,979,000)
Net income (loss) attributable to controlling interest$4,637,000
 $(42,445,000) $4,508,000
 $(116,092,000)Net income (loss) attributable to controlling interest$695,000 $(17,304,000)$4,545,000 $(13,379,000)
Net income (loss) per common share attributable to controlling interest — basic and diluted$0.02
 $(0.22) $0.02
 $(0.60)Net income (loss) per common share attributable to controlling interest — basic and diluted$0 $(0.09)$0.02 $(0.07)
Weighted average number of common shares outstanding — basic and diluted198,733,528
 195,027,512
 197,832,280
 193,660,666
Weighted average number of common shares outstanding — basic and diluted193,856,887 195,669,002 194,273,579 196,705,085 
Distributions declared per common share$0.15
 $0.15
 $0.45
 $0.45
       
Net income (loss)$4,461,000
 $(56,366,000) $(1,543,000) $(155,337,000)
Net (loss) incomeNet (loss) income$(680,000)$(17,103,000)$12,324,000 $(10,400,000)
Other comprehensive income (loss):       Other comprehensive income (loss):
Foreign currency translation adjustments355,000
 (427,000) 977,000
 (1,916,000)Foreign currency translation adjustments344,000 (281,000)(220,000)(301,000)
Total other comprehensive income (loss)355,000
 (427,000) 977,000
 (1,916,000)Total other comprehensive income (loss)344,000 (281,000)(220,000)(301,000)
Comprehensive income (loss)4,816,000
 (56,793,000) (566,000) (157,253,000)
Less: comprehensive loss attributable to noncontrolling interests176,000
 13,921,000
 6,051,000
 39,245,000
Comprehensive (loss) incomeComprehensive (loss) income(336,000)(17,384,000)12,104,000 (10,701,000)
Less: comprehensive loss (income) attributable to noncontrolling interestsLess: comprehensive loss (income) attributable to noncontrolling interests1,375,000 (201,000)(7,779,000)(2,979,000)
Comprehensive income (loss) attributable to controlling interest$4,992,000
 $(42,872,000) $5,485,000
 $(118,008,000)Comprehensive income (loss) attributable to controlling interest$1,039,000 $(17,585,000)$4,325,000 $(13,680,000)
The accompanying notes are an integral part of these condensed consolidated financial statements.

5
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)

Three Months Ended September 30, 2020
Stockholders’ Equity    Stockholders’ Equity
Common Stock             Common Stock  
Number
of
Shares
 Amount 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders’
Equity
 
Noncontrolling
Interests
 Total EquityNumber
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — December 31, 2016195,780,039
 $1,957,000
 $1,754,160,000
 $(490,298,000) $(3,029,000) $1,262,790,000
 $155,763,000
 $1,418,553,000
Offering costs — common stock—
 —
 (10,000) —
 —
 (10,000) —
 (10,000)
Issuance of common stock under the DRIP5,266,636
 53,000
 47,400,000
 —
 —
 47,453,000
 —
 47,453,000
Issuance of vested and nonvested restricted common stock22,500
 —
 40,000
 —
 —
 40,000
 —
 40,000
BALANCE — June 30, 2020BALANCE — June 30, 2020194,407,323 $1,944,000 $1,733,166,000 $(862,584,000)$(2,819,000)$869,707,000 $176,755,000 $1,046,462,000 
Amortization of nonvested common stock compensation—
 —
 131,000
 —
 —
 131,000
 —
 131,000
Amortization of nonvested common stock compensation— — 28,000 — — 28,000 — 28,000 
Stock based compensation—
 —
 —
 —
 —
 —
 390,000
 390,000
Stock based compensation— — — — — — 195,000 195,000 
Repurchase of common stock(2,699,995) (27,000) (23,995,000) —
 —
 (24,022,000) —
 (24,022,000)Repurchase of common stock(517,436)(5,000)(5,116,000)— — (5,121,000)— (5,121,000)
Contributions from noncontrolling interest—
 —
 —
 —
 —
 —
 8,304,000
 8,304,000
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (464,000) (464,000)Distributions to noncontrolling interests— — — — — — (189,000)(189,000)
Reclassification of noncontrolling interests to mezzanine equity—
 —
 —
 —
 —
 —
 (585,000) (585,000)Reclassification of noncontrolling interests to mezzanine equity— — — — — — (195,000)(195,000)
Fair value adjustment to redeemable noncontrolling interests—
 —
 (939,000) —
 —
 (939,000) (402,000) (1,341,000)Fair value adjustment to redeemable noncontrolling interests— — (228,000)— — (228,000)(98,000)(326,000)
Distributions declared—
 —
 —
 (88,800,000) —
 (88,800,000) —
 (88,800,000)
Net income (loss)—
 —
 —
 4,508,000
 —
 4,508,000
 (5,438,000)(1)(930,000)Net income (loss)— — — 695,000 — 695,000 (1,215,000)(520,000)(1)
Other comprehensive income—
 —
 —
 —
 977,000
 977,000
 —
 977,000
Other comprehensive income— — — — 344,000 344,000 — 344,000 
BALANCE — September 30, 2017198,369,180
 $1,983,000
 $1,776,787,000
 $(574,590,000) $(2,052,000) $1,202,128,000
 $157,568,000
 $1,359,696,000
BALANCE — September 30, 2020BALANCE — September 30, 2020193,889,887 $1,939,000 $1,727,850,000 $(861,889,000)$(2,475,000)$865,425,000 $175,253,000 $1,040,678,000 

Three Months Ended September 30, 2019
     Stockholders’ Equity
Stockholders’ Equity     Common Stock  
Common Stock            Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — June 30, 2019BALANCE — June 30, 2019194,736,018 $1,946,000 $1,739,119,000 $(759,520,000)$(2,580,000)$978,965,000 $160,010,000 $1,138,975,000 
Number
of
Shares
 Amount 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders’
Equity
 
Noncontrolling
Interests
 Total Equity
BALANCE — December 31, 2015191,135,158
 $1,911,000
 $1,718,423,000
 $(227,715,000) $(506,000) $1,492,113,000
 $191,145,000
 $1,683,258,000
Offering costs — common stock—
 —
 (11,000) —
 —
 (11,000) —
 (11,000)
Issuance of common stock under the DRIP5,124,834
 51,000
 48,641,000
 —
 —
 48,692,000
 —
 48,692,000
Issuance of common stock under the DRIP1,471,581 15,000 13,774,000 — — 13,789,000 — 13,789,000 
Issuance of vested and nonvested restricted common stock30,000
 —
 60,000
 —
 —
 60,000
 —
 60,000
Issuance of vested and nonvested restricted common stock15,000 — 28,000 — — 28,000 — 28,000 
Amortization of nonvested common stock compensation—
 —
 91,000
 —
 —
 91,000
 —
 91,000
Amortization of nonvested common stock compensation— — 44,000 — — 44,000 — 44,000 
Stock based compensation—
 —
 —
 —
 —
 —
 589,000
 589,000
Stock based compensation— — — — — — 195,000 195,000 
Repurchase of common stock(1,564,814) (15,000) (14,818,000) —
 —
 (14,833,000) —
 (14,833,000)Repurchase of common stock(1,832,625)(18,000)(17,303,000)— — (17,321,000)— (17,321,000)
Contribution from noncontrolling interests—
 —
 —
 —
 —
 —
 19,753,000
 19,753,000
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (229,000) (229,000)Distributions to noncontrolling interests— — — — — — (1,817,000)(1,817,000)
Distributions declared—
 —
 —
 (86,937,000) —
 (86,937,000) —
 (86,937,000)
Net loss—
 —
 —
 (116,092,000) —
 (116,092,000) (39,257,000) (155,349,000)
Reclassification of noncontrolling interests to mezzanine equityReclassification of noncontrolling interests to mezzanine equity— — — — — — (195,000)(195,000)
Fair value adjustment to redeemable noncontrolling interestsFair value adjustment to redeemable noncontrolling interests— — (135,000)— — (135,000)(59,000)(194,000)
Distributions declared ($0.15 per share)Distributions declared ($0.15 per share)— — — (29,603,000)— (29,603,000)— (29,603,000)
Net (loss) incomeNet (loss) income— — — (17,304,000)— (17,304,000)184,000 (17,120,000)(1)
Other comprehensive loss—
 —
 —
 —
 (1,916,000) (1,916,000) —
 (1,916,000)Other comprehensive loss— — — — (281,000)(281,000)— (281,000)
BALANCE — September 30, 2016194,725,178
 $1,947,000
 $1,752,386,000
 $(430,744,000) $(2,422,000) $1,321,167,000
 $172,001,000
 $1,493,168,000
BALANCE — September 30, 2019BALANCE — September 30, 2019194,389,974 $1,943,000 $1,735,527,000 $(806,427,000)$(2,861,000)$928,182,000 $158,318,000 $1,086,500,000 


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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)
For the Three and Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)

Nine Months Ended September 30, 2020
Stockholders’ Equity
 Common Stock  
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — December 31, 2019193,967,474 $1,939,000 $1,728,421,000 $(827,550,000)$(2,255,000)$900,555,000 $158,108,000 $1,058,663,000 
Issuance of common stock under the DRIP2,325,762 24,000 21,837,000 — — 21,861,000 — 21,861,000 
Issuance of vested and nonvested restricted common stock7,500 — 14,000 — — 14,000 — 14,000 
Amortization of nonvested common stock compensation— — 114,000 — — 114,000 — 114,000 
Stock based compensation— — — — — — 585,000 585,000 
Repurchase of common stock(2,410,849)(24,000)(23,083,000)— — (23,107,000)— (23,107,000)
Issuance of noncontrolling interest— — 515,000 — — 515,000 10,485,000 11,000,000 
Distributions to noncontrolling interests— — — — — — (338,000)(338,000)
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (585,000)(585,000)
Fair value adjustment to redeemable noncontrolling interests— — 32,000 — — 32,000 13,000 45,000 
Distributions declared ($0.20 per share)— — — (38,884,000)— (38,884,000)— (38,884,000)
Net income— — — 4,545,000 — 4,545,000 6,985,000 11,530,000 (1)
Other comprehensive loss— — — — (220,000)(220,000)— (220,000)
BALANCE — September 30, 2020193,889,887 $1,939,000 $1,727,850,000 $(861,889,000)$(2,475,000)$865,425,000 $175,253,000 $1,040,678,000 
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)
For the Three and Nine Months Ended September 30, 2020 and 2019
(Unaudited)

Nine Months Ended September 30, 2019
Stockholders’ Equity
 Common Stock  
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — December 31, 2018197,557,377 $1,975,000 $1,765,840,000 $(704,748,000)$(2,560,000)$1,060,507,000 $158,128,000 $1,218,635,000 
Offering costs — common stock— — (84,000)— — (84,000)— (84,000)
Issuance of common stock under the DRIP4,493,074 45,000 42,055,000 — — 42,100,000 — 42,100,000 
Issuance of vested and nonvested restricted common stock22,500 — 42,000 — — 42,000 — 42,000 
Amortization of nonvested common stock compensation— — 130,000 — — 130,000 — 130,000 
Stock based compensation— — — — — — 585,000 585,000 
Repurchase of common stock(7,682,977)(77,000)(72,379,000)— — (72,456,000)— (72,456,000)
Contributions from noncontrolling interests— — — — — — 3,000,000 3,000,000 
Distributions to noncontrolling interests— — — — — — (5,452,000)(5,452,000)
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (585,000)(585,000)
Fair value adjustment to redeemable noncontrolling interests— — (77,000)— — (77,000)(33,000)(110,000)
Distributions declared ($0.45 per share)— — — (88,300,000)— (88,300,000)— (88,300,000)
Net (loss) income— — — (13,379,000)— (13,379,000)2,675,000 (10,704,000)(1)
Other comprehensive loss— — — — (301,000)(301,000)— (301,000)
BALANCE — September 30, 2019194,389,974 $1,943,000 $1,735,527,000 $(806,427,000)$(2,861,000)$928,182,000 $158,318,000 $1,086,500,000 
___________
(1)Amount excludes $(613,000) of net loss attributable to redeemable noncontrolling interests. See Note 12, Redeemable Noncontrolling Interests, for a further discussion.
(1)For the three months ended September 30, 2020 and 2019, amounts exclude $(160,000) and $17,000, respectively, of net (loss) income attributable to redeemable noncontrolling interests. For the nine months ended September 30, 2020 and 2019, amounts exclude $794,000 and $304,000, respectively, of net income attributable to redeemable noncontrolling interests. See Note 12, Redeemable Noncontrolling Interests, for a further discussion.
The accompanying notes are an integral part of these condensed consolidated financial statements.

8
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)

Nine Months Ended September 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$12,324,000 $(10,400,000)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization74,250,000 87,149,000 
Other amortization23,239,000 22,625,000 
Deferred rent(4,596,000)(1,909,000)
Stock based compensation585,000 585,000 
Stock based compensation — nonvested restricted common stock128,000 172,000 
Loss from unconsolidated entities3,065,000 1,713,000 
Gain on dispositions of real estate investments(1,037,000)0 
Foreign currency loss1,192,000 1,653,000 
Loss on extinguishment of debt0 2,179,000 
Deferred income taxes(3,329,000)640,000 
Change in fair value of contingent consideration0 (681,000)
Change in fair value of derivative financial instruments5,671,000 5,846,000 
Impairment of real estate investments8,335,000 0 
Changes in operating assets and liabilities:
Accounts and other receivables17,036,000 (5,963,000)
Other assets(3,848,000)(2,631,000)
Accounts payable and accrued liabilities5,062,000 6,888,000 
Accounts payable due to affiliates2,531,000 47,000 
Security deposits, prepaid rent, operating lease and other liabilities51,077,000 (16,121,000)
Net cash provided by operating activities191,685,000 91,792,000 
CASH FLOWS FROM INVESTING ACTIVITIES
Developments and capital expenditures(93,657,000)(65,740,000)
Acquisitions of real estate investments(29,447,000)(32,793,000)
Proceeds from dispositions of real estate investments12,105,000 0 
Investments in unconsolidated entities(810,000)(1,520,000)
Real estate and other deposits(665,000)(652,000)
Principal repayments on real estate notes receivable0 28,650,000 
Net cash used in investing activities(112,474,000)(72,055,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under mortgage loans payable59,033,000 182,417,000 
Payments on mortgage loans payable(49,056,000)(59,706,000)
Early payoff of mortgage loans payable(2,601,000)(6,286,000)
Borrowings under the lines of credit and term loans115,755,000 955,053,000 
Payments on the lines of credit and term loans(76,000,000)(937,822,000)
Deferred financing costs(4,065,000)(12,486,000)
Debt extinguishment costs0 (251,000)
Borrowing under financing obligation1,907,000 0 
Payments on financing obligations(4,301,000)(6,243,000)
Distributions paid(26,997,000)(46,716,000)
Repurchase of common stock(23,107,000)(72,200,000)
9
 Nine Months Ended September 30,
 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES   
Net loss$(1,543,000) $(155,337,000)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation and amortization88,442,000
 212,596,000
Other amortization (including deferred financing costs, above/below-market leases, leasehold interests, debt discount/premium, real estate notes receivable loan costs and debt security investment accretion and closing costs)4,056,000
 3,644,000
Deferred rent(3,913,000) (8,017,000)
Stock based compensation390,000
 589,000
Stock based compensation — nonvested restricted common stock171,000
 151,000
Loss from unconsolidated entities3,668,000
 6,916,000
Bad debt expense, net5,220,000
 3,308,000
Gain on real estate dispositions(3,370,000) —
Foreign currency (gain) loss(3,678,000) 6,255,000
Loss on extinguishment of mortgage loan payable1,432,000
 —
Change in fair value of contingent consideration(57,000) 10,997,000
Change in fair value of derivative financial instruments(44,000) 54,000
Impairment of real estate investments4,883,000
 —
Changes in operating assets and liabilities:   
Accounts and other receivables(9,979,000) (8,001,000)
Other assets(6,501,000) (20,850,000)
Accounts payable and accrued liabilities8,832,000
 31,282,000
Accounts payable due to affiliates(79,000) 970,000
Security deposits, prepaid rent and other liabilities610,000
 7,841,000
Net cash provided by operating activities88,540,000
 92,398,000
CASH FLOWS FROM INVESTING ACTIVITIES   
Acquisition of real estate investments(102,241,000) (277,949,000)
Proceeds from real estate dispositions15,993,000
 —
Advances on real estate notes receivable—
 (1,942,000)
Principal repayments on real estate notes receivable26,752,000
 —
Loan costs on real estate notes receivable—
 (39,000)
Investment in unconsolidated entities(1,250,000) (2,000,000)
Capital expenditures(25,804,000) (30,441,000)
Restricted cash(3,180,000) (1,444,000)
Real estate and other deposits(876,000) 1,902,000
Proceeds from insurance settlements85,000
 —
Net cash used in investing activities(90,521,000)
(311,913,000)
CASH FLOWS FROM FINANCING ACTIVITIES   
Borrowings under mortgage loans payable230,452,000
 3,316,000
Payments on mortgage loans payable(6,110,000) (4,223,000)
Settlement of mortgage loans payable(100,775,000) —
Borrowings under the lines of credit and term loans764,575,000
 461,503,000
Payments on the lines of credit and term loans(820,858,000) (202,019,000)
Payment of derivative financial instrument—
 (15,000)

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
For the Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)

Nine Months Ended September 30,
20202019
Issuance of noncontrolling interest$11,000,000 $0 
Contributions from noncontrolling interests0 3,000,000 
Distributions to noncontrolling interests(334,000)(5,449,000)
Distributions to redeemable noncontrolling interests(439,000)(1,033,000)
Repurchase of stock warrants and redeemable noncontrolling interests(150,000)(475,000)
Security deposits and other(47,000)36,000 
Net cash provided by (used in) financing activities598,000 (8,161,000)
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH$79,809,000 $11,576,000 
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH(73,000)(108,000)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period89,880,000 72,705,000 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period$169,616,000 $84,173,000 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:
Cash and cash equivalents$53,149,000 $35,132,000 
Restricted cash36,731,000 37,573,000 
Cash, cash equivalents and restricted cash$89,880,000 $72,705,000 
End of period:
Cash and cash equivalents$133,332,000 $46,709,000 
Restricted cash36,284,000 37,464,000 
Cash, cash equivalents and restricted cash$169,616,000 $84,173,000 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest$49,524,000 $52,171,000 
Income taxes$524,000 $634,000 
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Investing Activities:
Accrued developments and capital expenditures$30,615,000 $16,440,000 
Capital expenditures from financing obligations$1,053,000 $8,434,000 
Tenant improvement overage$4,485,000 $1,016,000 
Investments in unconsolidated entity$0 $5,276,000 
The following represents the increase (decrease) in certain assets and liabilities in connection with our acquisitions and dispositions of real estate investments:
Accounts and other receivables$(11,000)$0 
Other assets, net$(253,000)$0 
Accounts payable and accrued liabilities$(82,000)$46,000 
Security deposits, prepaid rent and other liabilities$(459,000)$105,000 
10
 Nine Months Ended September 30,
 2017 2016
Deferred financing costs$(5,485,000) $(10,775,000)
Mortgage loan payable extinguishment costs(493,000) —
Other obligations9,487,000
 —
Contingent consideration related to acquisition of real estate—
 (350,000)
Repurchase of common stock(24,022,000) (14,833,000)
Repurchase of stock warrants and redeemable noncontrolling interests(204,000) —
Payments under capital leases(4,995,000) (8,181,000)
Contributions from noncontrolling interest8,304,000
 19,753,000
Distributions to noncontrolling interests(460,000) (237,000)
Contributions from redeemable noncontrolling interests975,000
 2,295,000
Distributions to redeemable noncontrolling interests(384,000) (198,000)
Security deposits131,000
 99,000
Payment of offering costs(10,000) (11,000)
Distributions paid(41,526,000) (38,343,000)
Net cash provided by financing activities8,602,000
 207,781,000
NET CHANGE IN CASH AND CASH EQUIVALENTS6,621,000
 (11,734,000)
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH AND CASH EQUIVALENTS132,000
 (72,000)
CASH AND CASH EQUIVALENTS — Beginning of period29,123,000
 48,953,000
CASH AND CASH EQUIVALENTS — End of period$35,876,000
 $37,147,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   
Cash paid for:   
Interest (including interest on capital leases)$46,117,000
 $34,431,000
Income taxes$432,000
 $306,000
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES   
Investing Activities:   
Accrued capital expenditures$6,163,000
 $3,540,000
Capital expenditures from capital leases$5,039,000
 $—
Real estate deposit$—
 $2,809,000
Settlement of receivable for investment in unconsolidated entity$1,000,000
 $3,877,000
Tenant improvement overage$257,000
 $441,000
Disposition of real estate investment$2,400,000
 $—
The following represents the increase (decrease) in certain assets and liabilities in connection with our acquisitions and dispositions of real estate investments:   
Other receivables$3,155,000
 $—
Other assets, net$(9,482,000) $263,000
Mortgage loans payable, net$—
 $191,320,000
Accounts payable and accrued liabilities$1,967,000
 $309,000
Capital lease obligations, net$(27,483,000) $—
Security deposits, prepaid rent and other liabilities$2,257,000
 $9,506,000

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
For the Nine Months Ended September 30, 20172020 and 20162019
(Unaudited)

Nine Months Ended September 30,Nine Months Ended September 30,
2017 201620202019
Financing Activities:   Financing Activities:
Issuance of common stock under the DRIP$47,453,000
 $48,692,000
Issuance of common stock under the DRIP$21,861,000 $42,100,000 
Distributions declared but not paid$9,830,000
 $9,647,000
Distributions declared but not paid$0 $9,673,000 
Reclassification of noncontrolling interests to mezzanine equity$585,000
 $—
Reclassification of noncontrolling interests to mezzanine equity$585,000 $585,000 
Accrued deferred financing costs$87,000
 $—
Settlement of mortgage loan payable$2,040,000
 $—
Payable to transfer agentPayable to transfer agent$0 $256,000 
The accompanying notes are an integral part of these condensed consolidated financial statements.

11

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Three and Nine Months Ended September 30, 20172020 and 20162019
The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT III, Inc. and its subsidiaries, including Griffin-American Healthcare REIT III Holdings, LP, except where the context otherwise requires.noted.
1. Organization and Description of Business
Griffin-American Healthcare REIT III, Inc., a Maryland corporation, was incorporated on January 11, 2013 and therefore, we consider that our date of inception. We were initially capitalized on January 15, 2013.2013. We invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). We also originate and acquire secured loans and may also originate and acquire other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income. We qualified to be taxed as a real estate investment trust, or REIT, under the Code for federal income tax purposes beginning with our taxable year ended December 31, 2014, and we intend to continue to qualify to be taxed as a REIT.
On February 26, 2014, we commenced a best efforts initial public offering, or our initial offering, in which we offered to the public up to $1,900,000,000 in shares of our common stock. As of April 22, 2015, the deregistration date of our initial public offering, or our initial offering, we had received and accepted subscriptions in our initial offering for 184,930,598 shares of our common stock, or $1,842,618,000, excluding shares of our common stock issued pursuant to our initial distribution reinvestment plan, or the Initial DRIP. As of April 22, 2015, a total of $18,511,000 in distributions were reinvested that resulted in 1,948,563 shares of our common stock being issued pursuant to the DRIP portion of our initial offering.Initial DRIP.
On March 25, 2015, we filed a Registration Statement on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act, to register a maximum of $250,000,000 of additional shares of our common stock to be issued pursuant to our distribution reinvestment plan,the Initial DRIP, or the Secondary2015 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the United States Securities and Exchange Commission, or SEC, upon its filing; however, we did not commenceWe commenced offering shares pursuant to the Secondary2015 DRIP Offering until April 22, 2015, following the deregistration of our initial offering. Effective October 5, 2016, we amended and restated the Initial DRIP, or the Amended and Restated DRIP, to amend the price at which shares of our common stock are issued pursuant to the Secondary2015 DRIP Offering. We continued to offer shares of our common stock pursuant to the 2015 DRIP Offering until the termination and deregistration of such offering on March 29, 2019. As of March 29, 2019, a total of $245,396,000 in distributions were reinvested that resulted in 26,386,545 shares of common stock being issued pursuant to the 2015 DRIP Offering.
On January 30, 2019, we filed a Registration Statement on Form S-3 under the Securities Act to register a maximum of $200,000,000 of additional shares of our common stock to be issued pursuant to the Amended and Restated DRIP, or the 2019 DRIP Offering. We commenced offering shares pursuant to the 2019 DRIP Offering on April 1, 2019, following the deregistration of the 2015 DRIP Offering. On May 29, 2020, in consideration of the impact the coronavirus, or COVID-19, pandemic has had on the United States, globally and our business operations, our board of directors, or our board, authorized the suspension of the Amended and Restated DRIP until such time, if any, as our board determines to authorize new distributions and to reinstate such plan. Such suspension was effective upon the completion of all shares issued with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. See Note 13, Equity, — Distribution Reinvestment Plan, for a further discussion. As of September 30, 2017,2020, a total of $155,616,000$63,105,000 in distributions were reinvested and 16,712,987that resulted in 6,724,348 shares of our common stock werebeing issued pursuant to the Secondary2019 DRIP Offering. We collectively refer to the Initial DRIP portion of our initial offering, the 2015 DRIP Offering and the 2019 DRIP Offering as our DRIP Offerings.
We conduct substantially all of our operations through Griffin-AmericanGriffin-American Healthcare REIT III Holdings, LP, or our operating partnership. We are externally advised byGriffin-American Healthcare REIT III Advisor, LLC, or Griffin-American Advisor, or our advisor, pursuant to an advisory agreement, or the Advisory Agreement, between us and our advisor. The Advisory Agreement was effective as of February 26, 2014 and had aone-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February 14, 201711, 2020 and expires on February 26, 2018. Our2021. Our advisor uses its best efforts, subject to the oversight, review and approval of our board, of directors, or our board, to, amongamong other things, research, identify, review and make investments in and dispositions of properties and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by wholly owned subsidiaries of American Healthcare Investors, LLC, or American Healthcare Investors, and 25.0% owned by a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital, (formerly known as Griffin Capital Corporation), or collectively, our co-sponsors. American Healthcare Investors is 47.1% owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Colony NorthStar,Capital, Inc. (NYSE: CLNS)CLNY), or Colony NorthStar (formerly known as NorthStar Asset Management Group Inc. prior to its merger with Colony Capital, Inc. and NorthStar Realty Finance Corp. on January 10, 2017), and 7.8% owned by James F. Flaherty III, a former partner of Colony NorthStar.Capital. We are not affiliated with Griffin
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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Capital, Griffin Capital Securities, LLC, the dealer manager for our initial offering, or our dealer manager, Colony NorthStarCapital or Mr. Flaherty; however, we are affiliated with Griffin-American Advisor,our advisor, American Healthcare Investors and AHI Group Holdings.
We currently operate through six6 reportable business segments: medical office buildings, hospitals, skilled nursing facilities, senior housing, senior housing — RIDEA and integrated senior health campuses. As of September 30, 2017,2020, we owned and/or operated 9597 properties, comprising 99101 buildings, and 107118 integrated senior health campuses including completed development projects, or approximately 12,516,00013,880,000 square feet of gross leasable area, or GLA, for an aggregate contract

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

purchase price of $2,837,375,000.$3,031,654,000. In addition, as of September 30, 2017,2020, we have invested $98,011,000 inalso owned a real estate-related investments, net of principal repayments.investment purchased for $60,429,000.
2. Summary of Significant Accounting Policies
The summary of significant accounting policies presented below is designed to assist in understanding our accompanying condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements.
Basis of Presentation
Our accompanying condensed consolidated financial statements include our accounts and those of our operating partnership, the wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries in which we have control, as well as any variable interest entities, or VIEs in which we are the primary beneficiary. We evaluate our ability to control an entity, and whether the entity is a VIE and we are the primary beneficiary, by considering substantive terms of the arrangement and identifying which enterprise has the power to direct the activities of the entity that most significantly impacts the entity’s economic performance as defined in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 810, Consolidation, or ASC Topic 810.performance.
We operateand intend tocontinue to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries of which we have control, will own substantially all of the interests in properties acquired on our behalf. We areare the sole general partner of ourour operating partnership, and as of both September 30, 20172020 and December 31, 2016,2019, we owned greater than a 99.99% general partnership interest therein. AsOur advisor is a limited partner, and as of both September 30, 20172020 and December 31, 2016, our advisor2019, owned less than a 0.01% noncontrolling limited partnership interest in our operating partnership.
Because we are the sole general partner of our operating partnership and have unilateral control over its management and major operating decisions (even if additional limited partners are admitted to our operating partnership), the accounts of our operating partnership are consolidated in our accompanying condensed consolidated financial statements. All intercompany accounts and transactions are eliminated in consolidation.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the United States Securities and Exchange Commission, or SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SECthe SEC’s rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable.
In preparing our accompanying condensed consolidated financial statements, management has evaluated subsequent events through the financial statement issuance date. We believe that although the disclosures contained herein are adequate to prevent the information presented from being misleading, our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 20162019 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017.26, 2020.
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Use of Estimates
The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through property acquisitions, revenues and grant income, allowance for credit losses, impairment of long-lived assets and contingencies. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the

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circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.
AllowanceRevenue Recognition — Resident Fees and Services Revenue
Disaggregation of Resident Fees and Services Revenue
The following tables disaggregate our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time:
Three Months Ended September 30,
20202019
Point in TimeOver TimeTotalPoint in TimeOver TimeTotal
Integrated senior health campuses$48,841,000 $193,873,000 $242,714,000 $53,215,000 $203,833,000 $257,048,000 
Senior housing — RIDEA(1)673,000 20,544,000 21,217,000 737,000 16,015,000 16,752,000 
Total resident fees and services$49,514,000 $214,417,000 $263,931,000 $53,952,000 $219,848,000 $273,800,000 
Nine Months Ended September 30,
20202019
Point in TimeOver TimeTotalPoint in TimeOver TimeTotal
Integrated senior health campuses$150,122,000 $593,218,000 $743,340,000 $158,948,000 $605,855,000 $764,803,000 
Senior housing — RIDEA(1)2,181,000 62,953,000 65,134,000 2,183,000 47,568,000 49,751,000 
Total resident fees and services$152,303,000 $656,171,000 $808,474,000 $161,131,000 $653,423,000 $814,554,000 
The following tables disaggregate our resident fees and services revenue by payor class:
Three Months Ended September 30,
20202019
Integrated
Senior Health
Campuses
Senior
Housing
 — RIDEA(1)
TotalIntegrated
Senior Health
Campuses
Senior
Housing
 — RIDEA(1)
Total
Private and other payors$112,601,000 $20,815,000 $133,416,000 $125,337,000 $16,741,000 $142,078,000 
Medicare79,688,000 0 79,688,000 81,965,000 0 81,965,000 
Medicaid50,425,000 402,000 50,827,000 49,746,000 11,000 49,757,000 
Total resident fees and services$242,714,000 $21,217,000 $263,931,000 $257,048,000 $16,752,000 $273,800,000 
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Nine Months Ended September 30,
20202019
Integrated
Senior Health
Campuses
Senior
Housing
 — RIDEA(1)
TotalIntegrated
Senior Health
Campuses
Senior
Housing
 — RIDEA(1)
Total
Private and other payors$353,126,000 $63,894,000 $417,020,000 $372,455,000 $49,706,000 $422,161,000 
Medicare237,853,000 0 237,853,000 250,923,000 0 250,923,000 
Medicaid152,361,000 1,240,000 153,601,000 141,425,000 45,000 141,470,000 
Total resident fees and services$743,340,000 $65,134,000 $808,474,000 $764,803,000 $49,751,000 $814,554,000 
___________
(1)Includes fees for Uncollectible basic housing and assisted living care. We record revenue when services are rendered at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For patients under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.
Accounts Receivable, Net — Resident Fees and Services Revenue
The beginning and ending balances of accounts receivable, net— resident fees and services are as follows:
Private
and
Other Payors		MedicareMedicaidTotal
Beginning balance — January 1, 2020
$46,543,000 $32,127,000 $26,366,000 $105,036,000 
Ending balance — September 30, 2020
38,593,000 29,054,000 18,232,000 85,879,000 
Decrease$(7,950,000)$(3,073,000)$(8,134,000)$(19,157,000)
Deferred Revenue — Resident Fees and Services Revenue
The beginning and ending balances of deferred revenue— resident fees and services, almost all of which relates to private and other payors, are as follows:
Total
Beginning balance — January 1, 2020
$13,518,000 
Ending balance — September 30, 2020
11,977,000 
Decrease$(1,541,000)
In addition to the deferred revenue above, we received approximately $52,322,000 of Medicare advance payments through an expanded program of the Centers for Medicare & Medicaid Services, or CMS. Such amounts will be recognized as resident fees and services revenue for actual services performed and Medicare claims billed once our recoupment period commences in 2021. See Note 11, Commitments and Contingencies — Impact of the COVID-19 Pandemic, for a further discussion.
Government Grants
We have been granted stimulus funds through various federal and state government programs, such as through the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, passed by the federal government on March 27, 2020, which were established for eligible healthcare providers to preserve liquidity in response to lost revenues and/or increased healthcare expenses (as such terms are defined in the applicable regulatory guidance) associated with the COVID-19 pandemic. Such grants are not loans and, as such, are not required to be repaid, subject to certain conditions. We recognize government grants as grant income or as a reduction of property operating expenses, as applicable, in our accompanying condensed consolidated statements of operations and comprehensive income (loss) when there is reasonable assurance that the grants will be received and all conditions to retain the funds will be met. We adjust our estimates and assumptions based on the applicable guidance provided by the government and the best available information that we have. Any stimulus or other relief funds
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received that are not expected to be used in accordance with such terms and conditions will be returned to the government, and any related deferred income will not be recognized.
For the three and nine months ended September 30, 2020, we recognized government grants of $740,000 and $30,730,000, respectively, as grant income, and $0 and $276,000, respectively, as a reduction of property operating expenses. As of September 30, 2020, we deferred approximately $20,735,000 of grant money received until such time as it is earned. Such deferred amounts are included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheet. As of and for the three and nine months ended September 30, 2019, we did 0t recognize any government grants.
Tenant and resident receivablesResident Receivables and unbilled deferred rentAllowances
On January 1, 2020, we adopted Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 326, Financial Instruments Credit Losses, or ASC Topic 326. We adopted ASC Topic 326 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2020.
Resident receivables are carried net of an allowance for uncollectible amounts.credit losses. An allowance is maintained for estimated losses resulting from the inability of certain tenants or residents and payors to meet the contractual obligations under their lease or service agreements. We also maintain an allowance for deferred rent receivables arising from the straight-line recognitionSubstantially all of rents. Suchsuch allowances are chargedrecorded as direct reductions of resident fees and services revenue as contractual adjustments provided to bad debt expense, which is included in general and administrativethird-party payors or implicit price concessions in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the tenant’s or resident’sresidents’ financial condition, security deposits, letters of credit, lease guarantees,cash collection patterns by payor and by state, current economic conditions, future expectations in estimating credit losses and other relevant factors. Tenant receivables and unbilled deferred rent receivables are reduced for uncollectible amounts, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
As of September 30, 20172020 and December 31, 2016,2019, we had $10,568,000$10,527,000 and $9,597,000,$11,435,000, respectively, in allowance for uncollectible accounts,allowances, which waswere determined necessary to reduce receivables by our expected future credit losses. For the nine months ended September 30, 2020 and 2019, we increased allowances by $9,841,000 and $8,065,000, respectively, and reduced allowances for collections or adjustments by $5,942,000 and $1,773,000, respectively. For the nine months ended September 30, 2020 and 2019, $4,807,000 and $4,610,000, respectively, of our receivables were written off against the related allowances.
Impairment of Long-Lived Assets
We periodically evaluate our long-lived assets, primarily consisting of investments in real estate that we carry at our historical cost less accumulated depreciation, for impairment when events or changes in circumstances indicate that its carrying value may not be recoverable. Indicators we consider important and that we believe could trigger an impairment review include, among others, the following:
•significant negative industry or economic trends;
•a significant underperformance relative to historical or projected future operating results; and
•a significant change in the extent or manner in which the asset is used or significant physical change in the asset.
For the nine months ended September 30, 2020, we determined that 1 skilled nursing facility and 1 medical office building were impaired and recognized an aggregate impairment charge of $5,616,000, which reduced the total aggregate carrying value of such assets to $7,040,000. The fair values of such impaired properties were based on their projected sales prices obtained from an independent third party using comparable market information and adjusted for anticipated selling costs of such properties, which were considered Level 2 measurements within the fair value hierarchy. We disposed of such impaired medical office building in July 2020 for a contract sales price of $3,500,000 and recognized a net gain on sale of $15,000. We did 0t recognize impairment charges on long-lived assets for both the three and nine months ended September 30, 2019.
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Properties Held for Sale
A property or a group of properties is required to be reported in discontinued operations in the statements of operations and comprehensive income (loss) for current and prior periods if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when either: (i) the component has been disposed of or (ii) is classified as held for sale. At such time as a property is held for sale, such property is carried at the lower of: (i) its carrying amount or (ii) fair value less costs to sell. In addition, a property being held for sale ceases to be depreciated. For the nine months ended September 30, 2020, we determined that the fair values of 2 integrated senior health campuses that were held for sale were lower than their carrying amounts, and as such, we recognized an aggregate impairment charge of $2,719,000, which reduced the total aggregate carrying value of such assets to $807,000. The fair values of such properties were based on their projected sales prices obtained from an independent third party using comparable market information and adjusted for anticipated selling costs of such properties, which were considered Level 2 measurements within the fair value hierarchy. In August 2020, we disposed of 1 such integrated senior health campus included in properties held for sale for a contract sales price of $10,000,000 and recognized a net gain on sale of $1,022,000. We did 0t recognize impairment charges on properties held for sale for both the three and nine months ended September 30, 2019.
Debt Security Investment, Net
We classify our marketable debt security investment as held-to-maturity because we have the positive intent and ability to hold the security to maturity, and we have not recorded any unrealized holding gains or losses on such investment. Our held-to-maturity security is recorded at amortized cost and adjusted for the amortization of premiums or discounts through maturity. Prior to the adoption of ASC Topic 326, a loss was recognized in earnings when we determined declines in the fair value of marketable securities were other-than-temporary. For both the three and nine months ended September 30, 2019, we did not incur any such losses. Effective January 1, 2020, we evaluated our debt security investment for expected future credit loss in accordance with ASC Topic 326. There was no net cumulative effect adjustment to retained earnings as of January 1, 2020. See Note 4, Debt Security Investment, Net, for a further discussion.
Other Assets, Net
Other assets, net consist of investments in unconsolidated entities, inventory, prepaid expenses and deposits, deferred financing costs related to our estimatelines of credit and term loans, deferred rent receivables, deferred tax assets, derivative financial instruments, lease inducements and lease commissions.
We report investments in unconsolidated entities using the equity method of accounting when we have the ability to exercise significant influence over the operating and financial policies. Under the equity method, our share of the investee’s earnings or losses is included in our accompanying condensed consolidated statements of operations and comprehensive income (loss). We generally discontinue recognition of equity method losses when our share of the investee’s losses equals or exceeds our equity method investment balance plus any advances for such investee, unless we have committed to provide such investee additional financial support or guaranteed its obligations. To the extent that our cost basis is different from the basis reflected at the entity level, the basis difference is generally amortized over the lives of the related assets and liabilities, and such amortization is included in our share of equity in earnings of the entity. The initial carrying value of investments in unconsolidated entities is based on the amount recoverable.paid to purchase the entity interest or the estimated fair value of the assets prior to the sale of interests in the entity. We have elected to follow the cumulative earnings approach when classifying distributions received from equity method investments in our condensed consolidated statements of cash flows, whereby any distributions received up to the amount of cumulative equity earnings will be considered a return on investment and classified in operating activities and any excess distributions would be considered a return of investment and classified in investing activities. We evaluate our equity method investments for impairment based upon a comparison of the estimated fair value of the equity method investment to its carrying value. When we determine a decline in the estimated fair value of such an investment below its carrying value is other-than-temporary, an impairment is recorded. For the three and nine months ended September 30, 2017, $02020 and $9,000, respectively, of our receivables were directly written off to bad debt expense. For the three and nine months ended September 30, 2016,2019, we did not write offincur any receivablesimpairment losses from unconsolidated entities.
Inventory consists primarily of pharmaceutical and medical supplies and is stated at the lower of cost (first-in, first-out) or market. Deferred financing costs related to bad debt expense. Forour lines of credit and term loans include amounts paid to lenders and others to obtain such financing. Such costs are amortized using the three months ended September 30, 2017straight-line method over the term of the related loan, which approximates the effective interest rate method. Amortization of deferred financing costs related to our lines of credit and 2016, $1,455,000term loans is included in interest expense in our accompanying condensed consolidated statements of operations and $1,467,000, respectively,comprehensive income (loss). Lease commissions are amortized using the straight-line method over the term of our receivables were written off against the allowance for uncollectible accounts, and forrelated lease. Prepaid expenses are amortized over the nine months ended September 30, 2017 and 2016, $4,685,000 and $4,059,000, respectively,related contract periods.
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Table of our receivables were written off against the allowance for uncollectible accounts.Contents
As of September 30, 2017 and December 31, 2016, we did not have any allowance for uncollectible accounts for deferred rent receivables. For the three months ended September 30, 2017 and 2016, $145,000 and $0, respectively, of our deferred rent receivables were directly written off to bad debt expense. For the nine months ended September 30, 2017 and 2016, $206,000 and $28,000, respectively, of our deferred rent receivables were directly written off to bad debt expense.
Property AcquisitionsGRIFFIN-AMERICAN HEALTHCARE REIT III, INC.
In accordance with ASC Topic 805, Business Combinations, and Accounting Standards Update, or ASU, 2017-01, Clarifying the Definition of a Business, or ASU 2017-01, we determine whether a transaction is a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired and liabilities assumed are not a business, we account for the transaction as an asset acquisition. Under both methods, we recognize the identifiable assets acquired and liabilities assumed; however, for a transaction accounted for as an asset acquisition, we allocate the purchase price to the identifiable assets acquired and liabilities assumed based on their relative fair values. We immediately expense acquisition related expenses associated with a business combination and capitalize acquisition related expenses directly associated with an asset acquisition.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
As a result of our early adoption of ASU 2017-01 on January 1, 2017, we accounted for the property acquisitions we completed for the nine months ended September 30, 2017 as asset acquisitions rather than business combinations. See Note 3, Real Estate Investments,6, Other Assets, Net, for a further discussion. For the nine months ended September 30, 2016, we completed 11 property acquisitions, which we accounted for as business combinations. See Note 17, Business Combinations, for a further discussion.
Accounts Payable and Accrued Liabilities
As of September 30, 20172020 and December 31, 2016,2019, accounts payable and accrued liabilities primarily includes insurance payable of $26,827,000 and $19,136,000, respectively, reimbursement of payroll relatedpayroll-related costs to the managers of our senior housing — RIDEA facilities and integrated senior health campuses of $23,195,000$43,555,000 and $20,992,000,$24,118,000, respectively, insurance reserves of $33,489,000 and $35,581,000, respectively, accrued property taxes of $15,152,000developments and $12,766,000, respectively, accrued distributions of $9,830,000 and $10,009,000, respectively, and accrued capital expenditures to unaffiliated third parties of $6,142,000$30,500,000 and $5,066,000,$25,019,000, respectively, accrued property taxes of $17,872,000 and $14,501,000, respectively, and accrued distributions of $0 and $9,974,000, respectively.
Recently Issued or Adopted Accounting PronouncementsIncome Taxes
We qualified, and elected to be taxed, as a REIT under the Code for federal income tax purposes beginning with our taxable year ended December 31, 2014, and we intend to continue to qualify to be taxed as a REIT. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute to our stockholders a minimum of 90.0% of our annual taxable income, excluding net capital gains. Such distributions are required to be paid at least 20.0% in cash and 80.0% in stock. In May 2014,2020, in response to the FASB issued ASU 2014-09, COVID-19 pandemic, the Internal Revenue from ContractsService, or IRS, temporarily reduced the cash distribution requirement to a minimum of 10.0%, which is applicable with Customers,respect to the aggregate distributions declared on or after April 1, 2020 until December 31, 2020. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.
If we fail to maintain our qualification as codifieda REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the IRS grants us relief under certain statutory provisions. Such an event could have a material adverse effect on our net income and net cash available for distribution to our stockholders.
We may be subject to certain state and local income taxes on our income, property or net worth in some jurisdictions, and in certain circumstances we may also be subject to federal excise taxes on undistributed income. In addition, certain activities that we undertake are conducted by subsidiaries, which we elected to be treated as taxable REIT subsidiaries, or TRS, to allow us to provide services that would otherwise be considered impermissible for REITs. Also, we have real estate investments in the United Kingdom, or UK, and Isle of Man, which do not accord REIT status to United States REITs under their tax laws. Accordingly, we recognize an income tax benefit or expense for the federal, state and local income taxes incurred by our TRS and foreign income taxes on our real estate investments in the UK and Isle of Man.
We follow ASC Topic 606, which replaces the existing accounting standards for revenue recognition. ASC Topic 606 provides a five-step framework740, Income Taxes, to recognize, revenuemeasure, present and disclose in our accompanying condensed consolidated financial statements uncertain tax positions that we have taken or expect to depicttake on a tax return. As of and for the transferthree and nine months ended September 30, 2020 and 2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.
We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of goodsevents that have been included in our financial statements or services to customerstax returns. Under this method, we determine deferred tax assets and liabilities based on the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in an amount that reflectseffect for the considerationyear in which the differences are expected to reverse. Deferred tax assets reflect the impact of the future deductibility of operating loss carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be received in exchange for those goodsrealized. Any increase or services. ASC Topic 606 is effective for interim and annual reporting periods beginning after December 15, 2017. We aredecrease in the processvaluation allowance that results from a change in circumstances, and that causes us to change our judgment about the realizability of evaluating allthe related deferred tax asset, is included in income tax benefit or expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss) when such changes occur. Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes us to change our revenue streams to identify any differencesjudgment about expected future tax consequences of events, is recorded in income tax benefit or expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss).

Deferred tax assets are included in other assets, net, and deferred tax liabilities are included in security deposits, prepaid rent and other liabilities, in our accompanying condensed consolidated balance sheets.
See Note 16, Income Taxes, for a further discussion.
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Recently Issued Accounting Pronouncements
the timing, measurement or presentation of revenue recognition. We believe the following revenue streams may be subject to ASC Topic 606: (i) certain elements of our resident fees and services, including revenues that are ancillary to the contractual rights of residents; and (ii) common area maintenance from leasing arrangements. We will not apply the principles of ASC Topic 606 to our common area maintenance revenues and certain elements of our resident fees and services to the extent they qualified as lease revenues until January 1, 2019, when we adopt ASU 2016-02, Leases, or ASU 2016-02. We have not yet selected a transition method and we expect to complete our evaluation of the impact of the adoption of ASC Topic 606 and its amendments on our consolidated financial statements during the fourth quarter of 2017.
In January 2016,March 2020, the FASB issued Accounting Standards Update, or ASU, 2016-01, Recognition and Measurement2020-04, Facilitation of the Effects of Reference Rate Reform of Financial Assets and Financial Liabilities,Reporting, or ASU 2016-01,2020-04, which amendsprovides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria. ASU 2020-04 applies to the classification and measurement of financial instruments. ASU 2016-01 revisesaforementioned transactions that reference the accounting related to: (i) the classification and measurement of investments in equity securities; and (ii) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, with respectLondon Inter-bank Offered Rate, or LIBOR, or another reference rate expected to only certainbe discontinued because of the amendments inreference rate reform. ASU 2016-01, for financial statements that have not yet been made available for issuance. ASU 2016-01 requires the application of the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, with certain exceptions. We do not expect the adoption of ASU 2016-01 on January 1, 2018 to have a material impact on our consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, which amends the guidance on accounting for leases, including extensive amendments to the disclosure requirements. Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under ASU 2016-02 from a lessor perspective, the guidance will require bifurcation of lease revenues into lease components and non-lease components and to separately recognize and disclose non-lease components that are executory in nature. Lease components will continue to be recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASC Topic 606. The disaggregated disclosure of lease and executory non-lease components (e.g., maintenance) will be required upon the adoption of ASU 2016-02. ASU 2016-022020-04 is effective for fiscal years and interim periods beginning after March 12, 2020 and through December 15, 2018. Early adoption is permitted31, 2022. We are currently evaluating this guidance to determine the impact on our disclosures.
In April 2020, the FASB issued a question and answer document, or the Lease Modification Q&A, to provide guidance for financial statements that havethe application of lease accounting modifications within ASC Topic 842, Leases, or ASC Topic 842, to lease concessions granted by lessors related to the effects of the COVID-19 pandemic. Lease accounting modification guidance in ASC Topic 842 addresses routine changes or enforceable rights and obligations to lease terms as a result of negotiations between the lessor and the lessee; however, the guidance does not yet been made available for issuance. ASU 2016-02take into consideration concessions granted to address sudden liquidity constraints of lessees arising from the COVID-19 pandemic. The underlying premise of ASC Topic 842 requires a modified retrospective transition approachlease to be accounted for leases existing at, or entered into after,as a new lease if the beginningmodified terms and conditions affect the economics of the earliest comparative period presentedlease for the remainder of the lease term. Further, a lease modification resulting from lease concessions would require the application of the modification framework pursuant to ASC Topic 842 on a lease-by-lease basis. The potential large volume of contracts to be assessed due to the COVID-19 pandemic may be burdensome and complex for entities to evaluate the lease modification accounting for each lease. Therefore, the Lease Modification Q&A allows entities to elect to account for lease concessions related to the effects of the COVID-19 pandemic as if they were granted under the enforceable rights included in the financial statementsoriginal contract and are outside of the lease modification framework pursuant to ASC Topic 842. Such election is available for lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee (e.g., total payments required by the modified contract being substantially the same as or less than total payments required by the original contract) and is to be applied consistently to leases with a few optional practical expedients. similar characteristics and circumstances.
As a result of the adoptionCOVID-19 pandemic, we have granted lease concessions to an insignificant number of ASU 2016-02 on January 1, 2019, we will recognize alltenants within our medical office building segment, such as in the form of our operating leases for which we are the lessee, including facilities leasesrent abatements with lease term extensions and ground leases, on our consolidated balance sheets and will capitalize fewer legal costs related to the drafting and execution of our lease agreements. We are is still evaluating the transition method including the practical expedient offered in ASU 2016-02. We are is also evaluating the complete impact of the adoption of ASU 2016-02 on January 1, 2019rent payment deferrals requiring payment within one year. Such concessions were not material to our condensed consolidated financial statements, and disclosures.
In June 2016,as such, we elected not to apply the FASB issued ASU 2016-13, Measurementrelief from lease modification accounting provided in the Lease Modification Q&A. We evaluate each lease concession granted as a result of Credit Losses on Financial Instruments, the COVID-19 pandemic to determine whether the concession reflects: (i) a resolution of contractual rights in the original lease and is thus outside of the lease modification framework of ASC Topic 842; or ASU 2016-13,(ii) a modification for which introduces a new approachwe would be required to estimate credit losses on certain typesapply the lease modification framework of financial instruments based on expected losses. It also modifiesASC Topic 842. The application of the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted after December 15, 2018. We dolease modification framework of ASC Topic 842 to lease concessions granted due to the effects of the COVID-19 pandemic did not expect the adoption of ASU 2016-13 on January 1, 2020 to have a material impact onto our condensed consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, or ASU 2016-15, which intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2016-15 on January 1, 2018 to have a material impact on our consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, or ASU 2016-16, which removes the prohibition in ASC 740, Income Taxes, against the immediate recognition3. Real Estate Investments, Net
Our real estate investments, net consisted of the currentfollowing as of September 30, 2020 and deferred income tax effectsDecember 31, 2019:
 September 30,
2020		December 31,
2019
Building, improvements and construction in process$2,361,877,000 $2,262,320,000 
Land and improvements199,528,000 195,491,000 
Furniture, fixtures and equipment167,675,000 150,508,000 
2,729,080,000 2,608,319,000 
Less: accumulated depreciation(402,138,000)(337,898,000)
$2,326,942,000 $2,270,421,000 
Depreciation expense for the three months ended September 30, 2020 and 2019 was $22,699,000 and $25,062,000, respectively, and for the nine months ended September 30, 2020 and 2019 was $67,959,000 and $68,796,000, respectively. For the three months ended September 30, 2020, we incurred capital expenditures of intra-entity transfers$29,390,000 for our integrated senior health campuses, $3,997,000 for our medical office buildings, $255,000 for our senior housing —RIDEA facilities and $19,000 for our hospitals. We did 0t incur any capital expenditures for our senior housing and skilled nursing facilities for the three months ended September 30, 2020. For the nine months ended September 30, 2020, we incurred capital expenditures of assets other than inventory. ASU 2016-16 is effective$88,397,000 for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2016-16 on January 1, 2018 to have a material impact on our consolidated financial statements.

integrated senior health campuses, $15,469,000 for our medical office buildings, $722,000 for our senior
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housing —RIDEA facilities and $34,000 for our hospitals. We did 0t incur any capital expenditures for our senior housing and skilled nursing facilities for the nine months ended September 30, 2020.
Included in the capital expenditure amounts above are costs for the development and expansion of our integrated senior health campuses. For the nine months ended September 30, 2020, we completed the development of 1 integrated senior health campus for $15,621,000 and incurred $2,573,000 to expand 2 of our existing integrated senior health campuses. In January 2017,addition, for the FASB issued ASU 2017-04, Simplifying the Testnine months ended September 30, 2020, we, through a majority-owned subsidiary of Trilogy Investors, LLC, or Trilogy, also acquired a land parcel in Ohio for Goodwill Impairment, or ASU 2017-04, which eliminates Step 2 from the goodwill impairment testa contract purchase price of $1,693,000 plus closing costs and allowspaid to our advisor an entity to perform its goodwill impairment test by comparing the fair valueacquisition fee of a reporting segment with its carrying amount. ASU 2017-04 is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. We early adopted ASU 2017-04 on January 1, 2017, which did not have a material impact on our consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, or ASU 2017-09, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Modification accounting is only applied if the value, the vesting conditions or the classification2.25% of the award (or equity or liability) changes as a resultportion of the change in terms or conditions. ASU 2017-09 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. We do not expect the adoptioncontract purchase price of ASU 2017-09 on January 1, 2018such land parcel attributed to have a material impact on our consolidated financial statements.ownership interest.
3.Acquisitions of Previously Leased Real Estate Investments Net
OurFor the nine months ended September 30, 2020, we, through a majority-owned subsidiary of Trilogy, of which we owned 67.6% at the time of acquisition, acquired 2 previously leased real estate investments net consistedlocated in Indiana and Kentucky. The following is a summary of such acquisitions for the nine months ended September 30, 2020, which are included in our integrated senior health campuses segment:
LocationDate
Acquired		Contract
Purchase Price		Line of Credit(1)Acquisition
Fee(2)
Monticello, IN07/30/20$10,600,000 $13,200,000 $161,000 
Louisville, KY07/30/2016,719,000 15,055,000 254,000 
Total$27,319,000 $28,255,000 $415,000 
___________
(1)Represents borrowings under the 2019 Trilogy Credit Facility, as defined in Note 8, Lines of Credit and Term Loans, at the time of acquisition.
(2)Our advisor was paid, as compensation for services rendered in connection with the investigation, selection and acquisition of our properties, an acquisition fee of 2.25% of the following asportion of the contract purchase price of the properties attributed to our ownership interest in the Trilogy subsidiary that acquired the properties.
For the nine months ended September 30, 20172020, we accounted for our property acquisitions as asset acquisitions. We incurred and capitalized closing costs and direct acquisition related expenses of $684,000 for such acquisitions. The following table summarizes the purchase price of the assets acquired at the time of acquisition, adjusted for $14,281,000 of operating lease right-of-use assets and $15,530,000 of operating lease liabilities, and based on their relative fair values:
2020
Acquisitions
Building and improvements$26,311,000 
Land3,399,000 
Total assets acquired$29,710,000 
4. Debt Security Investment, Net
On October 15, 2015, we acquired a commercial mortgage-backed debt security, or debt security, from an unaffiliated third party. The debt security bears an interest rate on the stated principal amount thereof equal to 4.24% per annum, the terms of which security provide for monthly interest-only payments. The debt security matures on August 25, 2025 at a stated amount of $93,433,000, resulting in an anticipated yield-to-maturity of 10.0% per annum. The debt security was issued by an unaffiliated mortgage trust and represents a 10.0% beneficial ownership interest in such mortgage trust. The debt security is subordinate to all other interests in the mortgage trust and is not guaranteed by a government-sponsored entity.
As of September 30, 2020 and December 31, 2016:
 
September 30,
2017
 December 31,
2016
Building, improvements and construction in process$2,042,450,000
 $1,981,610,000
Land173,338,000
 167,329,000
Furniture, fixtures and equipment97,043,000
 84,817,000
 2,312,831,000
 2,233,756,000
Less: accumulated depreciation(153,949,000) (94,775,000)
 $2,158,882,000
 $2,138,981,000
Depreciation expense2019, the carrying amount of the debt security investment was $75,037,000 and $72,717,000, respectively, net of unamortized closing costs of $1,250,000 and $1,375,000, respectively. Accretion on the debt security for the three months ended September 30, 20172020 and 20162019 was $20,611,000$828,000 and $18,050,000, respectively. Depreciation expense$751,000, respectively, and for the nine months ended September 30, 20172020 and 2016 2019was $61,453,000$2,445,000 and $49,719,000, respectively. For the nine months ended September 30, 2017, we determined that two integrated senior health campuses were impaired$2,218,000, respectively, which is recorded to real estate revenue in our accompanying condensed consolidated statements of operations and recognized an aggregate impairment chargecomprehensive income (loss). Amortization expense of $4,883,000, which reduced the total carrying value of such investments to $990,000. In July 2017, we disposed of one of our impaired integrated senior health campuses. For a further discussion, see the Dispositions in 2017 section below. The fair value of our remaining impaired integrated senior health campus was based on its projected sales price, which was considered a Level 2 measurement within the fair value hierarchy. No impairment charges were recognizedclosing costs for the three and nine months ended September 30, 2016.
For the three months ended September 30, 2017, we incurred capital expenditures of $6,810,000 on our integrated senior health campuses, $3,157,000 on our medical office buildings, $197,000 on our senior housing —RIDEA facilities, $145,000 on our skilled nursing facilities2020 and $15,000 on our hospitals. We did not incur any capital expenditures on our senior housing facilities.
In addition to the acquisitions discussed below, for the nine months ended September 30, 2017, we incurred capital expenditures of $20,864,000 on our integrated senior health campuses, $7,312,000 on our medical office buildings, $604,000 on our senior housing —RIDEA facilities, $320,000 on our skilled nursing facilities2019 was $44,000 and $65,000 on our hospitals. We did not incur any capital expenditures on our senior housing facilities.
We reimburse our advisor or its affiliates for acquisition expenses related to selecting, evaluating$37,000, respectively, and acquiring assets. The reimbursement of acquisition expenses, acquisition fees, total development costs and real estate commissions and other fees paid to unaffiliated third parties will not exceed, in the aggregate, 6.0% of the contract purchase price, unless fees in excess of such limits are approved by a majority of our directors, including a majority of our independent directors. For the three and nine months ended September 30, 2017 and 2016, such fees and expenses noted above did not exceed 6.0% of the contract purchase price of our property acquisitions.

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Acquisitions in 2017
For the nine months ended September 30, 2017, using cash on hand and debt financing, we completed the acquisition of two buildings from unaffiliated third parties. The following is a summary of our property acquisitions for the nine months ended September 30, 2017:
Acquisition(1) Location Type 
Date
Acquired
 
Contract
Purchase Price
 
Lines of Credit and
Term Loans(2)
 Acquisition Fee(3)
North Carolina ALF Portfolio(4) Huntersville, NC Senior Housing 01/18/17 $15,000,000
 $14,000,000
 $338,000
New London CT MOB New London, CT Medical Office 05/03/17 4,850,000
 4,000,000
 109,000
Total       $19,850,000
 $18,000,000
 $447,000
___________
(1)We own 100% of our properties acquired in 2017.
(2)Represents borrowings under the 2016 Corporate Line of Credit, as defined in Note 8, Lines of Credit and Term Loans, at the time of acquisition.
(3)Our advisor was paid in cash, as compensation for services rendered in connection with the investigation, selection and acquisition of our properties, an acquisition fee of 2.25% of the contract purchase price of each property.
(4)On January 18, 2017, we added one additional building to our existing North Carolina ALF Portfolio. The other four buildings in North Carolina ALF Portfolio were acquired in January 2015 and June 2015.
In addition to the property acquisitions in 2017 discussed above, subsequent to the initial purchase of Trilogy Investors, LLC, or Trilogy, our majority-owned subsidiary, in December 2015, we, through a majority-owned subsidiary of Trilogy, of which we own 67.7%, acquired land in Indiana on June 7, 20172020 and July 17, 2017 for a contract purchase price of $300,0002019 was $125,000 and $250,000, respectively, and paid an acquisition fee in cash to our advisor of approximately $5,000 and $4,000, respectively, and closing costs. The acquisitions of such land were financed using cash on hand.
2017 Acquisitions of Previously Leased Real Estate Investments
For the nine months ended September 30, 2017, we, through a majority-owned subsidiary of Trilogy, acquired seven previously leased real estate investments located in Indiana, Kentucky and Ohio. The following is a summary of such acquisitions for the nine months ended September 30, 2017, which are included in our integrated senior health campuses segment:
Location 
Date
Acquired
 
Contract
Purchase Price
 
Lines of Credit and
Term Loans(1)
 Acquisition Fee(2)
Boonville, Columbus and Hanover, IN; Lexington, KY; and Maumee and Willard, OH 02/01/17 $72,200,000
 $53,700,000
 $1,099,000
Greenfield, IN 05/16/17 3,500,000
 —
 53,000
Total   $75,700,000
 $53,700,000
 $1,152,000
___________
(1)Represents borrowings under the Trilogy PropCo Line of Credit, as defined in Note 8, Lines of Credit and Term Loans, at the time of acquisition.
(2)Our advisor was paid in cash, as compensation for services rendered in connection with the investigation, selection and acquisition of our properties, an acquisition fee of 2.25% of the portion of the contract purchase price of the properties attributed to our ownership interest of approximately 67.7% in the subsidiary of Trilogy that acquired the properties.

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For the nine months ended September 30, 2017, we accounted for our property acquisitions, including our acquisitions of previously leased real estate investments, as asset acquisitions. We incurred closing costs and direct acquisition related expenses of $2,399,000, which were capitalized in accordance with our early adoption of ASU 2017-01. The following table summarizes the purchase price of the assets acquired and liabilities assumed at the time of acquisition from our property acquisitions in 2017 based on their relative fair values:
  
2017 Property
Acquisitions
Building and improvements $58,635,000
Land 7,670,000
In-place leases 11,051,000
Certificates of need 4,750,000
Total assets acquired 82,106,000
Below-market leases (11,000)
Total liabilities assumed (11,000)
Net assets acquired $82,095,000
Dispositions in 2017
For the nine months ended September 30, 2017, we disposed of one land parcel in Kentucky, one integrated senior health campus in Indiana and one integrated senior health campus in Ohio. We recognized a total net gain on such dispositions of $3,370,000.Our advisor agreed to waive the disposition fees and expense reimbursements related to such dispositions that may otherwise have been due to our advisor pursuant to the Advisory Agreement. Our advisor did not receive any additional securities, shares of our stock or any other form of consideration or any repayment as a result of the waiver of such disposition fees and expense reimbursements. The following is a summary of our dispositions for the nine months ended September 30, 2017, which were included in our integrated senior health campuses segment:
Location Date Disposed 
Contract
Sales Price
Harrodsburg, KY 01/13/17 $2,400,000
Merrillville, IN 05/01/17 17,000,000
Fremont, OH 07/20/17 400,000
Total   $19,800,000
4. Real Estate Notes Receivable and Debt Security Investment, Net
As of September 30, 2017 and December 31, 2016, we had $100,133,000 and $101,117,000 of notes receivable and debt security investment, net, respectively. The following is a summary of our notes receivable and debt security investment, including unamortized loan and closing costs, net as of September 30, 2017 and December 31, 2016:
         Balance  
 
Origination
Date
 
Maturity
Date
 
Contractual
Interest
Rate(1)
 
Maximum
Advances
Available
 
September 30,
2017
 
December 31,
2016
 
Acquisition
Fee(2)
Mezzanine Fixed Rate Notes(3)(4)02/04/15 12/09/19 6.75% $28,650,000
 $28,650,000
 $28,650,000
 $573,000
Mezzanine Floating Rate Notes(3)(4)02/04/15 12/09/17 7.24% $31,567,000
 4,526,000
 7,167,000
 631,000
Debt security investment(5)10/15/15 08/25/25 4.24% N/A 64,997,000
 63,176,000
 1,209,000
         98,173,000
 98,993,000
 $2,413,000
Unamortized loan and closing costs, net        1,960,000
 2,124,000
  
         $100,133,000
 $101,117,000
  
___________
(1)Represents the per annum interest rate in effect as of September 30, 2017.

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(2)Our advisor was paid in cash, as compensation for services in connection with real estate-related investments, an acquisition fee of 2.00% of the total amount invested through September 30, 2017.
(3)The Mezzanine Fixed Rate Notes and the Mezzanine Floating Rate Notes, or collectively, the Mezzanine Notes, evidence interests in a portion of a mezzanine loan that is secured by pledges of equity interests in the owners of a portfolio of domestic healthcare properties, which such owners are themselves owned indirectly by a non-wholly owned subsidiary of Colony NorthStar (formerly known as NorthStar Realty Finance Corp. prior to its merger with Colony Capital, Inc. and NorthStar Asset Management Group Inc. on January 10, 2017). The maturity date of the Mezzanine Floating Rate Notes may be extended by three successive one-year extension periods at the borrower’s option, subject to satisfaction of certain conditions. In October 2016, the borrower exercised its right to extend the original December 9, 2016 maturity date of the Mezzanine Floating Rate Notes for one year, to December 9, 2017.
(4)Balance represents the original principal balance, decreased by any subsequent principal paydowns. The Mezzanine Notes only require monthly interest payments and are subject to certain prepayment restrictions if repaid before the respective maturity dates.
(5)The commercial mortgage-backed debt security, or the debt security, bears an interest rate on the stated principal amount thereof equal to 4.24% per annum, the terms of which security provide for monthly interest-only payments. The debt security matures on August 25, 2025 at a stated amount of $93,433,000, resulting in an anticipated yield-to-maturity of 10.0% per annum. The debt security is subordinate to all other interests in FREMF 2015-KS03 Mortgage Trust and is not guaranteed by a government-sponsored entity. As of September 30, 2017 and December 31, 2016, the net carrying amount with accretion was $66,661,000 and $64,912,000, respectively. We classify our debt security investment as held-to-maturity and we have not recorded any unrealized holding gains or losses on such investment.
We reimburse our advisor or its affiliates for acquisition expenses related to selecting, evaluating and acquiring assets. The reimbursement of acquisition expenses, acquisition fees and real estate commissions and other fees paid to unaffiliated third parties will not exceed, in the aggregate, 6.0% of the contract purchase price or in the case of a loan, funds advanced in a loan, unless fees in excess of such limits are approved by a majority of our directors, including a majority of our independent directors. For the three and nine months ended September 30, 2017 and 2016, such fees and expenses noted above did not exceed 6.0% of the contract purchase price of our real estate-related investments.
The following table shows the changes in the carrying amount of real estate notes receivable and debt security investment, net for the nine months ended September 30, 2017 and 2016:
 Nine Months Ended September 30,
 2017 2016
Beginning balance$101,117,000
 $144,477,000
Additions:   
Advances on real estate notes receivable—
 1,942,000
Accretion on debt security1,821,000
 1,650,000
Loan costs—
 39,000
Deductions:   
Principal repayments on real estate notes receivable(2,641,000) —
Foreign currency translation adjustments—
 (2,892,000)
Amortization of loan and closing costs(164,000) (607,000)
Ending balance$100,133,000

$144,609,000
For the three and nine months ended September 30, 2017 and 2016, we did not record any impairment losses on our real estate notes receivable and debt security investment. Amortization expense on loan and closing costs for the three months ended September 30, 2017 and 2016 was $57,000 and $231,000, respectively, and for the nine months ended September 30, 2017 and 2016, was $164,000 and $607,000,$105,000, respectively, which is recorded against real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income (loss). In accordance with ASC Topic 326, we evaluated credit quality indicators such as the agency ratings and the underlying collateral of such investment in order to determine expected future credit loss. No credit loss was recorded for both the three and nine months ended September 30, 2020.

5. Identified Intangible Assets, Net
Identified intangible assets, net consisted of the following as of September 30, 2020 and December 31, 2019:
September 30,
2020		December 31,
2019
Amortized intangible assets:
In-place leases, net of accumulated amortization of $21,451,000 and $21,029,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 9.4 years as of both September 30, 2020 and December 31, 2019)$24,649,000 $30,407,000 
Customer relationships, net of accumulated amortization of $448,000 and $336,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 15.9 years and 16.8 years as of September 30, 2020 and December 31, 2019, respectively)2,392,000 2,504,000 
Above-market leases, net of accumulated amortization of $2,106,000 and $2,057,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 4.7 years and 5.0 years as of September 30, 2020 and December 31, 2019, respectively)1,127,000 1,452,000 
Internally developed technology and software, net of accumulated amortization of $282,000 and $211,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 1.9 years and 2.8 years as of September 30, 2020 and December 31, 2019, respectively)188,000 259,000 
Unamortized intangible assets:
Certificates of need95,887,000 94,838,000 
Trade names30,429,000 30,787,000 
$154,672,000 $160,247,000 
Amortization expense for the three months ended September 30, 2020 and 2019 was $1,562,000 and $11,566,000, respectively, which included $106,000 and $131,000, respectively, of amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Amortization expense for the nine months ended September 30, 2020and 2019 was $5,445,000 and $18,005,000, respectively, which included $325,000 and $475,000, respectively, of amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
The aggregate weighted average remaining life of the identified intangible assets was 9.7 years as of both September 30, 2020 and December 31, 2019. As of September 30, 2020, estimated amortization expense on the identified intangible assets for the three months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter was as follows:
YearAmount
2020$1,237,000 
20214,626,000 
20223,896,000 
20233,127,000 
20242,710,000 
Thereafter12,760,000 
$28,356,000 
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5. Identified Intangible Assets, Net
Identified intangible assets, net consisted of the following as of September 30, 2017 and December 31, 2016:
 
September 30,
2017
 
December 31,
2016
Amortized intangible assets:   
In-place leases, net of accumulated amortization of $24,060,000 and $23,997,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 10.1 years and 8.6 years as of September 30, 2017 and December 31, 2016, respectively)$53,149,000
 $68,376,000
Leasehold interests, net of accumulated amortization of $372,000 and $266,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 54.8 years and 55.6 years as of September 30, 2017 and December 31, 2016, respectively)7,522,000
 7,628,000
Above-market leases, net of accumulated amortization of $3,190,000 and $2,622,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 5.2 years as of September 30, 2017 and December 31, 2016)3,150,000
 4,206,000
Customer relationships (with a weighted average remaining life of 20.0 years as of September 30, 2017)(1)2,840,000
 —
Internally developed technology and software (with a weighted average remaining life of 5.0 years as of September 30, 2017)(1)470,000
 —
Unamortized intangible assets:   
Certificates of need81,967,000
 76,142,000
Trade names30,787,000
 30,267,000
Purchase option assets(2)
2,754,000
 14,208,000
 $182,639,000
 $200,827,000
___________
(1)In September 2017, we, through a majority-owned subsidiary of Trilogy, acquired a pharmaceutical business. See Note 17, Business Combinations, for a further discussion.
(2)Under certain leases of our leased integrated senior health campuses, in which we are the lessee, we have the right to acquire the properties at varying dates in the future and at our option. We estimate the fair value of these purchase option assets by discounting the difference between the applicable property’s acquisition date fair value and an estimate of its future option price. We do not amortize the resulting intangible asset over the term of the lease, but rather adjust the recognized value of the asset upon purchase. In 2017, we exercised the right to acquire several leased facilities and the value of the purchased option assets utilized was $11,454,000. See Note 3, Real Estate Investments, Net — Acquisitions in 2017 — 2017 Acquisitions of Previously Leased Real Estate Investments, for a further discussion.
Amortization expense for the three months ended September 30, 2017 and 2016 was $7,205,000 and $53,495,000, respectively, which included $329,000 and $414,000, respectively, of amortization recorded against real estate revenue for above-market leases and $35,000 and $36,000, respectively, of amortization recorded to rental expenses for leasehold interests in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
Amortization expense for the nine months ended September 30, 2017 and 2016 was $27,761,000 and $163,378,000, respectively, which included $1,056,000 and $1,182,000, respectively, of amortization recorded against real estate revenue for above-market leases and $106,000 and $106,000, respectively, of amortization recorded to rental expenses for leasehold interests in our accompanying condensed consolidated statements of operations and comprehensive income (loss).

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The aggregate weighted average remaining life of the identified intangible assets was 15.3 years and 12.9 years as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, estimated amortization expense on the identified intangible assets for the three months ending December 31, 2017 and for each of the next four years ending December 31 and thereafter was as follows:
Year Amount
2017 $4,562,000
2018 9,153,000
2019 7,193,000
2020 5,937,000
2021 5,341,000
Thereafter 34,945,000
  $67,131,000
6. Other Assets, Net
Other assets, net consisted of the following as of September 30, 20172020 and December 31, 2016:2019:
September 30,
2020		December 31,
2019
Deferred rent receivablesDeferred rent receivables$37,747,000 $33,205,000 
Prepaid expenses, deposits and other assetsPrepaid expenses, deposits and other assets17,831,000 26,816,000 
InventoryInventory19,936,000 23,872,000 
Investments in unconsolidated entitiesInvestments in unconsolidated entities17,809,000 20,176,000 
Deferred tax assets, net(1)Deferred tax assets, net(1)17,864,000 13,315,000 
Lease commissions, net of accumulated amortization of $3,007,000 and $2,201,000 as of September 30, 2020 and December 31, 2019, respectivelyLease commissions, net of accumulated amortization of $3,007,000 and $2,201,000 as of September 30, 2020 and December 31, 2019, respectively11,441,000 10,794,000 
Deferred financing costs, net of accumulated amortization of $4,631,000 and $2,138,000 as of September 30, 2020 and December 31, 2019, respectively(2)Deferred financing costs, net of accumulated amortization of $4,631,000 and $2,138,000 as of September 30, 2020 and December 31, 2019, respectively(2)7,724,000 8,137,000 
Lease inducement, net of accumulated amortization of $1,404,000 and $1,140,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 10.2 years and 10.9 years as of September 30, 2020 and December 31, 2019, respectively)Lease inducement, net of accumulated amortization of $1,404,000 and $1,140,000 as of September 30, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 10.2 years and 10.9 years as of September 30, 2020 and December 31, 2019, respectively)3,596,000 3,860,000 
September 30,
2017
 
December 31,
2016
$133,948,000 $140,175,000 
Prepaid expenses, deposits and other assets$21,981,000
 $16,002,000
Investments in unconsolidated entities18,639,000
 20,057,000
Inventory16,337,000
 17,266,000
Deferred rent receivables15,978,000
 11,804,000
Deferred tax assets, net(1)10,230,000
 8,295,000
Deferred financing costs, net of accumulated amortization of $6,347,000 and $3,519,000 as of September 30, 2017 and December 31, 2016, respectively(2)7,553,000
 9,624,000
Lease commissions, net of accumulated amortization of $471,000 and $175,000 as of September 30, 2017 and December 31, 2016, respectively5,418,000
 3,834,000
Lease inducement, net of accumulated amortization of $351,000 and $88,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 13.3 years and 14.0 years as of September 30, 2017 and December 31, 2016, respectively)4,649,000
 4,912,000
$100,785,000
 $91,794,000
___________
(1)
(1)See Note 16, Income Taxes, for a further discussion.
(2)
In accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03, and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, or ASU 2015-15, deferred financing costs only include costs related to our lines of credit and term loans.
Amortization expense on lease commissions for the three months ended September 30, 2017a further discussion.
(2)Deferred financing costs only include costs related to our lines of credit and 2016 was $127,000term loans. See Note 8, Lines of Credit and $51,000, respectively, and for the nine months ended September 30, 2017 and 2016 was $306,000 and $99,000, respectively. Term Loans.
Amortization expense on deferred financing costs of our lines of credit and term loans for the three months ended September 30, 20172020 and 20162019 was $978,000$955,000 and $902,000,$882,000, respectively, and for the nine months ended September 30, 20172020 and 20162019 was $2,828,000$2,488,000 and $2,549,000,$2,882,000, respectively. Amortization expense on deferred financing costs ofon our lines of credit and term loans is recorded to interest expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Amortization expense on lease inducement for both the three months ended September 30, 2020 and 2019 was $88,000, and for both the nine months ended September 30, 20172020 and 2019 was $88,000 and $263,000, respectively. For the three and nine months ended September 30, 2016, we did not incur any amortization expense on lease inducement.$264,000. Amortization expense on lease inducement is recorded against real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income (loss).

Investments in unconsolidated entities primarily represents our investment in RHS Partners, LLC, or RHS, a privately-held company that operates 16 integrated senior health campuses, 3 of which are also owned by RHS. Our effective ownership of RHS was 33.8% as of both September 30, 2020 and December 31, 2019. As of September 30, 2020 and December 31, 2019, we had a receivable of $3,128,000 and $5,133,000, respectively, due from RHS, which is included in accounts and other receivables, net, in our accompanying condensed consolidated balance sheets. The following is summarized financial information of our investments in unconsolidated entities:
September 30, 2020December 31, 2019
RHSOtherTotalRHSOtherTotal
Balance Sheet Data:
Total assets$283,049,000 $17,188,000 $300,237,000 $278,297,000 $17,022,000 $295,319,000 
Total liabilities$260,526,000 $18,011,000 $278,537,000 $251,283,000 $17,245,000 $268,528,000 
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Three Months Ended September 30,
20202019
RHSOtherTotalRHSOtherTotal
Statements of Operations Data:
Revenues$31,207,000 $3,613,000 $34,820,000 $35,669,000 $2,954,000 $38,623,000 
Grant (loss) income(948,000)30,000 (918,000)0 0 0 
Expenses(35,414,000)(4,514,000)(39,928,000)(36,630,000)(3,637,000)(40,267,000)
Net loss$(5,155,000)$(871,000)$(6,026,000)$(961,000)$(683,000)$(1,644,000)
Nine Months Ended September 30,
20202019
RHSOtherTotalRHSOtherTotal
Statements of Operations Data:
Revenues$95,733,000 $10,707,000 $106,440,000 $106,099,000 $4,030,000 $110,129,000 
Grant income5,300,000 30,000 5,330,000 0 0 0 
Expenses(105,524,000)(13,037,000)(118,561,000)(108,604,000)(5,114,000)(113,718,000)
Net loss$(4,491,000)$(2,300,000)$(6,791,000)$(2,505,000)$(1,084,000)$(3,589,000)
7. Mortgage Loans Payable, Net
MortgageAs of September 30, 2020 and December 31, 2019, mortgage loans payable were $638,584,000$823,594,000 ($615,346,000, including800,170,000, net of discount/premium and deferred financing costs, net)costs) and $517,057,000$816,217,000 ($495,717,000, including792,870,000, net of discount/premium and deferred financing costs, net) as of September 30, 2017 and December 31, 2016,costs), respectively. As of September 30, 2017,2020, we had 4660 fixed-rate mortgage loans payable and four11 variable-rate mortgage loans payable with effective interest rates ranging from 2.45% to 7.17%5.25% per annum based on interest rates in effect as of September 30, 20172020 and a weighted average effective interest rate of 4.00%3.60%. As of December 31, 2016,2019, we had 3158 fixed-rate mortgage loans payable and six7 variable-rate mortgage loans payable with effective interest rates ranging from 2.45% to 6.72%6.21% per annum based on interest rates in effect as of December 31, 20162019 and a weighted average effective interest rate of 4.41%3.85%. We are required by the terms of certain loan documents to meet certain reporting requirements and covenants, such as net worth ratios, fixed charge coverage ratio,ratios and leverage ratioratios.
Mortgage loans payable, net consisted of the following as of September 30, 2020 and reporting requirements.December 31, 2019:
On May 12, 2017,
September 30,
2020		December 31,
2019
Total fixed-rate debt$722,743,000 $714,786,000 
Total variable-rate debt100,851,000 101,431,000 
Total fixed- and variable-rate debt823,594,000 816,217,000 
Less: deferred financing costs, net(10,060,000)(9,362,000)
Add: premium228,000 304,000 
Less: discount(13,592,000)(14,289,000)
Mortgage loans payable, net$800,170,000 $792,870,000 
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The following table reflects the changes in the carrying amount of mortgage loans payable, net for the nine months ended September 30, 2020 and 2019:
Nine Months Ended September 30,
20202019
Beginning balance$792,870,000 $688,262,000 
Additions:
Borrowings under mortgage loans payable59,033,000 182,417,000 
Amortization of deferred financing costs426,000 1,187,000 
Amortization of discount/premium on mortgage loans payable621,000 502,000 
Deductions:
Scheduled principal payments on mortgage loans payable(49,056,000)(59,706,000)
Early payoff of mortgage loans payable(2,601,000)(6,286,000)
Deferred financing costs(1,123,000)(1,119,000)
Ending balance$800,170,000 $805,257,000 
For both the three and nine months ended September 30, 2019, we paid offincurred a loss on the extinguishment of a mortgage loan payable for the principal amount of $93,150,000 that was due to mature in June 2018. We incurred a total loss on such debt extinguishment of $1,432,000, primarily related to the write-off of unamortized deferred financing costs and prepayment penalties,$1,393,000, which is recorded to interest expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Such loss was primarily related to the write-off of unamortized debt discount and prepayment penalties of a mortgage loan payable that was due to mature in November 2047. The sourcessource of funds for the pay-off and transaction costs were primarilypayoff was from (i) new Housing and Urban Development loans of approximately $72,019,000; and (ii) $21,600,000 in additional borrowings under the 2019 Trilogy PropCo Line of Credit Facility, as defined in Note 8, Lines of Credit and Term Loans.
Mortgage loans payable, net consisted of For both the following as of September 30, 2017three and December 31, 2016:
 
September 30,
2017
 
December 31,
2016
Total fixed-rate debt$528,850,000
 $313,265,000
Total variable-rate debt109,734,000
 203,792,000
Total fixed- and variable-rate debt638,584,000
 517,057,000
Less: deferred financing costs, net(1)(6,616,000) (3,861,000)
Add: premium1,302,000
 1,678,000
Less: discount(17,924,000) (19,157,000)
Mortgage loans payable, net$615,346,000
 $495,717,000
___________
(1)In accordance with ASU 2015-03 and ASU 2015-15, deferred financing costs only include costs related to our mortgage loans payable.
The following table shows the changes in the carrying amount of mortgage loans payable, net for the nine months ended September 30, 2017 and 2016:
 Nine Months Ended September 30,
 2017 2016
Beginning balance$495,717,000
 $295,270,000
Additions:   
Borrowings on mortgage loans payable230,452,000
 3,316,000
Assumptions of mortgage loans payable, net—
 191,320,000
Amortization of deferred financing costs2,060,000
 577,000
Amortization of discount/premium on mortgage loans payable858,000
 272,000
Deductions:   
Scheduled principal payments on mortgage loans payable(6,110,000) (4,223,000)
Settlement of mortgage loans payable(102,815,000) —
Deferred financing costs(4,816,000) (3,566,000)
Ending balance$615,346,000
 $482,966,000

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mortgage loans in 2020.
As of September 30, 2017,2020, the principal payments due on our mortgage loans payable for the three months ending December 31, 20172020 and for each of the next four years ending December 31 and thereafter were as follows:
YearAmount
2020$3,381,000 
202173,372,000 
202262,595,000 
202360,320,000 
202476,932,000 
Thereafter546,994,000 
$823,594,000 
Year Amount
2017 $2,349,000
2018 88,096,000
2019 26,611,000
2020 33,859,000
2021 13,234,000
Thereafter 474,435,000
  $638,584,000
8. Lines of Credit and Term Loans
20142019 Corporate Line of Credit
On August 18, 2014,January 25, 2019, we, through our operating partnership and certain of our subsidiaries, or the subsidiary guarantors, entered into a credit agreement, or the 20142019 Corporate Credit Agreement, with Bank of America, N.A., or Bank of America, KeyBank, National Association, or KeyBank, and a syndicate of other banks to obtain a revolving line of credit with an aggregate maximum principal amount of $60,000,000, or the 2014 Corporate Line of Credit. On August 18, 2014, we also entered into separate revolving notes, or the 2014 Corporate Revolving Notes, with each of Bank of America and KeyBank, whereby we promised to pay the principal amount of each revolving loan and accrued interest to the respective lender or its registered assigns, in accordance with the terms and conditions of the 2014 Corporate Credit Agreement. On November 30, 2015, we entered into a Commitment Increase Amendment Agreement with Bank of America, KeyBank and the subsidiary guarantors named therein, to increase the aggregate maximum principal amount of the 2014 Corporate Line of Credit to $200,000,000, subject to certain maximum borrowing conditions. On February 3, 2016, we, through our operating partnership, terminated the 2014 Corporate Credit Agreement, as amended, and the 2014 Corporate Revolving Notes with each of Bank of America and KeyBank and entered into the 2016 Corporate Line of Credit as described below. We currently do not have any obligations under the 2014 Corporate Credit Agreement or the 2014 Corporate Revolving Notes.
2016 Corporate Line of Credit
On February 3, 2016, we, through the subsidiary guarantors, entered into a credit agreement, or the 2016 Corporate Credit Agreement, with Bank of America, as administrative agent, a swing line lender and a letter of credit issuer; KeyBank, National Association, or KeyBank, as syndication agent, a swing line lender and a letter of credit issuer; Citizens Bank, National Association, or Citizens Bank, as a syndication agent, a swing line lender, a letter of credit issuer, a joint lead arranger and joint bookrunner; and a syndicate of other banks, as lenders, to obtain a revolving line of credit facility with an aggregate maximum principal amount of $300,000,000,$630,000,000, or the 20162019 Corporate RevolvingLine of Credit. The 2019 Corporate Line of Credit Facility, andconsists of a term loansenior unsecured revolving credit facility in the aggregate amount of $200,000,000, or$150,000,000 and a senior unsecured term loan facility in the 2016 Corporate Term Loan Facility, and together with the 2016 Corporate Revolving Credit Facility, the 2016 Corporate Lineaggregate amount of Credit. Pursuant to the terms of the 2016 Corporate Credit Agreement, we$480,000,000. We may borrowobtain up to $25,000,000 in the form of standby letters of credit and up to $25,000,000 in the form of swing line loans. The 2016 Corporate Line of Credit matures on February 3, 2019, and may be extended for one 12-month period during the term of the 2016 Corporate Credit Agreement, subject to satisfaction of certain conditions, including payment of an extension fee.
On February 3, 2016, we also entered into separate revolving notes, or the 2016 Corporate Revolving Notes, and separate term notes, or the Term Notes, with each of Bank of America, KeyBank and a syndicate of other banks.
The maximum principal amount of the 2016 Corporate Line of Credit can be increased by up to $500,000,000, for a total principal amount of $1,000,000,000, subject to: (i) the terms of the 2016 Corporate Credit Agreement; and (ii) such additional financing being offered and provided by existing lenders or new lenders under the 2016 Corporate Credit Agreement. On August 3, 2017,July 28, 2020, we entered into a First Amendment Waiver and Commitment Increaseto the 2019 Corporate Credit Agreement, or the Credit Agreement Amendment, with Bank of America, KeyBank,America; KeyBank; Citizens Bank; and the lenders named therein, to amend the 2016 Corporate Credit Agreement.a syndicate of other banks, as lenders. The material terms of the Credit Agreement Amendment provide for: (i) an increase infor, including among other things, the 2016 Corporate Term Loan Facility in an amount equal to $50,000,000; (ii)following, with capitalized terms having the establishment of an additional capitalization rate of 8.75% for any Real Property Asset,meaning as defined in the 20162019 Corporate Credit Agreement, with mixed uses consisting of both assisted living and independent living properties and skilled nursing facilities, but specifically excluding medical office buildings and life science buildings; (iii) a revisionunless otherwise defined herein: (i) revisions to the definition of Term Loan Commitment, as defined in the 2016 Corporate Credit Agreement, to reflect the increase in the Term Loan Facility and specify that the aggregate principal amount of the Term Loan Commitments of all of the Term Loan Lenders, as defined in the

financial covenant
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2016 Corporate Credit Agreement, as in effectcalculations to exclude the assets, liabilities and operating performance of our indirect, majority-owned subsidiary Trilogy REIT Holdings, LLC, or Trilogy REIT Holdings, or any subsidiary thereof; (ii) the inclusion of a covenant modification period beginning on June 30, 2020 continuing through the effectiveearlier of (a) June 30, 2021, or (b) the date ofwe deliver written notice to end the Amendment is $250,000,000; (iv) an agreement by each Term Loan Lender severally, but not jointly, to fund its pro rata share of the Initial Term Loan, as defined in the Amendment, and Incremental Term Loan, as defined in the Amendment,covenant modification period, subject to certain conditions, or the terms and conditions set forth in the Amendment; (v) the obligation of the Credit Parties, as defined in the 2016 Corporate Credit Agreement, to cause theFirst Amendment Period; (iii) an increased Consolidated Secured Leverage Ratio as defined in the 2016 Corporate Credit Agreement, as of the end of any fiscal quarter, to be equal to or less than 40.0%;65.0% during the First Amendment Period; (iv) changes to the applicable interest rate based on revisions to the Consolidated Leverage Ratio pricing grid; (v) an increased Consolidated Unencumbered Leverage Ratio equal to or less than 65.0% during the First Amendment Period; (vi) revisions to the Lenders’ waiverConsolidated Tangible Net Worth and EBITDAR coverage requirements; (vii) the inclusion of a LIBOR floor, provided that the Term Loan Hedged Portion of the notice requirementTerm Loans shall not be subject to such floor; (viii) our operating partnership to pledge the equity interests in each direct and indirect subsidiary that owns an unencumbered asset; (ix) the removal of swing line loans; (x) updates regarding restrictions and limitations on certain investments during the change in name and form of organization of certain subsidiary guarantors, as set forth in the Amendment; and (vii) the addition of Bankremainder of the West, or New Lender,term of the 2019 Corporate Line of Credit; (xi) clarifications regarding events triggering a Fundamental Change; (xii) a restriction on the payment of distributions and share repurchases during the First Amendment Period; and (xiii) a lender fee. Notwithstanding the foregoing, the Credit Agreement Amendment provides that we can opt out of these modifications based on our written irrevocable election to end the First Amendment Period. Except as a party tomodified by the 2016Credit Agreement Amendment, the material terms of the 2019 Corporate Credit Agreement, as amended, remain in full force and a Term Loan Lender and Lender, as defined in the 2016 Corporate Credit Agreement, and New Lender’s agreement to be bound by all terms, provisions and conditions applicable to Lenders contained in the 2016 Corporate Credit Agreement. As a resulteffect.
The maximum principal amount of the Amendment, our aggregate borrowing capacity under the 20162019 Corporate Line of Credit wasmay be increased by up to $550,000,000.
Until such time$370,000,000, for a total principal amount of $1,000,000,000, subject to: (i) the terms of the 2019 Corporate Credit Agreement, as we or our operating partnership have obtained two investment grade ratings from anyamended; and (ii) at least five business days’ prior written notice to Bank of Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and/or Fitch Ratings, loans under the 2016America. The 2019 Corporate Line of Credit bearmatures on January 25, 2022, and may be extended for 1 12-month period during the term of the 2019 Corporate Credit Agreement, as amended, subject to satisfaction of certain conditions, including payment of an extension fee.
At our option, the 2019 Corporate Line of Credit bears interest at per annum rates equal to at our option, either:(a) (i)(a) the Eurodollar Rate, as defined in the 20162019 Corporate Credit Agreement, as amended, plus (b) in the case of revolving loans,(ii) a margin ranging from 1.55%1.85% to 2.20% per annum2.80% based on our and our consolidated subsidiaries’ consolidated leverage ratio andConsolidated Leverage Ratio, as defined in the case of term loans, a margin ranging from 1.50% to 2.10% per annum based on our and our consolidated subsidiaries’ consolidated leverage ratio;2019 Corporate Credit Agreement, as amended, or (ii)(a)(b) (i) the greatestgreater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate, (as defined in the 2016 Corporate Credit Agreement, as amended) plus 0.50% per annum, (3) the one-month Eurodollar Rate (as defined in the 2016 Corporate Credit Agreement, as amended) plus 1.00% per annum and (4) 0.00%, plus (b) in the case of revolving loans, a margin ranging from 0.55% to 1.20% per annum based on our consolidated leverage ratio and in the case of term loans, a margin ranging from 0.50% to 1.10% per annum based on our consolidated leverage ratio.
After such time as we or our operating partnership have obtained two investment grade ratings from any of Moody’s Investors Service, Inc., Standard & Poor’s Rating Services and/or Fitch Ratings and submitted a written election to the administrative agent, loans under the 2016 Corporate Line of Credit shall bear interest at per annum rates equal to, at the option of our operating partnership, either: (i)(a) the Eurodollar Rate, as defined in the 20162019 Corporate Credit Agreement, as amended, plus (b) in the case of revolving loans, a margin ranging from 0.925% to 1.70% per annum based on our or our operating partnership’s debt ratings and in the case of term loans, a margin ranging from 1.00% to 1.95% per annum based on our or our operating partnership’s debt ratings; or (ii)(a) the greatest of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate (as defined in the 2016 Corporate Credit Agreement, as amended) plus 0.50% per annum,, (3) the one-month Eurodollar Rate (as defined in the 2016 Corporate Credit Agreement, as amended) plus 1.00% per annum, and (4) 0.00%, plus (b) in the case of revolving loans,(ii) a margin ranging from 0.00%0.85% to 0.70% per annum1.80% based on our or our operating partnership’s debt ratings and in the case of term loans, a margin ranging from 0.00% to 0.95% per annum based on our or our operating partnership’s debt ratings.Consolidated Leverage Ratio. Accrued interest underon the 20162019 Corporate Line of Credit Agreement, as amended, is payable monthly.
The loans may be repaid in whole or in part without prepayment premium or penalty, subject to certain conditions. We are required to pay a fee on the unused portion of the lenders’ commitments under the 2016 Corporate Revolving Credit Facility in an amount equal to 0.30% per annum on the actual average daily unused portion of the available commitments if the average daily amount of actual usage is less than 50.0% and in an amount equal to 0.20% per annum on the actual average daily unused portion of the available commitments if the actual average daily usage is greater than 50.0%. Such fee is payable quarterly in arrears. We are also required to pay a fee on the unused portion of the lenders’ commitments under the 2016 Corporate Term Loan Facility in an amount equal to: (i) 0.25% per annum multiplied by (ii) the actual daily amount of the unused Term Loan Commitments, as defined in the 20162019 Corporate Credit Agreement, as amended, duringat a per annum rate equal to 0.20% if the period foraverage daily used amount is greater than 50.00% of the commitments and 0.25% if the average daily used amount is less than or equal to 50.00% of the commitments, which payment is made. The unused fee shall be measured and payable on Term Loan Facility is payablea quarterly in arrears.
The 2016 Corporate Credit Agreement, as amended, contains various affirmative and negative covenants that are customary for credit facilities and transactions of this type, including limitations on the incurrence of debt by our operating partnership and its subsidiaries and limitations on secured recourse indebtedness.basis.
As of both September 30, 20172020 and December 31, 2016,2019, our aggregate borrowing capacity under the 20162019 Corporate Line of Credit was $550,000,000 and $500,000,000, respectively.$630,000,000. As of September 30, 20172020 and December 31, 2016,2019, borrowings outstanding under the 20162019 Corporate Line of Credit totaled $432,000,000$573,500,000 and $391,000,000,$557,000,000, respectively, and $118,000,000 and $109,000,000, respectively, remained available. As of September 30, 2017 and December 31, 2016, the weighted average interest rate on such borrowings outstanding was 3.01%2.71% and 2.53%3.83% per annum, respectively.
2019 Trilogy Credit Facility
On September 5, 2019, we, through Trilogy RER, LLC and certain subsidiaries of Trilogy OpCo, LLC, Trilogy RER, LLC, and Trilogy Pro Services, LLC, or the 2019 Trilogy Co-Borrowers, entered into an amended and restated loan agreement, or the 2019 Trilogy Credit Agreement, with KeyBank, as administrative agent; CIT Bank, N.A., respectively, per annum.

as revolving agent; Regions Bank, as syndication agent; KeyBanc Capital Markets, Inc., as co-lead arranger and co-book runner; Regions Capital Markets, as co-lead arranger and co-book runner; Bank of America, as co-documentation agent; The Huntington National Bank, as co-documentation agent; and a syndicate of other banks, as lenders named therein, to amend and restate the terms of an existing credit agreement in order to obtain a senior secured revolving credit facility with an aggregate maximum principal amount of $360,000,000, consisting of: (i) a $325,000,000 secured revolver supported by real estate assets and ancillary business cash flow and (ii) a $35,000,000 accounts receivable revolving credit facility supported by eligible accounts receivable, or the 2019 Trilogy Credit Facility. For the nine months ended September 30, 2019, as a result of the termination of the previous credit agreement, we incurred a loss on extinguishment of $786,000, which is recorded to interest expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss) and was primarily related to the write-off of unamortized deferred financing fees. We may obtain up to $35,000,000 in the form of swing line loans and up to $15,000,000 in the form of standby letters of credit under the 2019 Trilogy Credit Facility.
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Trilogy PropCo Line of Credit
On December 1, 2015, in connection with the acquisition of Trilogy, we, through Trilogy PropCo Finance, LLC, a Delaware limited liability company and an indirect subsidiary of Trilogy (as the surviving entity of a merger with Trilogy Finance Merger Sub, LLC, or Trilogy PropCo Parent), and certain of its subsidiaries, or the Trilogy Co-Borrowers, and, together with Trilogy PropCo Parent, the Trilogy PropCo Borrowers, entered into a loan agreement, or the Trilogy PropCo Credit Agreement, with KeyBank, as administrative agent; Regions Bank, as syndication agent; and a syndicate of other banks, as lenders, to obtain a line of credit with an aggregate maximum principal amount of $300,000,000, or the Trilogy PropCo Line of Credit.
On December 1, 2015, we also entered into separate revolving notes with each of KeyBank and Regions Bank, whereby we promised to pay the principal amount of each revolving loan and accrued interest to the respective lender or its registered assigns, in accordance with the terms and conditions of the Trilogy PropCo Credit Agreement. The proceeds of the loans made under the2019 Trilogy PropCo Line of Credit Facility may be used for working capital, capital expenditures, acquisition of properties and fee interests in leasehold propertiesacquisitions, debt repayment and general corporate purposes. The maximum principal amount of the 2019 Trilogy PropCo LineCredit Facility may be increased by up to $140,000,000, for a total principal amount of $500,000,000, subject to: (i) the terms of the 2019 Trilogy Credit has a four-year term, maturingAgreement and (ii) at least 10 business days’ prior written notice to KeyBank. The 2019 Trilogy Credit Facility matures on December 1, 2019, unlessSeptember 5, 2023 and may be extended for a one-year1 12-month period during the term of the 2019 Trilogy Credit Agreement subject to the satisfaction of certain conditions, including payment of an extension fee, or otherwise terminated in accordance withfee.
At our option, the terms thereunder. Availability of the total commitment under the2019 Trilogy PropCo Line of Credit is subjectFacility bears interest at per annum rates equal to a borrowing base based on, among other things, the appraised value of certain real estate and villa units constructed on such real estate.
Provided that no default or event of default has occurred and subject to certain terms and conditions set forth(a) LIBOR plus 2.75% for LIBOR Rate Loans, as defined in the 2019 Trilogy PropCo Credit Agreement, and (b) for Base Rate Loans, as amended,defined in the 2019 Trilogy PropCo Borrowers shall haveCredit Agreement, 1.75% plus the option, at any time andgreater of: (i) the fluctuating annual rate of interest announced from time to time beforeby KeyBank as its prime rate, (ii) 0.50% above the maturity date, to requestFederal Funds Effective Rate, as defined in the increase of the total maximum principal amount by $100,000,000 to $400,000,000. See Note 21, Subsequent Event — Amendment to2019 Trilogy PropCo Credit Agreement, for a further discussion.
Atand (iii) 1.00% above the Trilogy PropCo Borrowers’ option, the Trilogy PropCo Line of Credit bears interest at a floating rate based on an adjusted London Interbank Offered Rate, or LIBOR, plus an applicable margin of 4.25% or an alternate base rate plus an applicable margin of 3.25%. In addition to payingone-month LIBOR. Accrued interest on the outstanding principal under the2019 Trilogy PropCo Line of Credit the Trilogy PropCo Borrowers are required to pay an unused fee to the lenders in respect of the unutilized commitments at a rate equal to an initial rate of 0.25% per annum, subject to adjustment depending on usage. Outstanding amounts under the Trilogy PropCo Line of CreditFacility is payable monthly. The loans may be prepaid,repaid in whole or in part at any time, without penaltyprepayment fees or premium,penalty, subject to customary breakage costs.
Thecertain conditions. We are required to pay fees on the unused portion of the lenders’ commitments under the 2019 Trilogy PropCoCredit Facility, with respect to any day during a calendar quarter, at a per annum rate equal to (a) 0.15% if the sum of the Aggregate Real Estate Revolving Credit Obligations, as defined in the 2019 Trilogy Credit Agreement, outstanding on such day is greater than 50.00% of the commitments or 0.20% if the sum of the Aggregate Real Estate Revolving Credit Obligations on such day is less than or equal to 50.00% of the commitments, and (b) 0.15% if the sum of the Aggregate A/R Revolving Credit Obligations, as amended, contains various affirmativedefined in the 2019 Trilogy Credit Agreement, outstanding on such day is greater than 50.00% of the commitments or 0.20% if the sum of the Aggregate A/R Revolving Credit Obligations on such day is less than or equal to 50.00% of the commitments, which fees shall be measured and negative covenants that are customary for credit facilitiespayable on a quarterly basis.
As of both September 30, 2020 and transactions of this type, including incurrence of debt and limitations on secured recourse indebtedness.
OurDecember 31, 2019, our aggregate borrowing capacity under the 2019 Trilogy PropCo Line of Credit Facility was $300,000,000 as of September 30, 2017 and December 31, 2016.$360,000,000. As of September 30, 20172020 and December 31, 2016,2019, borrowings outstanding under the 2019 Trilogy PropCo Line of Credit Facility totaled $155,376,000$282,134,000 and $238,776,000,$258,879,000, respectively, and $144,624,000 and $61,224,000, respectively, remained available. Thethe weighted average interest rate on such borrowings outstanding was 2.90% and 4.52% per annum, respectively.
Both the 2019 Corporate Credit Agreement, as amended, and the 2019 Trilogy Credit Agreement contain various financial covenants. We were in compliance with such covenants as of September 30, 20172020. The extent and December 31, 2016 was 5.48% and 4.87%, respectively, per annum.
Trilogy OpCo Line of Credit
On March 21, 2016, we, through Trilogy Healthcare Holdings, Inc., a Delaware corporation and a direct subsidiary of Trilogy, and certain of its subsidiaries, or the Trilogy OpCo Borrowers, entered into a credit agreement, or the Trilogy OpCo Credit Agreement, with Wells Fargo Bank, National Association, as administrative agent and lender; and a syndicate of other banks, as lenders, to obtain a $42,000,000 secured revolving credit facility, or the Trilogy OpCo Line of Credit. The Trilogy OpCo Line of Credit is secured primarily by residents’ receivablesseverity of the Trilogy OpCo Borrowers. The termsCOVID-19 pandemic on our business continues to evolve and any continued future deterioration of operations in excess of management's projections as a result of COVID-19 could impact future compliance with these financial covenants. If any future financial covenants are violated, we anticipate seeking a waiver or amending the Trilogy OpCo Line of Credit Agreement provided for a one-time increase during the term of the agreement by updebt covenants with our lenders when and if such event should occur. However, there can be no assurances that management will be able to $18,000,000, for a maximum principal amount of $60,000,000, subject to certain conditions. On April 1, 2016, we increased the aggregate maximum principal amount of the Trilogy OpCo Line of Credit to $60,000,000.effectively achieve such plans.
The Trilogy OpCo Line of Credit has a five-year term, maturing on March 21, 2021, unless otherwise terminated in accordance with the terms thereunder. The Trilogy OpCo Line of Credit bears interest at a floating rate based on, at the Trilogy OpCo Borrowers’ option, an adjusted LIBOR plus an Applicable Margin relative to LIBOR Rate Loans, or a Base Rate plus an Applicable Margin relative to Base Rate Loans, as such terms are defined and in accordance with the terms of the Trilogy OpCo Line of Credit. Accrued interest under the Trilogy Opco Line of Credit is payable monthly.

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In addition to paying interest on the outstanding principal under the Trilogy OpCo Line of Credit, the Trilogy OpCo Borrowers are required to pay an unused fee in an amount equal to 0.50% per annum times the average monthly unutilized commitment. The unused fee is payable monthly in arrears, commencing on the first day of each month from and after the closing date up to the first day of the month prior to the date on which the obligations are paid in full. If the commitment is terminated prior to the second anniversary of the closing date, a prepayment premium of 1.00% of the total commitment applies.
The Trilogy OpCo Credit Agreement, as amended, contains customary events of default, covenants and other terms, including, among other things, restrictions on the payment of dividends and other distributions, incurrence of indebtedness, creation of liens and transactions with affiliates. Availability of the total commitment under the Trilogy OpCo Line of Credit is subject to a borrowing base based on, among other things, the eligible accounts receivable outstanding of the Trilogy OpCo Borrowers.
Our aggregate borrowing capacity under the Trilogy OpCo Line of Credit was $60,000,000 as of September 30, 2017 and December 31, 2016, subject to certain terms and conditions. As of September 30, 2017 and December 31, 2016, borrowings outstanding under the Trilogy OpCo Line of Credit totaled $5,659,000 and $19,541,000, respectively, and $54,341,000 and $40,459,000, respectively, remained available. The weighted average interest rate on borrowings outstanding as of September 30, 2017 and December 31, 2016 was 5.22% and 4.53%, respectively, per annum.
9. Derivative Financial Instruments
Consistent with ASC Topic 815, Derivatives and Hedging, or ASC Topic 815, weWe record derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability measured at fair value. ASC Topic 815 permits special hedge accounting if certain requirements are met. Hedge accounting allows for gains and losses on derivatives designated as hedges to be offset by the change in value of the hedged item or items or to be deferred in other comprehensive income (loss).
The following table lists the derivative financial instruments held by us as of September 30, 20172020 and December 31, 2016:
2019, which are included in other assets, net, or security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets:
   Fair ValueFair Value
Instrument Notional Amount Index Interest Rate Maturity Date 
September 30,
2017
 
December 31,
2016
InstrumentNotional AmountIndexInterest RateMaturity DateSeptember 30,
2020		December 31,
2019
Cap $17,075,000
 one month LIBOR 2.25% 02/01/18 $—
 $—
Cap$20,000,000 one month LIBOR3.00%09/23/21$0 $0 
Swap 140,000,000
 one month LIBOR 0.82% 02/03/19 1,334,000
 1,355,000
Swap250,000,000 one month LIBOR2.10%01/25/22(6,431,000)(2,821,000)
Swap 60,000,000
 one month LIBOR 0.78% 02/03/19 598,000
 627,000
Swap130,000,000 one month LIBOR1.98%01/25/22(3,138,000)(1,150,000)
Swap 50,000,000
 one month LIBOR 1.39% 02/03/19 94,000
 —
Swap100,000,000 one month LIBOR0.20%01/25/22(73,000)0 
 $267,075,000
 $2,026,000

$1,982,000
$(9,642,000)$(3,971,000)
As of September 30, 20172020 and December 31, 2016, none2019, 0ne of our derivativesderivative financial instruments were designated as hedges. Derivatives not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements of ASC Topic 815. Changes in the fair value of derivative financial instruments are recorded as a component of interest expense in gain or (loss) in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive income (loss). For the three months ended September 30, 20172020 and 2016,2019, we recorded $(59,000)$1,763,000 and $989,000,$(1,169,000), respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we recorded $44,000$(5,671,000) and $(54,000)$(5,846,000), respectively, as an a decrease/(increase) decrease to interest expense in our accompanying condensed consolidated statements of operations and comprehensive income (loss) related to the change in the fair value of our derivative financial instruments.
See Note 15, Fair Value Measurements, for a further discussion of the fair value of our derivative financial instruments.
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10. Identified Intangible Liabilities, Net
As of September 30, 2017 and December 31, 2016, identified intangible liabilities consisted of below-market leases of $1,708,000 and $2,216,000, respectively, net of accumulated amortization of $996,000 and $946,000, respectively. Amortization expense on below-market leases for the three months ended September 30, 2017 and 2016 was $146,000 and $189,000, respectively, and for the nine months ended September 30, 2017 and 2016 was $518,000 and $466,000, respectively. Amortization expense on below-market leases is recorded to real estate revenue in our accompanying condensed consolidated

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10. Identified Intangible Liabilities, Net
As of September 30, 2020 and December 31, 2019, identified intangible liabilities, net consisted of below-market leases of $416,000 and $663,000, respectively, net of accumulated amortization of $785,000 and $1,342,000, respectively. Amortization expense on below-market leases for the three months ended September 30, 2020 and 2019 was $64,000 and $91,000, respectively, and for the nine months ended September 30, 2020 and 2019 was $248,000 and $300,000, respectively, which is recorded to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
The weighted average remaining life of below-market leases was 4.92.7 years and 5.14.3 years as of September 30, 20172020 and December 31, 2016,2019, respectively. As of September 30, 2017,2020, estimated amortization expense on below-market leases for the three months ending December 31, 20172020 and for each of the next four years ending December 31 and thereafter was as follows:
YearAmount
2020$49,000 
2021180,000 
202289,000 
202371,000 
202427,000 
Thereafter0 
$416,000 
Year Amount
2017 $140,000
2018 482,000
2019 392,000
2020 263,000
2021 146,000
Thereafter 285,000
  $1,708,000
11. Commitments and Contingencies
Litigation
We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Environmental Matters
We follow a policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.
Other
Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business, which include calls/puts to sell/acquire properties. In our view, these matters are not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Impact of the COVID-19 Pandemic
The COVID-19 pandemic is dramatically impacting the United States and has resulted in an aggressive worldwide effort to contain the spread of the virus. These efforts have significantly and adversely disrupted economic markets and impacted commercial activity worldwide, including markets in which we own and/or operate properties, and the prolonged economic impact remains uncertain. In addition, the continuously evolving nature of the COVID-19 pandemic makes it difficult to ascertain the long-term impact it will have on real estate markets and our portfolio of investments. Considerable uncertainty still surrounds the COVID-19 pandemic and its effects on the population, as well as the effectiveness of any responses taken on an international, national and local level by government and public health authorities and businesses to contain and combat the outbreak and spread of the virus. In particular, government-imposed business closures and re-opening restrictions have dramatically impacted the operations of our real estate investments and our tenants across the country, such as creating declines in resident occupancy. Further, our senior housing — RIDEA facilities and integrated senior health campuses have also experienced dramatic increases and may continue to experience increases in costs to care for residents, particularly increased
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labor costs to maintain staffing levels to care for the aged population during this crisis, costs of COVID-19 testing of employees and residents and costs to procure the volume of personal protective equipment and other supplies required.
We have taken actions to strengthen our balance sheet and preserve liquidity in response to the COVID-19 pandemic. Since March 2020, we have postponed non-essential capital expenditures. In addition, in March 2020, we reduced stockholder distributions and partially suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders. In response to the continued uncertainty and adverse effects of the COVID-19 pandemic on our operations, in May 2020, we suspended all distribution payments, the Amended and Restated DRIP and our share repurchase plan for all stockholders. In addition, in an effort to further increase our liquidity, our advisor agreed to defer 50.0% of the asset management fees that it would otherwise be entitled to receive for services performed by our advisor or its affiliates from June 1, 2020 to November 30, 2020. See Note 14, Related Party Transactions, for a further discussion. We are continuously monitoring the impact of the COVID-19 pandemic on our business, residents, tenants, operating partners, managers, portfolio of investments and on the United States and global economies. The prolonged duration and impact of the COVID-19 pandemic has materially disrupted, and may continue to materially disrupt, our business operations and impact our financial performance. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Which May Influence Results of Operations, for a further discussion of the adverse impact of the COVID-19 pandemic to our business operations.
In addition to the government grants we recognized as of September 30, 2020 as discussed at Note 2, Summary of Significant Accounting Policies — Government Grants, we received approximately $52,322,000 of Medicare advance payments during the second quarter of 2020 through an expanded program of the CMS that was intended to expedite cash flow to qualified healthcare providers. Such advance payments were based upon a qualified healthcare provider’s estimate of Medicare services to be performed for up to three months in the future and are recovered by CMS from future Medicare claims submitted by the qualified healthcare provider at any time. However, any remaining unpaid balance is required to be recouped in accordance with CMS guidance issued in October 2020 such that recoupment will commence one year after the Medicare advance payments were issued. After the first year, Medicare will automatically recoup 25.0% of Medicare payments otherwise owed to the provider for 11 months. Thereafter, recoupment will increase to 50.0% for another six months. Any amounts of unutilized Medicare advance payments, which reflect funds received that are not applied to actual billings for Medicare services performed, will be repaid to CMS by the end of 2022. The amount of Medicare advance payments received as of September 30, 2020 is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets as we cannot currently estimate the future services to be performed and the amount of funds we will retain and/or return. Once our recoupment period commences in 2021, any Medicare advance payments retained for actual services performed and Medicare claims billed will be included in resident fees and services revenue in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
12. Redeemable Noncontrolling Interests
On January 15, 2013,As of both September 30, 2020 and December 31, 2019, our advisor made an initial capital contributionowned all of $2,000 to our operating partnership in exchange forthe 222 limited partnership units. Upon the effectiveness of the Advisory Agreement on February 26, 2014, Griffin-American Advisor becameunits outstanding in our advisor. operating partnership.As of both September 30, 20172020 and December 31, 2016,2019, we owned greater than a 99.99% general partnership interest in our operating partnership, and our advisor owned less than a 0.01% limited partnership interest in our operating partnership. As ourOur advisor Griffin-American Advisor is entitled to special redemption rights of its limited partnership units. The noncontrolling interest of our advisor in our operating partnership that has redemption features outside of our control is accounted for as a redeemable noncontrolling interest and is presented outside of permanent equity in our accompanying condensed consolidated balance sheets. See Note 14, Related Party Transactions — Liquidity Stage — Subordinated Participation Interest — Subordinated Distribution Upon Listing and Note 14, Related Party Transactions — Subordinated Distribution Upon Termination, for a further discussion of the redemption features of the limited partnership units.
OnAs of both September 30, 2020 and December 1, 2015,31, 2019, we, through Trilogy REIT Holdings, LLC, or Trilogy REIT Holdings, in which we indirectly hold a 70.0% ownership interest, pursuant to an equity purchase agreement with Trilogy and other seller parties thereto, completed the acquisition of approximately 96.7%owned 96.6% of the outstanding equity interests of Trilogy. Pursuant to the equity purchase agreement, at the closingAs of the acquisition,both September 30, 2020 and December 31, 2019, certain members of Trilogy’s pre-closing management retained a portion of the outstanding equity interests of Trilogy held by suchand certain members of an advisory committee to Trilogy’s pre-closing management, representing in the aggregateboard of directors owned approximately 3.3%3.4% of the outstanding equity interests of Trilogy. The noncontrolling interests held by Trilogy’s pre-

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closing managementsuch members have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets. As
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Table of September 30, 2017, TrilogyContents

GRIFFIN-AMERICAN HEALTHCARE REIT Holdings and certain members of Trilogy’s pre-closing management owned approximately 96.7% and 3.3% of Trilogy, respectively.III, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
We record the carrying amount of redeemable noncontrolling interests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and distributions or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the nine months ended September 30, 20172020 and 2016:2019:
Nine Months Ended September 30,
20202019
Beginning balance$44,105,000 $38,245,000 
Reclassification from equity585,000 585,000 
Distributions(439,000)(1,033,000)
Repurchase of redeemable noncontrolling interests(150,000)(400,000)
Fair value adjustment to redemption value(45,000)110,000 
Net income attributable to redeemable noncontrolling interests794,000 304,000 
Ending balance$44,850,000 $37,811,000 
 Nine Months Ended September 30,
 2017 2016
Beginning balance$31,507,000
 $22,987,000
Additions975,000
 2,295,000
Reclassification from equity585,000
 —
Repurchase of redeemable noncontrolling interests(59,000) —
Distributions(384,000) (198,000)
Fair value adjustment to redemption value1,341,000
 —
Net loss attributable to redeemable noncontrolling interests(613,000) —
Ending balance$33,352,000
 $25,084,000
13. Equity
Preferred Stock
Our charter authorizes us to issue 200,000,000 shares of our preferred stock, par value $0.01$0.01 per share. As of both September 30, 20172020 and December 31, 2016, no2019, 0 shares of preferred stock were issued and outstanding.
Common Stock
Our charter authorizes us to issue 1,000,000,000 shares of our common stock, par value $0.01 per share. On January 15, 2013,As of both September 30, 2020 and December 31, 2019, our advisor acquired owned 22,222 shares of our common stock, for total cash consideration of $200,000 and was admitted as our initial stockholder. We used the proceeds from the sale of shares of our common stock towhich our advisor to make an initial capital contribution to our operating partnership.acquired on January 15, 2013. On March 12, 2015, we terminated the primary portion of our initial public offering. We continued to offer shares of our common stock in our initial offering pursuant to the Initial DRIP, until the termination of the DRIP portion of our initial offering and deregistration of our initial offering on April 22, 2015.
On March 25, 2015, we filed a Registration Statement on Form S-3 under the Securities Act to register a maximum of $250,000,000 of additional shares of our common stock pursuant to the Secondary2015 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commenceWe commenced offering shares pursuant to the Secondary2015 DRIP Offering until April 22, 2015, following the deregistration of our initial offering. Effective October 5, 2016,We continued to offer shares of our common stock pursuant to the 2015 DRIP Offering until the termination and deregistration of the 2015 DRIP Offering on March 29, 2019.
On January 30, 2019, we filed a Registration Statement on Form S-3 under the Securities Act to register a maximum of $200,000,000 of additional shares of our common stock to be issued pursuant to the 2019 DRIP Offering. We commenced offering shares pursuant to the 2019 DRIP Offering on April 1, 2019, following the deregistration of the 2015 DRIP Offering. On May 29, 2020, our board authorized the suspension of the Amended and Restated DRIP, amended the price at whichand consequently, we ceased issuing shares of our common stock are issued pursuant to the Secondary2019 DRIP Offering.Offering following the distributions paid in June 2020 to stockholders of record on or prior to the close of business on May 31, 2020. See Distributionthe “Distribution Reinvestment PlanPlan” section below for a further discussion.
Through September 30, 2017,2020, we had issued 184,930,598 shares of our common stock in connection with the primary portion of our initial public offering and 18,661,55035,059,456 shares of our common stock pursuant to theour DRIP and the Secondary DRIP Offering.Offerings. We also repurchased 5,327,69026,257,389 shares of our common stock under our share repurchase plan and granted an aggregate of 82,500135,000 shares of our restricted common stock to our independent directors through September 30, 2017.2020. As of September 30, 20172020 and December 31, 2016,2019, we had 198,369,180193,889,887 and 195,780,039193,967,474 shares of our common stock issued and outstanding, respectively.

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Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of noncontrolling interests, by component consisted of the following for the nine months ended September 30, 20172020 and 2016:2019:
Nine Months Ended September 30,Nine Months Ended September 30,
2017 201620202019
Beginning balance — foreign currency translation adjustments$(3,029,000) $(506,000)Beginning balance — foreign currency translation adjustments$(2,255,000)$(2,560,000)
Net change in current period977,000
 (1,916,000)Net change in current period(220,000)(301,000)
Ending balance — foreign currency translation adjustments$(2,052,000) $(2,422,000)Ending balance — foreign currency translation adjustments$(2,475,000)$(2,861,000)
Noncontrolling Interests
As of both September 30, 20172020 and December 31, 2016,2019, Trilogy REIT Holdings owned approximately 96.7%96.6% of Trilogy. We are the indirect owner of a 70.0% interest in Trilogy REIT Holdings pursuant to an amended joint venture agreement with an indirect, wholly-owned subsidiary of NorthStar Healthcare Income, Inc., or NHI, and a wholly-owned subsidiary of the operating partnership of Griffin-American Healthcare REIT IV, Inc., or GAHR IV. Both GAHR IV and us are sponsored by American Healthcare Investors. We serve as the sole manager of Trilogy REIT Holdings. NorthStar Healthcare Income, Inc., through certainAs of its subsidiaries, ownsboth September 30, 2020 and December 31, 2019, NHI and GAHR IV indirectly owned a 30.0% ownership24.0% and 6.0% membership interest in Trilogy REIT Holdings. As ofHoldings, respectively. For the three and nine months ended September 30, 20172020 and December 31, 2016,2019, 30.0% of the net earnings of Trilogy REIT Holdings were allocated to noncontrolling interests.
In connection with theour acquisition and operation of Trilogy, profit interest units in Trilogy, or the Profit Interests, were issued to Trilogy Management Services, LLC and an independent director of Trilogy, both are unaffiliated third parties that manage or direct the day-to dayday-to-day operations of Trilogy. The Profit Interests consist of time-based or performance-based commitments. The time-based Profit Interests were measured at their grant date fair value and vest in increments of 20.0% on each anniversary of the respective grant date over a five-yearfive year period. We amortize the time-based Profit Interests on a straight-line basis over the vesting periods, which are recorded to general and administrative in our accompanying condensed consolidated statements of operations and comprehensive income (loss). The performance-based Profit Interests are subject to a performance commitment and vest upon liquidity events as defined in the Profit Interests agreements. The performance-based Profit Interests were measured at their grant date fair value and immediately expensed. The performance-based Profit Interests are subject to fair value measurements until vesting occurs with changes to fair value recorded to general and administrative in our accompanying condensed consolidated statements of operations and comprehensive income (loss). For both the three months ended September 30, 20172020 and 2016,2019, we recognized stock compensation expense related to the Profit Interests of $195,000 and $196,000, respectively. Forfor both the nine months ended September 30, 20172020 and 2016,2019, we recognized stock compensation expense related to the Profit Interests of $390,000 and $589,000, respectively.$585,000.
There were no0 canceled, expired or exercised Profit Interests during the three and nine months ended September 30, 20172020 and 2016.2019. The nonvested awards are presented as noncontrolling interests and are re-classified to redeemable noncontrolling interests upon vesting as they have redemption features outside of our control similar to the common stock units held by Trilogy’s pre-closing management once vested.management. See Note 12, Redeemable Noncontrolling Interests, for a further discussion.
On January 6, 2016, one of our consolidated subsidiaries issued non-voting preferred shares of beneficial interests to qualified investors for total proceeds of $125,000. These preferred shares of beneficial interests are entitled to receive cumulative preferential cash dividends at the rate of 12.5% per annum. In accordance with ASC Topic 810, weWe classify the value of the subsidiary’s preferred shares of beneficial interests as noncontrolling interests in our accompanying condensed consolidated balance sheets and the dividends of the preferred shares of beneficial interests asin net income or loss attributable to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
In addition, asAs of both September 30, 20172020 and December 31, 2016,2019, we owned an 86.0% interest in a consolidated limited liability company that owns the Lakeview IN Medical Plaza, propertywhich we acquired on January 21, 2016. As such, 14.0% of the net earnings of the Lakeview IN Medical Plaza property were allocated to noncontrolling interests for the three and nine months ended September 30, 20172020 and 2016.2019.
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On April 7, 2020, we sold a 9.4% membership interest in a consolidated limited liability company that owns Southlake TX Hospital to an unaffiliated third party for a contract purchase price of $11,000,000. For the period from April 7, 2020 through September 30, 2020, 9.4% of the net earnings of Southlake TX Hospital were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive income (loss), and the carrying amount of such noncontrolling interest is presented in total equity in our accompanying condensed consolidated balance sheet as of September 30, 2020.
Distribution Reinvestment Plan
We adopted the DRIP that allowed stockholders to purchase additional shares of our common stock through the reinvestment of distributions at an offering price equal to 95.0% of the primary offering price of our initial offering, subject to certain conditions. We had registered and reserved $35,000,000 in shares of our common stock for sale pursuant to the Initial DRIP in

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our initial offering, at an offering price of $9.50 per share, which we terminatedderegistered on April 22, 2015. OnWe continued to offer shares of our common stock pursuant to the 2015 DRIP Offering, which commenced offering shares following the deregistration of our initial offering, until the deregistration of the 2015 DRIP Offering on March 25, 2015, we filed a Registration Statement on Form S-3 under the Securities Act29, 2019. We continue to register a maximum of $250,000,000offer up to $200,000,000 of additional shares of our common stock pursuant to the Secondary2019 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commenceOffering, which commenced offering shares pursuant to the Secondary DRIP Offering untilon April 22, 2015,1, 2019, following the deregistration of our initial offering.the 2015 DRIP Offering.
Effective October 5, 2016, we amended and restated the Amended and RestatedInitial DRIP amendedto amend the price at which shares of our common stock are issued pursuant to the Secondary DRIP Offering.such distribution reinvestment plan. Pursuant to the Amended and Restated DRIP, shares are issued at a price equal to the most recently estimated net asset value, or NAV, of one share of our common stock, asapproved and established by our board. The Amended and Restated DRIP became effective with the distribution paymentpayments to stockholders paid in the month of November 2016, which distributions were reinvested at $9.01 per share, the initial estimated per share net asset value, or NAV, unanimously approved and established by our board on October 5, 2016. Formerly, shares were issued pursuant to the Secondary DRIP Offering at 95.0% of the estimated value of one share of our common stock, as estimated by our board. In all other material respects, the terms of the Secondary2015 DRIP Offering remainremained unchanged by the Amended and Restated DRIP.
On October 4, 2017,May 29, 2020, in consideration of the impact the COVID-19 pandemic has had on the United States, globally and our business operations, our board authorized the suspension of all stockholder distributions upon the completion of the payment of distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. As a result, our board also approved the suspension of the Amended and Restated DRIP until such time, if any, as our board determines to authorize new distributions and to reinstate such plan. Such suspension was effective upon the completion of all shares issued with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020.
Since October 5, 2016, our board had previously approved and established a revisedan estimated per share NAV of our common stock of $9.27. Accordingly, commencingannually. Commencing with the distribution payment to stockholders paid in the month of November 2017,following such board approval, shares of our common stock issued pursuant to the Amended and Restated DRIP were or will be issued at $9.27the current estimated per share NAV until such time as our board determines a newdetermined an updated estimated per share NAV. At this time, the audit committee of our board continues to deem it prudent to delay the determination of our annual estimated per share NAV until sometime in the future when we are able to more clearly discern the short- and long-term ramifications on valuation assumptions and methodologies and resulting healthcare real estate asset values due to the impacts of the COVID-19 pandemic. As such, we did not publish an updated estimated per share NAV of our common stock in October 2020. The following is a summary of our historical and current estimated per share NAV:
Approval Date by our BoardEstimated Per Share NAV
(Unaudited)
10/05/16$9.01 
10/04/17$9.27 
10/03/18$9.37 
10/03/19$9.40 
For the three months ended September 30, 20172020 and 2016, $15,826,0002019, $0 and $16,199,000,$13,789,000, respectively, in distributions were reinvested and 0 and 1,471,581 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings. For the nine months ended September 30, 2020 and 2019, $21,861,000 and $42,100,000, respectively, in distributions were reinvested and 2,325,762 and 4,493,074 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings.
As of September 30, 2020 and December 31, 2019, a total of $327,012,000 and $305,151,000, respectively, in distributions were cumulatively reinvested that resulted in 1,756,46635,059,456 and 1,705,19232,733,694 shares of our common stock, respectively, being issued pursuant to the Secondaryour DRIP Offering. For the nine months ended September 30, 2017 and 2016, $47,453,000 and $48,692,000, respectively, in distributions were reinvested that resulted in 5,266,636 and 5,124,834 sharesOfferings.
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As of September 30, 2017 and December 31, 2016, a total of $174,126,000 and $126,673,000, respectively, in distributions were reinvested that resulted in 18,661,550 and 13,394,914 shares of our common stock, respectively, being issued pursuant to the DRIP portion of our initial offering and the Secondary DRIP Offering.
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Share Repurchase Plan
OurIn response to the COVID-19 pandemic and its effects to our business and operations, our board has approveddecided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects. As a result, on March 31, 2020, our board partially suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchase requests submitted for repurchase during the second quarter of 2020. Repurchase requests that resulted from the death or qualifying disability of stockholders were not suspended, but remained subject to all terms and conditions of our share repurchase plan, including our board’s discretion to determine whether we had sufficient funds available to repurchase any shares. Subsequently, on May 29, 2020, our board suspended our share repurchase plan with respect to all share repurchase requests received after May 31, 2020, including repurchases resulting from the death or qualifying disability of stockholders. On July 1, 2020, we paid the final share repurchase requests that were honored prior to the suspension of our share repurchase plan. Our board shall determine if and when it is in the best interest of our company and stockholders to reinstate our share repurchase plan.
Prior to the suspension of the share repurchase plan, allowsour share repurchase plan, as amended, allowed for repurchases of shares of our common stock by us when certain criteria are met. Share repurchases will bewere made at the sole discretion of our board. Subject to the availability of the funds for share repurchases, we will limitgenerally limited the number of shares of our common stock repurchased during any calendar year to 5.0% of the weighted average number of shares of our common stock outstanding during the prior calendar year;year.Additionally, effective with respect to share repurchase requests submitted for repurchase during the second quarter of 2019, the number of shares that were repurchased during any fiscal quarter was limited to an amount equal to the net proceeds that we received from the sale of shares issued pursuant to our DRIP Offerings during the immediately preceding completed fiscal quarter; provided however, that shares subject to a repurchase requested upon the death or “qualifying disability,” as defined in our share repurchase plan, of a stockholder willwere not be subject to this cap.quarterly cap or to our existing cap on repurchases of 5.0% of the weighted average number of shares outstanding during the calendar year prior to the repurchase date. Funds for the repurchase of shares of our common stock will come exclusivelycame from the cumulative proceeds we receivereceived from the sale of shares of our common stock pursuant to theour DRIP portion of our initial offering and the Secondary DRIP Offering.Offerings. Furthermore, our share repurchase plan providesprovided that if there arewere insufficient funds to honor all repurchase requests, pending requests willmay be honored among all requests for repurchase in any given repurchase period as follows: first, pro ratarepurchases in full as to repurchases sought uponthat would result in a stockholder’s death;stockholder owning less than $2,500 of shares; and, next, pro rata as to repurchases sought by stockholders with a qualifying disability; and, finally, pro rata as to other repurchase requests.
All repurchases will be subject to a one-year holding period, except for repurchases made in connection with a stockholder’s death or “qualifying disability,” as defined in our share repurchase plan. Further, all share repurchases will be repurchased following a one-year holding period at a price between 92.5% and 100% of each stockholder’s repurchase amount, depending on the period of time their shares have been held. Until October 4, 2016, the repurchase amount for shares repurchased under our share repurchase plan was equal to the lesser of the amount a stockholder paid for their shares of our common stock or the most recent per share offering price. However, if shares of our common stock were repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price was no less than 100% of the price paid to acquire the shares of our common stock from us.
Effective with respect to share repurchase requests submitted during the fourth quarter 2016, theThe Repurchase Amount, as such term is defined in our share repurchase plan, as amended, shall bewas equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the most recent estimated value of one share of our common stock, as determined by our board. Accordingly, commencing with the share repurchase requests submitted during the fourth quarter 2016, we repurchase shares as follows: (a) for stockholders who have continuously held their shares of our common

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stock for at least one year, the price will be 92.5% of the Repurchase Amount; (b) for stockholders who have continuously held their shares of our common stock for at least two years, the price will be 95.0% of the Repurchase Amount; (c) for stockholders who have continuously held their shares of our common stock for at least three years, the price will be 97.5% of the Repurchase Amount; (d) for stockholders who have held their shares of our common stock for at least four years, the price will be 100% of the Repurchase Amount; and (e) forFor requests submitted pursuant to a death or a qualifying disability of a stockholder, the price will beRepurchase Amount was 100% of the amount per share the stockholder paid for their shares of common stock (in each case, as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to our common stock).
Onstock. Since October 5, 2016, our board had previously approved and established an initial estimated per share NAV annually. See the “Distribution Reinvestment Plan” section above for a discussion of our common stock of $9.01. On October 4, 2017, our board approvedhistorical and established a revisedcurrent estimated per share NAV of our common stock of $9.27.NAV. Accordingly, commencing with share repurchase requests submitted during the fourth quarter of 2017, the revisedthat our board approved and established an estimated per share NAV, of $9.27 will servesuch per share NAV served as the Repurchase Amount for stockholders who purchased their shares at a price equal to or greater than $9.27such per share NAV in our initial offering, until such time as our board determines a newdetermined an updated estimated per share NAV.
For the three months ended September 30, 20172020 and 2016,2019, we received share repurchase requestsrepurchased 517,436 and repurchased 1,039,450 and 933,9741,832,625 shares of our common stock, respectively, for an aggregate of $9,317,000$5,121,000 and $8,835,000,$17,321,000, respectively, at an average repurchasepurchase price of $8.96$9.90 and $9.46$9.45 per share, respectively. For the nine months ended September 30, 20172020 and 2016,2019, we received share repurchase requestsrepurchased 2,410,849 and repurchased 2,699,995 and 1,564,8147,682,977 shares of our common stock, respectively, for an aggregate of $24,022,000$23,107,000 and $14,833,000,$72,456,000, respectively, at an average repurchase price of $8.90$9.58 and $9.48$9.43 per share, respectively.
As of September 30, 20172020 and December 31, 2016,2019, we received share repurchase requestscumulatively repurchased 26,257,389 and repurchased 5,327,690 and 2,627,69523,846,540 shares of our common stock, respectively, for an aggregate of $48,724,000$244,930,000 and $24,702,000,$221,823,000, respectively, at an average repurchase price of $9.15$9.33 and $9.40$9.30 per share, respectively. All shares were repurchased using proceeds we received from the sale of shares of our common stock pursuant to the DRIP portion of our initial offering and the Secondary DRIP Offering.
2013 Incentive Plan
We adopted the 2013 Incentive Plan, or our incentive plan, pursuant to which our board, or a committee of our independent directors, may make grants of options, shares of restrictedour common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, employees and consultants. The maximum number of shares of our common stock that may be issued pursuant to our incentive plan is 2,000,000 shares.
Through September 30, 2017, we granted an aggregate of 37,500 shares of our restricted common stock, as defined in our incentive plan, to our independent directors in connection with their initial election or re-election to our board, of which 20.0% vested on the grant date and 20.0% will vest on each of the first four anniversaries of the grant date. In addition, through September 30, 2017, we granted an aggregate of 45,000 shares of our restricted common stock, as defined in our incentive plan, to our independent directors in consideration for their past services rendered. These shares of restricted common stock vest under the same period described above. Shares of our restricted common stock may not be sold, transferred, exchanged, assigned, pledged, hypothecated or otherwise encumbered. Such restrictions expire upon vesting. Shares of our restricted common stock have full voting rights and rights to distributions.
From the applicable dates that the required service periods began, or the service inception dates, to the applicable grant dates, we recognized compensation expense related to the shares of our restricted common stock based on the reporting date fair value, which we estimated as follows: (i) at $10.00 per share for shares of our restricted common stock granted through October 4, 2016, the then most recent price paid to acquire a share of common stock in our initial offering; or (ii) the most recent estimated per share NAV of our common stock, as determined by our board, for shares of our restricted common stock granted effective October 5, 2016. Beginning on the applicable grant dates, compensation cost related to the shares of our restricted common stock is measured based on the applicable grant date fair value, which we estimated as follows: (i) at $10.00 per share for shares of our restricted common stock granted through October 4, 2016, the then most recent price paid to acquire a share of common stock in our initial offering; or (ii) the most recent estimated value of one share of our common stock, as determined by our board, for shares of our restricted common stock granted effective October 5, 2016. On October 5, 2016, our board approved and established an initial estimated per share NAV of our common stock of $9.01 and on October 4, 2017, our board approved and established a revised estimated per share NAV of our common stock of $9.27. Stock compensation expense is recognized from the applicable service inception dates to the applicable vesting date for each vesting tranche (i.e., on a tranche-by-tranche basis) using the accelerated attribution method.

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ASC Topic 718, Compensation — Stock Compensation, requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For the three and nine months ended September 30, 20172020 and 2016,2019, we did not assume any forfeitures.granted an aggregate of 7,500 and 22,500 shares of our restricted common stock, respectively, at a weighted average grant date fair value of $9.40 and $9.37 per share, respectively, to our independent directors in connection with their re-election to our board or in consideration for their past services rendered. Such shares vest as to 20.0% of the shares on the date of grant and on each of the first 4 anniversaries of the grant date. For the three months ended September 30, 20172020 and 2016,2019, we recognized stock compensation expense related to the independent director grants of $71,000$28,000 and $90,000,$72,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we recognized stock compensation expense related to the independent director grants of $171,000$128,000 and $151,000, respectively, which$172,000, respectively. Such stock compensation expense is included in general and administrative in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
As of September 30, 2017 and December 31, 2016, there was $265,000 and $233,000, respectively, of total unrecognized compensation expense, net of estimated forfeitures, related to nonvested shares of our restricted common stock. As of September 30, 2017, this expense is expected to be recognized over a remaining weighted average period of 1.77 years.
As of September 30, 2017 and December 31, 2016, the weighted average grant date fair value of the nonvested shares of our restricted common stock was $442,000 and $390,000, respectively. A summary of the status of the nonvested shares of our restricted common stock as of September 30, 2017 and December 31, 2016, and the changes for the nine months ended September 30, 2017, is presented below:
 
Number of Nonvested
Shares of Our
Restricted Common Stock
 
Weighted
Average Grant
Date Fair Value
Balance — December 31, 201639,000
 $10.00
Granted22,500
 $9.01
Vested(15,500) $9.71
Forfeited—
 $—
Balance — September 30, 201746,000
 $9.61
Expected to vest — September 30, 201746,000
 $9.61
14. Related Party Transactions
Fees and Expenses Paid to Affiliates
All of our executive officers and our non-independent directors are also executive officers and employees and/or holders of a direct or indirect interest in our advisor, one of our co-sponsors or other affiliated entities. We are affiliated with our advisor, American Healthcare Investors and AHI Group Holdings; however, we are not affiliated with Griffin Capital, our dealer manager, Colony NorthStarCapital or Mr. Flaherty. We entered into the Advisory Agreement, which entitles our advisor and its affiliates to specified compensation for certain services, as well as reimbursement of certain expenses. Our board, including a majority of our independent directors, has reviewed the material transactions between our affiliates and us during the three and nine months ended September 30, 2020. Set forth below is a description of the transactions with affiliates. We believe that we have executed all of the transactions set forth below on terms that are fair and reasonable to us and on terms no less favorable to us than those available from unaffiliated third parties. In the aggregate, for the three months ended September 30, 20172020 and 2016,2019, we incurred $5,544,000$6,876,000 and $8,642,000,$6,105,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $17,931,000$19,027,000 and $22,968,000,$18,823,000, respectively, in fees and expenses to our affiliates as detailed below.
Acquisition and Development Stage
Acquisition Fee
We pay our advisor or its affiliates an acquisition fee of up to 2.25% of the contract purchase price, including any contingent or earn-out payments that may be paid, for each property we acquire or 2.00% of the origination or acquisition price, including any contingent or earn-out payments that may be paid, for any real estate-related investment we originate or acquire. Since January 31, 2015, acquisition fees are and have been paid in cash. Our advisor or its affiliates are entitled to receive these acquisition fees for properties and real estate-related investments we acquire with funds raised in our initial offering including acquisitions completed after the termination of the Advisory Agreement, or funded with net proceeds from the sale of a property or real estate-related investment, subject to certain conditions.
For the three months ended September 30, 20172020 and 2016,2019, we incurred $67,000$416,000 and $3,524,000,$277,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $1,700,000$452,000 and $8,551,000,$1,075,000, respectively, in acquisition fees to our advisor. Acquisition fees in connection with the acquisition of properties accounted for as business combinations are expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Acquisition fees in connection with the acquisition of properties accounted for as

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asset acquisitions or the acquisition of real estate-related investments are capitalized as part of the associated investments in our accompanying condensed consolidated balance sheets.
Development Fee
In the event our advisor or its affiliates provide development-related services, our advisor or its affiliates receive a development fee in an amount that is usual and customary for comparable services rendered for similar projects in the geographic market where the services are provided; however, we will not pay a development fee to our advisor or its affiliates if our advisor or its affiliates elect to receive an acquisition fee based on the cost of such development.
For the three months ended September 30, 2020 and 2019, we incurred $255,000 and $0, respectively, and for the nine months ended September 30, 2017, we did not incur any development fees to our advisor or its affiliates. For the three2020 and nine months ended September 30, 2016,2019, we incurred $76,000$329,000 and $163,000, respectively, in development fees to our advisor or its affiliates. Until December 31, 2016, development fees were expensed and included in acquisition related expenses in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Since January 1, 2017, as a result of our early adoption of ASU 2017-01, development fees are capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets.
Reimbursement of Acquisition Expenses
We reimburse our advisor or its affiliates, for acquisition expenses related to selecting, evaluating and acquiring assets, which are reimbursed regardless of whether an asset is acquired. The reimbursement of acquisition expenses, acquisition fees, total development costs and real estate commissions paid to unaffiliated third parties will not exceed, in the aggregate, 6.0% of the contract purchase price or real estate-related investments, unless fees in excess of such limits are approved by a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction. For the three and nine months ended September 30, 2017 and 2016, such fees and expenses did not exceed 6.0% of the contract purchase price of our acquisitions or real estate-related investments.
For the three and nine months ended September 30, 2017, we did not incur any acquisition expenses to our advisor or its affiliates. For the three and nine months ended September 30, 2016, we incurred $1,000 in acquisition expenses to our advisor or its affiliates. Reimbursements of acquisition expenses in connection with the acquisition of properties accounted for as business combinations are expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations and comprehensive income (loss). Reimbursements of acquisition expenses in connection with the acquisition of properties accounted for as asset acquisitions or the acquisition of real estate-related investments are capitalized as part of the associated investments in our accompanying condensed consolidated balance sheets.
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Operational Stage
Asset Management Fee
We pay our advisor or its affiliates a monthly fee for services rendered in connection with the management of our assets equal to one-twelfth of 0.75% of average invested assets, subject to our stockholders receiving distributions in an amount equal to 5.0% per annum, cumulative, non-compounded, of invested capital. For such purposes, average invested assets means the average of the aggregate book value of our assets invested in real estate properties and real estate-related investments, before deducting depreciation, amortization, bad debt and other similar non-cash reserves, computed by taking the average of such values at the end of each month during the period of calculation; and invested capital means, for a specified period, the aggregate issue price of shares of our common stock purchased by our stockholders, reduced by distributions of net sales proceeds by us to our stockholders and by any amounts paid by us to repurchase shares of our common stock pursuant to our share repurchase plan. In an effort to increase our liquidity during the ongoing uncertainty surrounding the COVID-19 pandemic, on May 29, 2020, our advisor agreed to defer 50.0% of the asset management fees that it would otherwise be entitled to receive pursuant to the Advisory Agreement for services performed by our advisor or its affiliates during the period from June 1, 2020 to November 30, 2020, with the full amount of such deferred fees becoming due and payable by us on January 2, 2021. Such deferred asset management fees of $3,460,000 as of September 30, 2020 are included in accounts payable due to affiliates in our accompanying condensed consolidated balance sheets.
For the three months ended September 30, 20172020 and 2016,2019, we incurred $4,713,000$5,205,000 and $4,427,000,$5,021,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $14,054,000$15,449,000 and $12,373,000,$15,018,000, respectively, in asset management fees to our advisor or its affiliates. Asset management fees are included in general and administrative in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
Property Management Fee
Our advisor or its affiliates may directly serve as property manager of our properties or may sub-contract their property management duties to any third party and provide oversight of such third-party property manager. We pay our advisor or its affiliates a monthly management fee equal to a percentage of the gross monthly cash receipts of such property as follows: (i) a property management oversight fee of 1.0% of the gross monthly cash receipts of any stand-alone, single-tenant, net leased

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property; (ii) a property management oversight fee of 1.5% of the gross monthly cash receipts of any property that is not a stand-alone, single-tenant, net leased property and for which our advisor or its affiliates will provide oversight of a third party that performs the duties of a property manager with respect to such property; or (iii) a fair and reasonable property management fee that is approved by a majority of our directors, including a majority of our independent directors, that is not less favorable to us than terms available from unaffiliated third parties for any property that is not a stand-alone, single-tenant, net leased property and for which our advisor or its affiliates will directly serve as the property manager without sub-contracting such duties to a third party.
For the three months ended September 30, 20172020 and 2016,2019, we incurred $589,000$663,000 and $517,000,$636,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $1,761,000$1,966,000 and $1,752,000,$1,915,000, respectively, in property management fees to our advisor or its affiliates. Property management fees are included in property operatingrental expenses and rentalgeneral and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
Lease Fees
We pay our advisor or its affiliates a separate fee for any leasing activities in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic area for similar properties as determined by a survey of brokers and agents in such area. Such fee is generally expected to range from 3.0% to 6.0% of the gross revenues generated during the initial term of the lease.
For the three months ended September 30, 20172020 and 2016,2019, we incurred $102,000$237,000 and $45,000,$68,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $222,000$518,000 and $140,000,$237,000, respectively, in lease fees to our advisor or its affiliates. Lease fees are capitalized as lease commissions and included in other assets, net in our accompanying condensed consolidated balance sheets.
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Construction Management Fee
In the event that our advisor or its affiliates assist with planning and coordinating the construction of any capital or tenant improvements, our advisor or its affiliates are paid a construction management fee of up to 5.0% of the cost of such improvements. For the three months ended September 30, 20172020 and 2016,2019, we incurred $20,000$39,000 and $21,000,$56,000, respectively, and for the nine months ended September 30, 20172020 and 2016,2019, we incurred $38,000$133,000 and $22,000,$255,000, respectively, in construction management fees to our advisor or its affiliates.
Construction management fees are capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets or are expensed and included in our accompanying condensed consolidated statements of operations and comprehensive income (loss), as applicable.
Operating Expenses
We reimburse our advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations. However, we cannot reimburse our advisor or its affiliates at the end of any fiscal quarter for total operating expenses that, in the four consecutive fiscal quarters then ended, exceed the greater of: (i) 2.0% of our average invested assets, as defined in the Advisory Agreement; or (ii) 25.0% of our net income, as defined in the Advisory Agreement, unless our independent directors determined that such excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient.
OurFor the 12 months ended September 30, 2020 and 2019, our operating expenses did not exceed the aforementioned limitations. The following table reflects our operating expenses as a percentage of average invested assets and as a percentage of net income were 0.9% and 17.4%, respectively, for the 12 months ended September 30, 2017; therefore, our operating expenses did not exceed the aforementioned limitation.month periods then ended:
12 months ended September 30,
20202019
Operating expenses as a percentage of average invested assets0.9 %0.9 %
Operating expenses as a percentage of net income18.7 %20.1 %
For the three months ended September 30, 20172020 and 2016,2019, our advisor or its affiliates incurred operating expenses on our behalf of $53,000$61,000 and $31,000,$47,000, respectively, and for the nine months ended September 30, 20172020 and 2016, our advisor or its affiliates2019, incurred operating expenses on our behalf of $156,000$180,000 and $53,000,$160,000, respectively. Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations and comprehensive income (loss).

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Compensation for Additional Services
We pay our advisor and its affiliates for services performed for us other than those required to be rendered by our advisor or its affiliates under the Advisory Agreement. The rate of compensation for these services has to be approved by a majority of our board, including a majority of our independent directors, and cannot exceed an amount that would be paid to unaffiliated third parties for similar services. For the three and nine months ended September 30, 20172020 and 2016,2019, our advisor and its affiliates were not compensated for any additional services.
Liquidity Stage
Disposition Fees
For services relating to the sale of one or more properties, we pay our advisor or its affiliates a disposition fee of up to the lesser of 2.0% of the contract sales price or 50.0% of a customary competitive real estate commission given the circumstances surrounding the sale, in each case as determined by our board, including a majority of our independent directors, upon the provision of a substantial amount of the services in the sales effort. The amount of disposition fees paid, when added to the real estate commissions paid to unaffiliated third parties, will not exceed the lesser of the customary competitive real estate commission or an amount equal to 6.0% of the contract sales price.
For the three and nine months ended September 30, 2017,2020, our advisor agreed to waive theexpense reimbursements and $270,000 and $490,000, respectively, of disposition fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement. See Note 3, Real Estate Investments, Net 2, Summary of Significant Accounting Policies — Dispositions in 2017,Impairment of Long-Lived Assets and Note 2, Summary of Significant Accounting Policies — Properties Held for Sale, for discussions of our property dispositions, as well as Note 13, Equity — Noncontrolling Interests, for a further discussion.discussion of the disposition of membership interests in a consolidated
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limited liability company. Our advisor did not receive any additional securities, shares of stock or any other form of consideration or any repayment as a result of the waiver of such disposition fees and expense reimbursements. For the three and nine months ended September 30, 2016,2019, we did not incur any disposition fees to our advisor or its affiliates.
Subordinated Participation Interest
Subordinated Distribution of Net Sales Proceeds
In the event of liquidation, we will pay our advisor a subordinated distribution of net sales proceeds. The distribution will be equal to 15.0% of the remaining net proceeds from the sales of properties, after distributions to our stockholders, in the aggregate, of: (i) a full return of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan); plus (ii) an annual 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock, as adjusted for distributions of net sales proceeds. Actual amounts to be received depend on the sale prices of properties upon liquidation. For the three and nine months ended September 30, 20172020 and 2016,2019, we did not incurpay any such distributions to our advisor.
Subordinated Distribution Upon Listing
Upon the listing of shares of our common stock on a national securities exchange, in redemption of our advisor’s limited partnership units, we will pay our advisor a distribution equal to 15.0% of the amount by which: (i) the market value of our outstanding common stock at listing plus distributions paid prior to listing exceeds (ii) the sum of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan) and the amount of cash that, if distributed to stockholders as of the date of listing, would have provided them an annual 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock through the date of listing. Actual amounts to be paid depend upon the market value of our outstanding stock at the time of listing, among other factors. For the three and nine months ended September 30, 20172020 and 2016,2019, we did not incurpay any such distributions to our advisor.
Subordinated Distribution Upon Termination
Pursuant to the Agreement of Limited Partnership, as amended, of our operating partnership, upon termination or non-renewal of the Advisory Agreement, our advisor will also be entitled to a subordinated distribution in redemption of its limited partnership units from our operating partnership equal to 15.0% of the amount, if any, by which: (i) the appraised value of our assets on the termination date, less any indebtedness secured by such assets, plus total distributions paid through the termination date, exceeds (ii) the sum of the total amount of capital raised from stockholders (less amounts paid to repurchase shares of our common stock pursuant to our share repurchase plan) and the total amount of cash equal to an annual 7.0% cumulative, non-compounded return on the gross proceeds from the sale of shares of our common stock through the termination date. In addition, our advisor may elect to defer its right to receive a subordinated distribution upon termination until either a listing or other liquidity event, including a liquidation, sale of substantially all of our assets or merger in which our stockholders receive in exchange for their shares of our common stock, shares of a company that are traded on a national securities exchange.

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As of September 30, 20172020 and 2016,December 31, 2019, we haddid not recordedhave any charges to earningsliability related to the subordinated distribution upon termination.
Accounts Payable Due to Affiliates
The following amounts were outstanding to our affiliates as of September 30, 20172020 and December 31, 2016:2019:
FeeSeptember 30,
2020		December 31,
2019
Asset and property management fees$4,524,000 $1,991,000 
Construction management fees97,000 175,000 
Lease commissions49,000 143,000 
Development fees18,000 0 
Operating expenses11,000 12,000 
$4,699,000 $2,321,000 
36
Fee 
September 30,
2017
 
December 31,
2016
Asset and property management fees $1,769,000
 $1,736,000
Acquisition fees 201,000
 202,000
Development fees —
 105,000
Construction management fees 21,000
 38,000
Lease commissions 11,000
 89,000
Operating expenses 11,000
 16,000
  $2,013,000
 $2,186,000
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15. Fair Value Measurements
Assets and Liabilities Reported at Fair Value
The table below presents our assets and liabilities measured at fair value on a recurring basis as of September 30, 2017,2020, aggregated by the level in the fair value hierarchy within which those measurements fall:
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 TotalQuoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Assets:       Assets:
Derivative financial instruments$—
 $2,026,000
 $—
 $2,026,000
Contingent consideration receivable—
 —
 —
 —
Derivative financial instrumentDerivative financial instrument$0 $0 $0 $0 
Total assets at fair value$—
 $2,026,000
 $—
 $2,026,000
Total assets at fair value$0 $0 $0 $0 
Liabilities:       Liabilities:
Contingent consideration obligations$—
 $—
 $8,950,000
 $8,950,000
Derivative financial instrumentsDerivative financial instruments$0 $9,642,000 $0 $9,642,000 
Warrants—
 —
 1,105,000
 1,105,000
Warrants0 0 1,178,000 1,178,000 
Total liabilities at fair value$—
 $—
 $10,055,000
 $10,055,000
Total liabilities at fair value$0 $9,642,000 $1,178,000 $10,820,000 
The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2016,2019, aggregated by the level in the fair value hierarchy within which those measurements fall:
 
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total
Assets:       
Derivative financial instruments$—
 $1,982,000
 $—
 $1,982,000
Contingent consideration receivable—
 —
 —
 —
Total assets at fair value$—
 $1,982,000
 $—
 $1,982,000
Liabilities:       
Contingent consideration obligations$—
 $—
 $8,992,000
 $8,992,000
Warrants—
 —
 1,250,000
 1,250,000
Total liabilities at fair value$—
 $—
 $10,242,000
 $10,242,000

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Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Assets:
Derivative financial instrument$0 $0 $0 $0 
Total assets at fair value$0 $0 $0 $0 
Liabilities:
Derivative financial instruments$0 $3,971,000 $0 $3,971,000 
Warrants0 0 1,178,000 1,178,000 
Total liabilities at fair value$0 $3,971,000 $1,178,000 $5,149,000 
There were no transfers into orand out of fair value measurement levels during the nine months ended September 30, 20172020 and 2016.2019.
Derivative Financial Instruments
We use interest rate swaps and interest rate caps to manage interest rate risk associated with variable-rate debt. The valuation of these instruments is determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, as well as option volatility. The fair values of interest rate swaps are determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves.
To comply with the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, or ASC Topic 820, weWe incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.
Although we have determined that the majority of the inputs used to value our derivative financial instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparty. However, as of September 30, 2017,2020, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation
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of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Contingent ConsiderationWarrants
Asset
As of both September 30, 2017, we have not recorded any contingent consideration receivables. In connection with our acquisition of Mt. Juliet TN MOB in March 2015, there is a contingent consideration receivable in the range of $0 up to a maximum of $140,000. We would receive payment of contingent consideration in the event that a tenant occupying 6,611 square feet of GLA terminates their lease prior to March 31, 2018, and to the extent there is a shortfall in rent from any replacement tenant. As of September 30, 2017, we do not believe that we will receive such amount and therefore we have not recorded any contingent consideration receivable. When recorded by us, contingent consideration receivables will be included in other assets, net in our accompanying condensed consolidated balance sheets.
Liabilities
As of September 30, 20172020 and December 31, 2016, we have accrued $8,950,000 and $8,992,000, respectively, as contingent consideration obligations in connection with our property acquisitions, which is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets. Such consideration will be paid upon various conditions being met, including our tenants achieving certain operating performance metrics and sellers’ leasing unoccupied space, as discussed below.
Of the amount accrued as of September 30, 2017, $8,885,000 relates to our acquisition of North Carolina ALF Portfolio in January and June 2015, $50,000 relates to our acquisition of King of Prussia PA MOB in January 2015 and $15,000 relates to the additional building we acquired and added to our existing North Carolina ALF Portfolio in January 2017. Of the amount accrued as of December 31, 2016, $8,942,000 relates to our acquisition of North Carolina ALF Portfolio in January and June 2015 and $50,000 relates to our acquisition of King of Prussia PA MOB.
The estimated total amount of $8,885,000 related to our acquisition of North Carolina ALF Portfolio in January and June 2015 will be paid based upon the computation in the lease agreement and receipt of notification within three years after the applicable acquisition date that the tenant has increased its earnings before interest, taxes, depreciation and rent cost, or EBITDAR, as defined in the lease agreement, for the preceding three months. There is no minimum required payment, but the total maximum is capped at $35,144,000 and is also limited by the tenant’s ability to increase its EBITDAR. Any payment made will result in an increase in the monthly rent charged to the tenant and additional rental revenue to us. Upon the tenant

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meeting certain conditions under the lease agreement and providing us notice in October 2016, we paid $10,000,000 towards this obligation related to the Wake Forest Facility in November 2016. We have assumed that the tenant will meet the remaining conditions under the lease agreement and that we will pay the remaining contingent consideration for the three other facilities three years from the date of the applicable acquisition.
Warrants
As of September 30, 2017 and December 31, 2016,2019, we have recorded $1,105,000 and $1,250,000, respectively,$1,178,000 related to warrants in Trilogy common units held by certain members of Trilogy’s pre-closing management, which is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets. Once exercised, these warrants have redemption features similar to the common units held by members of Trilogy’s pre-closing management.See Note 12, Redeemable Noncontrolling Interests, for a further discussion. As of September 30, 20172020 and December 31, 2016,2019, the carrying value is a reasonable estimate of fair value.
Financial Instruments Disclosed at Fair Value
ASC Topic 825, Financial Instruments, requires disclosure of the fair value of financial instruments, whether or not recognized on the face of the balance sheet. Fair value is defined under ASC Topic 820.
Our accompanying condensed consolidated balance sheets include the following financial instruments: real estate notes receivable, debt security investment, cash and cash equivalents, accounts and other receivables, restricted cash, real estate deposits, accounts payable and accrued liabilities, accounts payable due to affiliates, mortgage loans payable and borrowings under our lines of credit and term loans.
We consider the carrying values of cash and cash equivalents, accounts and other receivables, restricted cash, real estate deposits and accounts payable and accrued liabilities to approximate the fair value for these financial instruments based upon an evaluation of the underlying characteristics, market data and because of the short period of time between origination of the instruments and their expected realization. The fair value of cash and cash equivalents is classified in Level 1 of the fair value hierarchy. The fair value of accounts payable due to affiliates is not determinable due to the related party nature of the accounts payable. The fair values of the other financial instruments are classified in Level 2 of the fair value hierarchy.
The fair value of our real estate notes receivable and debt security investment areis estimated using a discounted cash flow analysis using interest rates available to us for investments with similar terms and maturities. The fair valuevalues of our mortgage loans payable and our lines of credit and term loans are estimated using a discounted cash flow analysisanalyses using borrowing rates available to us for debt instruments with similar terms and maturities. We have determined that the valuations of our real estate notes receivable, debt security investment, mortgage loans payable and lines of credit and term loans are classified in Level 2 within the fair value hierarchy. The carrying amounts and estimated fair values of such financial instruments as of September 30, 20172020 and December 31, 20162019 were as follows:
September 30,
2020		December 31,
2019
 Carrying
Amount(1)		Fair
Value		Carrying
Amount(1)		Fair
Value
Financial Assets:
Debt security investment$75,037,000 $93,364,000 $72,717,000 $94,026,000 
Financial Liabilities:
Mortgage loans payable$800,170,000 $824,271,000 $792,870,000 $732,846,000 
Lines of credit and term loans$847,910,000 $859,406,000 $807,742,000 $816,355,000 
 
September 30,
2017
 
December 31,
2016
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Financial Assets:       
Real estate notes receivable$33,472,000
 $34,240,000
 $36,205,000
 $37,231,000
Debt security investment$66,661,000
 $93,387,000
 $64,912,000
 $94,320,000
Financial Liabilities:       
Mortgage loans payable$615,346,000
 $573,476,000
 $495,717,000
 $495,532,000
Lines of credit and term loans$585,482,000
 $592,945,000
 $639,693,000
 $647,336,000
___________
(1)Carrying amount is net of any discount/premium and unamortized costs.
16. Income Taxes
As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our consolidated subsidiaries as taxable REIT subsidiaries, or TRSs,TRS, pursuant to the Code. TRSsTRS may participate in services that would otherwise be considered impermissible for REITs and are subject to federal and state income tax at regular corporate tax rates.

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On March 27, 2020, the federal government passed the CARES Act that contains economic stimulus provisions, including the temporary removal of limitations on the deductibility of NOL, modifications to the carryback periods of NOL, modifications to the business interest deduction limitations and technical corrections to the tax depreciation recovery period of qualified improvement property. Accordingly, tax law changes within the CARES Act may impact income taxes accrued, deferred tax assets or liabilities and the associated valuation allowances included in our condensed consolidated financial statements, if any. We do not anticipate that tax law changes in the CARES Act will materially impact the computation of our taxable income, including our TRS. We also do not expect that we will realize a material tax benefit as a result of the changes to the provisions of the Code made by the CARES Act. We will continue to evaluate the tax impact of the CARES Act and any guidance provided by the United States Treasury Department, the IRS, and other state and local regulatory authorities to our condensed consolidated financial statements.
The components of income (loss)or loss before taxes for the three and nine months ended September 30, 20172020 and 20162019 were as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 20162020201920202019
Domestic$3,875,000
 $(56,233,000) $(2,318,000) $(154,887,000)Domestic$(444,000)$(16,211,000)$9,687,000 $(8,896,000)
Foreign(134,000) (135,000) (723,000) (277,000)Foreign(86,000)(52,000)(305,000)(354,000)
Income (loss) before income taxes$3,741,000
 $(56,368,000) $(3,041,000) $(155,164,000)
(Loss) income before income taxes(Loss) income before income taxes$(530,000)$(16,263,000)$9,382,000 $(9,250,000)
The components of income tax (benefit)benefit or expense for the three and nine months ended September 30, 20172020 and 20162019 were as follows:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 20162020201920202019
Federal deferred$(1,996,000) $2,859,000
 $(5,478,000) $(5,535,000)Federal deferred$(2,591,000)$(1,446,000)$(3,018,000)$(2,538,000)
State deferred(200,000) (68,000) (549,000) (924,000)State deferred(532,000)(242,000)(578,000)(381,000)
Foreign deferred—
 87,000
 (61,000) —
Federal current—
 107,000
 —
 115,000
Federal current0 0 (38,000)0 
Foreign current90,000
 (45,000) 239,000
 122,000
Foreign current150,000 90,000 425,000 510,000 
Valuation allowances1,386,000
 (2,942,000) 4,351,000
 6,395,000
Valuation allowances3,123,000 2,438,000 267,000 3,559,000 
Total income tax (benefit) expense$(720,000) $(2,000) $(1,498,000) $173,000
Total income tax expense (benefit)Total income tax expense (benefit)$150,000 $840,000 $(2,942,000)$1,150,000 
Current Income Tax
Federal and state income taxes are generally a function of the level of income recognized by our TRSs.TRS. Foreign income taxes are generally a function of our income on our real estate and real estate-related investments located in the United Kingdom, or UK and Isle of Man.
Deferred Taxes
Deferred income tax is generally a function of the period’s temporary differences (primarily basis differences between tax and financial reporting for real estate assets and equity investments) and generation of tax net operating lossesNOL that may be realized in future periods depending on sufficient taxable income.
We apply the rules under ASC 740-10, Accounting for Uncertainty in Income Taxes, for uncertain tax positions using a “more likely than not” recognition threshold for tax positions. Pursuant to these rules, we will initially recognize the financial statement effects of aan uncertain tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. As of both September 30, 20172020 and December 31, 2016,2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.
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We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable. As of both September 30, 20172020 and December 31, 2016,2019, our valuation allowance substantially reserves the net deferred tax assets due to inherent uncertainty of future income. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.
17. Business CombinationsLeases
2017 Business CombinationLessor
We have operating leases with tenants that expire at various dates through 2050. For the three months ended September 30, 2020 and 2019, we recognized $29,004,000 and $26,668,000, respectively, of revenues related to operating lease payments, of which $5,233,000 and $4,649,000, respectively, was for variable lease payments. For the nine months ended September 30, 2017, none2020 and 2019, we recognized $86,626,000 and $88,619,000, respectively, of revenues related to operating lease payments, of which $14,125,000 and $13,739,000, respectively, was for variable lease payments. As of September 30, 2020, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the three months ended December 31, 2020 and for each of the next four years ending December 31 and thereafter for properties that we wholly own:
YearAmount
2020$21,766,000 
202188,432,000 
202282,791,000 
202375,666,000 
202468,962,000 
Thereafter462,096,000 
Total$799,713,000 
Lessee
We lease certain land, buildings, furniture, fixtures, campus equipment, office equipment and automobiles. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Most leases include one or more options to renew, with renewal terms that generally can extend at various dates through 2112, excluding extension options. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. As of September 30, 2020, we had future lease payments of $44,307,000 for operating leases that had not yet commenced. Such operating leases will commence between fiscal year 2021 and 2022 with lease terms of up to 15 years.
The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may also include other variable lease costs (i.e., common area maintenance, property acquisitionstaxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of lease costs were accounted for as business combinations. See Note 3, Real Estate Investments, Net, for a discussion of our 2017 property acquisitions accounted for asfollows:

Three Months Ended September 30,
Lease CostClassification20202019
Operating lease cost(1)Property operating expenses and rental expenses$8,068,000 $7,387,000 
Finance lease cost
Amortization of leased assetsDepreciation and amortization433,000 467,000 
Interest on lease liabilitiesInterest expense82,000 146,000 
Total lease cost$8,583,000 $8,000,000 
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asset acquisitions. On September 26, 2017, we, through a majority-owned subsidiary of Trilogy, acquired a pharmaceutical business in Nashville, Tennessee from an unaffiliated third party for a contract purchase price of $7,500,000, plus closing
Nine Months Ended September 30,
Lease CostClassification20202019
Operating lease cost(1)Property operating expenses and rental expenses$24,507,000 $22,507,000 
Finance lease cost
Amortization of leased assetsDepreciation and amortization1,478,000 1,520,000 
Interest on lease liabilitiesInterest expense413,000 278,000 
Total lease cost$26,398,000 $24,305,000 
___________
(1)Includes short-term leases and variable lease costs, and an acquisition fee paid to our advisor, which are included in acquisitionimmaterial.
Other information related expenses into leases was as follows:
Lease Term and Discount RateSeptember 30,
2020		December 31,
2019
Weighted average remaining lease term (in years)
Operating leases13.513.5
Finance leases1.41.3
Weighted average discount rate
Operating leases5.76 %5.94 %
Finance leases5.90 %7.33 %
Nine Months Ended September 30,
Supplemental Disclosure of Cash Flows Information20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows related to operating leases$18,096,000 $16,602,000 
Operating cash outflows related to finance leases$413,000 $277,000 
Financing cash outflows related to finance leases$1,148,000 $2,490,000 
Leased assets obtained in exchange for finance lease liabilities$66,000 $0 
Right-of-use assets obtained in exchange for operating lease liabilities$14,127,000 $166,000 
Operating Leases
As of September 30, 2020, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated statements of operations and comprehensive income (loss). The acquisition of such pharmaceutical business was accounted for as a business combination. Based on quantitative and qualitative considerations, such business combination we completed during 2017 was not material.balance sheet:
2016 Business Combinations
For the nine months ended September 30, 2016, using cash on hand and debt financing, we completed 11 property acquisitions comprising 17 buildings, which have been accounted for as business combinations. The aggregate contract purchase price for these property acquisitions was $437,025,000, plus closing costs and acquisition fees of $11,821,000, which are included in acquisition related expenses in our accompanying condensed consolidated statements of operations and comprehensive income (loss).
Results of operations for the property acquisitions during the nine months ended September 30, 2016 are reflected in our accompanying condensed consolidated statements of operations and comprehensive income (loss) for the period from the date of acquisition of each property through September 30, 2016. For the period from the acquisition date through September 30, 2016, we recognized the following amounts of revenue and net income for the property acquisitions:
YearAmount
2020$6,330,000 
202123,711,000 
202224,163,000 
202324,351,000 
202423,603,000 
Thereafter190,561,000 
Total operating lease payments292,719,000 
Less: interest96,324,000 
Present value of operating lease liabilities$196,395,000 
41
Acquisition Revenue Net Income
2016 Acquisitions $12,735,000
 $670,000
The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed of our 11 property acquisitions for the nine months ended September 30, 2016:
 
2016 Property
Acquisitions
Building and improvements$396,665,000
Land36,345,000
Furniture, fixtures and equipment644,000
In-place leases40,059,000
Above-market leases1,324,000
Certificates of need18,410,000
Purchase option assets(56,792,000)
Total assets acquired436,655,000
Below-market leases(1,423,000)
Total liabilities assumed(1,423,000)
Net assets acquired$435,232,000
Assuming the property acquisitions in 2016 discussed above had occurred on January 1, 2015, for the three and nine months ended September 30, 2016, unaudited pro forma revenue, net loss, net loss attributable to controlling interest and net loss per common share attributable to controlling interest — basic and diluted would have been as follows:
 Three Months Ended Nine Months Ended
 September 30, 2016 September 30, 2016
Revenue$248,949,000
 $746,682,000
Net loss$(51,121,000) $(133,978,000)
Net loss attributable to controlling interest$(37,277,000) $(94,311,000)
Net loss per common share attributable to controlling interest — basic and diluted
$(0.19) $(0.49)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Finance Leases
The unaudited pro forma adjustments assume that the offering proceeds, at a price of $10.00 per share, net of offering costs, were raised as of January 1, 2015. In addition, acquisition related expenses associated with the property acquisitions have been excluded from the pro forma results in 2016. The pro forma results are not necessarily indicative of the operating results that would have been obtained had the acquisitions occurred at the beginning of the periods presented, nor are they necessarily indicative of future operating results.
18. Segment Reporting
ASC Topic 280, Segment Reporting, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions. Accordingly, when we acquired our first medical office building in June 2014; senior housing facility in September 2014; hospital in December 2014; senior housing — RIDEA portfolio in May 2015; skilled nursing facilities in October 2015; and integrated senior health campuses in December 2015, we established a new reportable business segment at such time. As of September 30, 2017,2020, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as a reconciliation of those cash flows to finance lease liabilities:
YearAmount
2020$90,000 
2021151,000 
202222,000 
202316,000 
20240 
Thereafter0 
Total finance lease payments279,000 
Less: interest11,000 
Present value of finance lease liabilities$268,000 
18. Segment Reporting
As of September 30, 2020, we evaluated our business and made resource allocations based on six6 reportable business segments: medical office buildings, hospitals, skilled nursing facilities, senior housing, senior housing —RIDEA and integrated senior health campuses.
Our medical office buildings are typically leased to multiple tenants under separate leases, in each building, thus requiring active management and responsibility for many of the associated operating expenses (although many(much of thesewhich are, or can effectively be, passed through to the tenants). In addition, our medical office buildings segment includes the Mezzanine Notes. Our hospital investments are primarily single-tenant properties thatfor which we lease the facilities to unaffiliated tenants under triple-net and generally master leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. Our skilled nursing facilities and senior housing facilities are similarly structured asto our hospital investments. In addition, our senior housing segment includes our debt security investment and Crown Senior Care Facility, a facility agreement we entered into with Caring Homes (TFP) Group Limited, or the CHG Borrower, an unaffiliated third party, on September 16, 2015, which was collateralized by three senior housing facilities in the UK and the income from the CHG Borrower’s operations and which was settled in full on November 15, 2016.investment. Our senior housing —RIDEA properties include senior housing facilities that are owned and operated utilizing a RIDEA structure. Our integrated senior health campuses include a range of assisted living, memory care, independent living, skilled nursing services and certain ancillary businesses.businesses that are owned and operated utilizing a RIDEA structure.
We evaluate performance based upon segment net operating income. We define segment net operating income as total revenues and grant income, less property operating expenses and rental expenses, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, interest expense, gain (loss)or loss in fair value of derivative financial instruments, gain or loss on dispositions of real estate investments, impairment of real estate investments, foreign currency gain (loss),or loss, other income, (expense),income or loss from unconsolidated entities and income tax benefit (expense)or expense for each segment. We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement. However, we believe that segment net operating income serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis.
Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance. Non-segment assets primarily consist of corporate assets including cash and cash equivalents, other receivables, real estate deposits, deferred financing costs interest rate swap assets and other assets not attributable to individual properties.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Summary information for the reportable segments during the three and nine months ended September 30, 20172020 and 20162019 was as follows:
Integrated
Senior Health
Campuses
Senior
Housing
— RIDEA
Medical
Office
Buildings		Senior
Housing		Skilled
Nursing
Facilities		HospitalsThree Months
Ended
September 30, 2020
 
Medical
Office
Buildings
 
Skilled
Nursing
Facilities
 Hospitals 
Senior
Housing
 
Senior
Housing
— RIDEA
 
Integrated
Senior Health
Campuses
 
Three Months
Ended
September 30, 2017
Revenues:              
Revenues and grant income:Revenues and grant income:
Resident fees and services $—
 $—
 $—
 $—
 $16,213,000
 $214,555,000
 $230,768,000
Resident fees and services$242,714,000 $21,217,000 $0 $0 $0 $0 $263,931,000 
Real estate revenue 19,971,000
 3,775,000
 2,964,000
 5,270,000
 —
 —
 31,980,000
Real estate revenue0 0 19,675,000 4,245,000 3,676,000 2,737,000 30,333,000 
Total revenues 19,971,000
 3,775,000
 2,964,000
 5,270,000
 16,213,000
 214,555,000
 262,748,000
Grant incomeGrant income740,000 0 0 0 0 0 740,000 
Total revenues and grant incomeTotal revenues and grant income243,454,000 21,217,000 19,675,000 4,245,000 3,676,000 2,737,000 295,004,000 
Expenses:              Expenses:
Property operating expenses —
 —
 —
 —
 10,823,000
 188,224,000
 199,047,000
Property operating expenses225,199,000 15,790,000 0 0 0 0 240,989,000 
Rental expenses 7,343,000
 415,000
 375,000
 166,000
 —
 —
 8,299,000
Rental expenses0 0 7,304,000 9,000 369,000 113,000 7,795,000 
Segment net operating income $12,628,000

$3,360,000

$2,589,000

$5,104,000

$5,390,000

$26,331,000

$55,402,000
Segment net operating income$18,255,000 $5,427,000 $12,371,000 $4,236,000 $3,307,000 $2,624,000 $46,220,000 
Expenses:              Expenses:
General and administrativeGeneral and administrative       $9,270,000
General and administrative$6,969,000 
Acquisition related expensesAcquisition related expenses         71,000
Acquisition related expenses54,000 
Depreciation and amortizationDepreciation and amortization       27,579,000
Depreciation and amortization24,591,000 
Other income (expense):Other income (expense):            Other income (expense):
Interest expense:Interest expense:  Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)  (14,773,000)
Loss in fair value of derivative financial instruments (59,000)
Loss on dispositions of real estate investments       (9,000)
Interest expense (including amortization of deferred financing costs and debt discount/premium)Interest expense (including amortization of deferred financing costs and debt discount/premium)(17,229,000)
Gain in fair value of derivative financial instrumentsGain in fair value of derivative financial instruments1,763,000 
Gain on dispositions of real estate investmentsGain on dispositions of real estate investments1,037,000 
Loss from unconsolidated entitiesLoss from unconsolidated entities       (1,494,000)Loss from unconsolidated entities(2,855,000)
Foreign currency gainForeign currency gain           1,384,000
Foreign currency gain1,945,000 
Other incomeOther income       210,000
Other income203,000 
Income before income taxes       3,741,000
Income tax benefit           720,000
Net income             $4,461,000
Loss before income taxesLoss before income taxes(530,000)
Income tax expenseIncome tax expense(150,000)
Net lossNet loss$(680,000)
41
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Integrated
Senior Health
Campuses
Senior
Housing
— RIDEA
Medical
Office
Buildings		Senior
Housing		Skilled
Nursing
Facilities		HospitalsThree Months
Ended
September 30, 2019
Revenues:
Resident fees and services$257,048,000 $16,752,000 $0 $0 $0 $0 $273,800,000 
Real estate revenue0 0 19,890,000 2,601,000 2,672,000 2,799,000 27,962,000 
Total revenues257,048,000 16,752,000 19,890,000 2,601,000 2,672,000 2,799,000 301,762,000 
Expenses:
Property operating expenses230,349,000 11,509,000 0 0 0 0 241,858,000 
Rental expenses0 0 8,140,000 553,000 346,000 149,000 9,188,000 
Segment net operating income$26,699,000 $5,243,000 $11,750,000 $2,048,000 $2,326,000 $2,650,000 $50,716,000 
Expenses:
General and administrative$7,675,000 
Acquisition related expenses4,000 
Depreciation and amortization36,778,000 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)(21,046,000)
Loss in fair value of derivative financial instruments(1,169,000)
Loss from unconsolidated entities(766,000)
Foreign currency loss(1,464,000)
Other income1,923,000 
Loss before income taxes(16,263,000)
Income tax expense(840,000)
Net loss$(17,103,000)
44
  
Medical
Office
Buildings
 
Skilled
Nursing
Facilities
 Hospitals 
Senior
Housing
 
Senior
Housing
 — RIDEA
 
Integrated
Senior Health
Campuses
 
Three Months
Ended
September 30, 2016
Revenues:              
Resident fees and services $—
 $—
 $—
 $—
 $15,871,000
 $202,236,000
 $218,107,000
Real estate revenue 19,686,000
 2,994,000
 3,600,000
 4,543,000
 —
 —
 30,823,000
Total revenues 19,686,000

2,994,000

3,600,000

4,543,000

15,871,000

202,236,000
 248,930,000
Expenses:              
Property operating expenses —
 —
 —
 —
 10,660,000
 176,580,000
 187,240,000
Rental expenses 7,142,000
 231,000
 145,000
 135,000
 —
 —
 7,653,000
Segment net operating income $12,544,000

$2,763,000

$3,455,000

$4,408,000

$5,211,000

$25,656,000

$54,037,000
Expenses:              
General and administrative           $7,232,000
Acquisition related expenses           15,936,000
Depreciation and amortization         71,384,000
Other income (expense):            
Interest expense:  
Interest expense (including amortization of deferred financing costs and debt discount/premium) (13,027,000)
Gain in fair value of derivative financial instruments 989,000
Loss from unconsolidated entities (2,355,000)
Foreign currency loss (1,502,000)
Other income 42,000
Loss before income taxes          (56,368,000)
Income tax benefit 2,000
Net loss             $(56,366,000)


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Integrated
Senior Health
Campuses
Senior
Housing
— RIDEA
Medical
Office
Buildings		Senior
Housing		Skilled
Nursing
Facilities		HospitalsNine Months
Ended
September 30, 2020
Revenues and grant income:
Resident fees and services$743,340,000 $65,134,000 $0 $0 $0 $0 $808,474,000 
Real estate revenue0 0 58,853,000 11,038,000 12,415,000 8,258,000 90,564,000 
Grant income30,730,000 0 0 0 0 0 30,730,000 
Total revenues and grant income774,070,000 65,134,000 58,853,000 11,038,000 12,415,000 8,258,000 929,768,000 
Expenses:
Property operating expenses683,332,000 47,588,000 0 0 0 0 730,920,000 
Rental expenses0 0 22,536,000 52,000 1,195,000 329,000 24,112,000 
Segment net operating income$90,738,000 $17,546,000 $36,317,000 $10,986,000 $11,220,000 $7,929,000 $174,736,000 
Expenses:
General and administrative$21,324,000 
Acquisition related expenses307,000 
Depreciation and amortization74,250,000 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)(53,415,000)
Loss in fair value of derivative financial instruments(5,671,000)
Gain on dispositions of real estate investments1,037,000 
Impairment of real estate investments(8,335,000)
Loss from unconsolidated entities(3,065,000)
Foreign currency loss(1,303,000)
Other income1,279,000 
Income before income taxes9,382,000 
Income tax benefit2,942,000 
Net income$12,324,000 
45
  
Medical
Office
Buildings
 
Skilled
Nursing
Facilities
 Hospitals 
Senior
Housing
 
Senior
Housing
— RIDEA
 
Integrated
Senior Health
Campuses
 
Nine Months
Ended
September 30, 2017
Revenues:              
Resident fees and services $—
 $—
 $—
 $—
 $48,048,000
 $634,252,000
 $682,300,000
Real estate revenue 58,879,000
 11,228,000
 9,717,000
 15,598,000
 —
 —
 95,422,000
Total revenues 58,879,000
 11,228,000
 9,717,000
 15,598,000
 48,048,000
 634,252,000
 777,722,000
Expenses:              
Property operating expenses —
 —
 —
 —
 32,507,000
 563,592,000
 596,099,000
Rental expenses 22,068,000
 1,204,000
 1,152,000
 501,000
 —
 —
 24,925,000
Segment net operating income $36,811,000
 $10,024,000
 $8,565,000
 $15,097,000
 $15,541,000
 $70,660,000
 $156,698,000
Expenses:              
General and administrative       $24,642,000
Acquisition related expenses         532,000
Depreciation and amortization       88,442,000
Other income (expense):            
Interest expense:  
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)  (45,356,000)
Gain in fair value of derivative financial instruments 44,000
Gain on dispositions of real estate investments       3,370,000
Impairment of real estate investments       (4,883,000)
Loss from unconsolidated entities       (3,668,000)
Foreign currency gain           3,697,000
Other income       673,000
Loss before income taxes       (3,041,000)
Income tax benefit           1,498,000
Net loss             $(1,543,000)


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Integrated
Senior Health
Campuses
Senior
Housing
— RIDEA
Medical
Office
Buildings		Senior
Housing		Skilled
Nursing
Facilities		HospitalsNine Months
Ended
September 30, 2019
Revenues:
Resident fees and services$764,803,000 $49,751,000 $0 $0 $0 $0 $814,554,000 
Real estate revenue0 0 60,548,000 14,184,000 9,998,000 8,467,000 93,197,000 
Total revenues764,803,000 49,751,000 60,548,000 14,184,000 9,998,000 8,467,000 907,751,000 
Expenses:
Property operating expenses681,996,000 34,704,000 0 0 0 0 716,700,000 
Rental expenses0 0 23,553,000 776,000 1,076,000 434,000 25,839,000 
Segment net operating income$82,807,000 $15,047,000 $36,995,000 $13,408,000 $8,922,000 $8,033,000 $165,212,000 
Expenses:
General and administrative$21,104,000 
Acquisition related expenses(292,000)
Depreciation and amortization87,149,000 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)(59,665,000)
Loss in fair value of derivative financial instruments(5,846,000)
Loss from unconsolidated entities(1,713,000)
Foreign currency loss(1,654,000)
Other income2,377,000 
Loss before income taxes(9,250,000)
Income tax expense(1,150,000)
Net loss$(10,400,000)
  Medical
Office
Buildings		 
Skilled
Nursing
Facilities
 Hospitals Senior
Housing		 
Senior
Housing
 — RIDEA
 
Integrated
Senior Health
Campuses
 
Nine Months
Ended
September 30, 2016
Revenues:              
Resident fees and services $—
 $—
 $—
 $—
 $46,612,000
 $604,953,000
 $651,565,000
Real estate revenue 54,302,000
 5,305,000
 13,744,000
 13,840,000
 —
 —
 87,191,000
Total revenues 54,302,000
 5,305,000
 13,744,000
 13,840,000
 46,612,000
 604,953,000
 738,756,000
Expenses:              
Property operating expenses —
 —
 —
 —
 31,616,000
 537,110,000
 568,726,000
Rental expenses 19,727,000
 385,000
 1,075,000
 395,000
 —
 —
 21,582,000
Segment net operating income $34,575,000
 $4,920,000
 $12,669,000

$13,445,000
 $14,996,000
 $67,843,000
 $148,448,000
Expenses:              
General and administrative           $21,379,000
Acquisition related expenses           24,184,000
Depreciation and amortization         212,596,000
Other income (expense):            
Interest expense:  
Interest expense (including amortization of deferred financing costs and debt discount/premium) (32,350,000)
Loss in fair value of derivative financial instruments (54,000)
Loss from unconsolidated entities (6,916,000)
Foreign currency loss (6,544,000)
Other income 411,000
Loss before income taxes          (155,164,000)
Income tax expense (173,000)
Net loss             $(155,337,000)
AssetsTotal assets by reportable segment as of September 30, 20172020 and December 31, 20162019 were as follows:
September 30,
2017
 
December 31,
2016
September 30,
2020		December 31,
2019
Integrated senior health campuses$1,353,987,000
 $1,330,597,000
Integrated senior health campuses$1,914,639,000 $1,791,868,000 
Medical office buildings668,752,000
 699,381,000
Medical office buildings616,944,000 620,292,000 
Senior housing — RIDEA281,015,000
 286,058,000
Senior housing — RIDEA351,237,000 360,823,000 
Senior housing231,676,000
 212,314,000
Senior housing149,289,000 152,909,000 
Skilled nursing facilities129,948,000
 129,984,000
Skilled nursing facilities119,366,000 126,606,000 
Hospitals124,320,000
 127,258,000
Hospitals110,545,000 113,737,000 
Other7,492,000
 8,926,000
Other9,169,000 6,054,000 
Total assets$2,797,190,000
 $2,794,518,000
Total assets$3,271,189,000 $3,172,289,000 
As of both September 30, 20172020 and December 31, 2016,2019, goodwill of $75,309,000 and $75,265,000, respectively, was allocated to integrated senior health campuses, and no other segments had goodwill.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)

Our portfolio of properties and other investments are located in the United States, Isle of Man and the UK. Revenues and grant income and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for our operations for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
 Three Months Ended September 30, Nine Months Ended September 30, 2020201920202019
 2017 2016 2017 2016
Revenues:        
Revenues and grant income:Revenues and grant income:
United States $261,551,000
 $247,881,000
 $774,230,000
 $735,344,000
United States$293,796,000 $300,609,000 $926,202,000 $904,152,000 
International 1,197,000
 1,049,000
 3,492,000
 3,412,000
International1,208,000 1,153,000 3,566,000 3,599,000 
Total revenues $262,748,000
 $248,930,000
 $777,722,000
 $738,756,000
$295,004,000 $301,762,000 $929,768,000 $907,751,000 
The following is a summary of real estate investments, net by geographic regions as of September 30, 20172020 and December 31, 2016:
2019:
September 30,
2017
 
December 31,
2016
 September 30,
2020		December 31,
2019
Real estate investments, net:   Real estate investments, net:
United States$2,105,942,000
 $2,089,247,000
United States$2,278,720,000 $2,219,882,000 
International52,940,000
 49,734,000
International48,222,000 50,539,000 
Total real estate investments, net$2,158,882,000
 $2,138,981,000
$2,326,942,000 $2,270,421,000 
19. Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk are primarily real estate notes receivable andour debt security investment, cash and cash equivalents, accounts and other receivables, restricted cash and real estate deposits. We are exposed to credit risk with respect to the real estate notes receivable andour debt security investment, but we believe collection of the outstanding amount is probable. We believe that the risk is further mitigated as the real estate notes receivable are secured by property and there is a guarantee of completion agreement executed between the parent company of the borrowers and us. Cash and cash equivalents are generally invested in investment-grade, short-term instruments with a maturity of three months or less when purchased. We have cash and cash equivalents in financial institutions that are insured by the Federal Deposit Insurance Corporation, or FDIC. As of September 30, 20172020 and December 31, 2016,2019, we had cash and cash equivalents in excess of FDIC insured limits. We believe this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants is limited. We perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.
Based on leases in effect as of September 30, 2017,2020, properties in one1 state in the United States accounted for 10.0% or more of theour total property portfolio’s annualized base rent or annualized net operating income of our total property portfolio.income. Properties located in Indiana accounted for 35.4%38.3% of theour total property portfolio’s annualized base rent or annualized net operating income of our total property portfolio.income. Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.
Based on leases in effect as of September 30, 2017,2020, our six6 reportable business segments, integrated senior health campuses, medical office buildings, senior housing —RIDEA, senior housing, skilled nursing facilities, hospitals and hospitalssenior housing, accounted for 43.4%52.9%, 30.0%26.1%, 10.3%10.1%, 6.3%5.5%, 5.9%2.7% and 4.1%2.7%, respectively, of our total property portfolio’s annualized base rent or annualized net operating income. As of September 30, 2017,2020, none of our tenants at our properties accounted for 10.0% or more of our aggregatetotal property portfolio’s annualized base rent or annualized net operating income, which is based on contractual base rent from leases in effect inclusive of our senior housing — RIDEA facilities and integrated senior health campuses operations as of September 30, 2017.2020.

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20. Per Share Data
We report earnings (loss) per share pursuant to ASC Topic 260, Earnings per Share. Basic earnings (loss) per share for all periods presented are computed by dividing net income (loss) applicable to common stock by the weighted average number of shares of our common stock outstanding during the period. Net income (loss) applicable to common stock is calculated as net income (loss) attributable to controlling interest less distributions allocated to participating securities of $7,000$0 and $6,000,$7,000, respectively, for the three months ended September 30, 20172020 and 2016,2019, and $19,000$9,000 and $12,000,$21,000, respectively, for the nine months ended September 30, 20172020 and 2016.2019. Diluted earnings (loss) per share are computed based on the weighted average number of shares of our common stock and all potentially dilutive securities, if any. Nonvested shares of our restricted common stock and redeemable limited partnership units of our operating partnership are participating securities and give rise to potentially dilutive shares of our common stock.
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As of September 30, 20172020 and 2016,2019, there were 46,00033,000 and 40,00046,500 nonvested shares, respectively, of our restricted common stock outstanding, but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during these periods. As of both September 30, 20172020 and 2016,2019, there were 222 units of redeemable limited partnership units of our operating partnership outstanding, but such units were also excluded from the computation of diluted earnings (loss) per share because such units were anti-dilutive during these periods.
21. Subsequent Event
Amendment to Trilogy PropCo Credit Agreement
On October 27, 2017, we entered into an amendment to the Trilogy PropCo Credit Agreement, or the Trilogy PropCo Amendment, with KeyBank, as administrative agent, and a syndicate of other banks, as lenders, to amend the terms of the Trilogy PropCo Credit Agreement.
The material terms of the Trilogy PropCo Amendment provide for: (i) a reduction of the total commitment under the Trilogy PropCo Line of Credit from $300,000,000 to $250,000,000; (ii) a revision to the definition of applicable margin, pursuant to which the Trilogy PropCo Line of Credit bears interest at a floating rate based on LIBOR, plus an applicable margin of 4.00% per annum or an alternate base rate plus an applicable margin of 3.00% per annum, at the Trilogy PropCo Borrowers' option; and (iii) the Trilogy PropCo Borrowers' obligation to pay to KeyBank the unused fee that has accrued with respect to the portion of the total commitment being reduced.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT III, Inc. and its subsidiaries, including Griffin-American Healthcare REIT III Holdings, LP, except where the context otherwise requires.noted.
The following discussion should be read in conjunction with our accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our 20162019 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or SEC, on March 15, 2017.26, 2020. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of September 30, 20172020 and December 31, 2016,2019, together with our results of operations for the three and nine months ended September 30, 20172020 and 20162019 and cash flows for the nine months ended September 30, 20172020 and 2016.2019.
Forward-Looking Statements
Historical results and trends should not be taken as indicative of future operations. Our statements contained in this report that are not historical factual statements are “forward-looking statements.” Actual results may differ materially from those included in the forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations, are generally identifiable by use of the words “expect,” “project,” “may,” “will,” “should,” “could,” “would,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential,” “seek” and any other comparable and derivative terms or the negatives thereof. Our ability to predict results or the actual effect of future plans orand strategies is inherently uncertain. Factors which could have a material adverse effect on our operations on a consolidated basis include, but are not limited to: changes in economic conditions generally and the real estate market specifically; the effects of the coronavirus, or COVID-19, pandemic, including its effects on the healthcare industry, senior housing and skilled nursing facilities and the economy in general; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs; the availability of capital; changes in interest and foreign currency exchange rates; competition in the real estate industry; the supply and demand for operating properties in our proposed market areas; changes in accounting principles generally accepted in the United States, of America, or GAAP, policies or guidelines applicable to REITs; the success of our investment strategy; the availability of financing; and our ongoing relationship with American Healthcare Investors, LLC, or American Healthcare Investors, and Griffin Capital Company, LLC, or Griffin Capital, (formerly known as Griffin Capital Corporation), or collectively, our co-sponsors, and their affiliates. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date on which such statements were made, and undue reliance should not be placed on such statements. We undertake no obligation to update any such statements that may become untrue because of subsequent events. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview and Background
Griffin-American Healthcare REIT III, Inc., a Maryland corporation, was incorporated on January 11, 2013,, and therefore, we consider that our date of inception. We were initially capitalized on January 15, 2013.2013. We invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings, hospitals, skilled nursing facilities, senior housing and other healthcare-related facilities. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). We also originate and acquire secured loans and may also originate and acquire other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income. We qualified to be taxed as a REIT under the Code for federal income tax purposes beginning with our taxable year ended December 31, 2014, and we intend to continue to qualify to be taxed as a REIT.
On February 26, 2014, we commenced a best efforts initial public offering, or our initial offering, in which we offered to the public up to $1,900,000,000 in shares of our common stock. As of April 22, 2015, the deregistration date of our initial public offering, or our initial offering, we had received and accepted subscriptions in our initial offering for 184,930,598 shares of our common stock, or $1,842,618,000, excluding shares of our common stock issued pursuant to our initial distribution reinvestment plan, or the Initial DRIP. As of April 22, 2015, a total of $18,511,000 in distributions were reinvested that resulted in 1,948,563 shares of our common stock being issued pursuant to the DRIP portion of our initial offering.Initial DRIP.
On March 25, 2015, we filed a Registration Statement on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act, to register a maximum of $250,000,000 of additional shares of our common stock to be issued pursuant to our distribution reinvestment plan,the Initial DRIP, or the Secondary2015 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commenceWe commenced offering shares pursuant to the Secondary2015 DRIP Offering until April 22, 2015, following the deregistration of our initial offering. Effective October 5, 2016, we amended and restated the Initial DRIP, or the Amended and Restated DRIP, to amend the price at which shares of our common stock are issued pursuant to the Secondary2015 DRIP Offering. We
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continued to offer shares of our common stock pursuant to the 2015 DRIP Offering until the termination and deregistration of such offering on March 29, 2019. As of March 29, 2019, a total of $245,396,000 in distributions were reinvested that resulted in 26,386,545 shares of our common stock being issued pursuant to the 2015 DRIP Offering.
On January 30, 2019, we filed a Registration Statement on Form S-3 under the Securities Act to register a maximum of $200,000,000 of additional shares of our common stock to be issued pursuant to the Amended and Restated DRIP, or the 2019 DRIP Offering. We commenced offering shares pursuant to the 2019 DRIP Offering on April 1, 2019, following the deregistration of the 2015 DRIP Offering. On May 29, 2020, in consideration of the impact the COVID-19 pandemic has had on the United States, globally and our business operations, our board of directors, or our board, authorized the suspension of the Amended and Restated DRIP until such time, if any, as our board determines to authorize new distributions and to reinstate such plan. Such suspension was effective upon the completion of all shares issued with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. As of September 30, 2020, a total of $63,105,000 in distributions were reinvested that resulted in 6,724,348 shares of common stock being issued pursuant to the 2019 DRIP Offering. We collectively refer to the Initial DRIP portion of our initial offering, the 2015 DRIP Offering and the 2019 DRIP Offering as our DRIP Offerings. See the “Liquidity and Capital Resources” section below for a further discussion.
The COVID-19 pandemic is dramatically impacting the United States and has resulted in an aggressive worldwide effort to contain the spread of the virus. These efforts have significantly and adversely disrupted economic markets and impacted commercial activity worldwide, including markets in which we own and/or operate properties, and the prolonged economic impact remains uncertain. In addition, the continuously evolving nature of the COVID-19 pandemic makes it difficult to ascertain the long-term impact it will have on real estate markets and our portfolio of investments. Considerable uncertainty still surrounds the COVID-19 pandemic and its effects on the population, as well as the effectiveness of any responses taken on a national and local level by government and public health authorities and businesses to contain and combat the outbreak and spread of the virus. In particular, government-imposed business closures and re-opening restrictions have dramatically impacted the operations of our real estate investments and our tenants across the country, such as creating declines in resident occupancy. Further, our senior housing — RIDEA facilities and integrated senior health campuses have also experienced dramatic increases and may continue to experience increases in costs to care for residents, particularly labor costs to maintain staffing levels to care for the aged population during this crisis, costs of COVID-19 testing of employees and residents and costs to procure the volume of personal protective equipment, or PPE, and other supplies required.
We have taken actions to strengthen our balance sheet and preserve liquidity in response to the COVID-19 pandemic risks. Since March 2020, we have postponed non-essential capital expenditures. In addition, in March 2020, we reduced stockholder distributions and partially suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders. In response to the continued uncertainty and adverse effects of the COVID-19 pandemic on our operations, in May 2020, we suspended all distribution payments, the Amended and Restated DRIP and our share repurchase plan for all stockholders to further conserve and preserve liquidity. Furthermore, in an effort to increase our liquidity, our advisor agreed to defer 50.0% of the asset management fees that it would otherwise be entitled to receive for services performed by our advisor or its affiliates from June 1, 2020 to November 30, 2020. See Note 13, Equity — Distribution Reinvestment Plan,14, Related Party Transactions, to our accompanying condensed consolidated financial statements for a further discussion. As of September 30, 2017, a total of $155,616,000 in distributions were reinvested and 16,712,987 sharesWe believe that the long-term stability of our common stock were issued pursuantportfolio will return once the virus has been controlled. In states where lockdown orders have been lifted, the downward trends in our portfolio appear to have somewhat moderated, but we have not yet witnessed a significant rebound. We are continuously monitoring the Secondary DRIP Offering.impact of the COVID-19 pandemic on our business, residents, tenants, operating partners, managers, portfolio of investments and on the United States and global economies. The prolonged duration and impact of the COVID-19 pandemic has materially disrupted, and may continue to materially disrupt, our business operations and impact our financial performance. See the “Factors Which May Influence Results of Operations,” “Results of Operations” and “Liquidity and Capital Resources” sections below for a further discussion.

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On October 5, 2016, our board of directors, or3, 2019, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established an initialupdated estimated per share net asset value, or NAV, of our common stock of $9.01. On October 4, 2017, our board approved and established a revised$9.40. We previously provided an updated estimated per share NAV of our common stock of $9.27. We are providing the estimated per share NAVannually to assist broker-dealers in connection with their obligations under National Association of Securities Dealers Conduct Rule 2340, as required by the Financial Industry Regulatory Authority, or FINRA, Rule 2231 with respect to customer account statements. The updated estimated per share NAV iswas based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding on a fully diluted basis.basis, calculated as of June 30, 2019. The valuation was performed in accordance with the methodology provided in Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs,, or the Practice Guideline, issued by the Investment Program Association,Institute for Portfolio Alternatives, or the IPA, in April 2013, in addition to guidance from the SEC. We intend to continue to publish an updated estimated per share NAV on at least an annual basis. See our Current ReportsReport on Form 8-K filed with the SEC on October 7, 2016 and October 5, 2017,4, 2019 for more information on the methodologies and assumptions used to determine, and the limitations and risks of, our initial and revisedupdated estimated per share NAV. At this time, the audit committee of our board continues to deem it prudent to delay the determination of our annual estimated per share NAV respectively.until sometime in the future when we are able to more clearly discern the short- and long-term ramifications on valuation assumptions and methodologies and resulting healthcare real estate asset values
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due to the impacts of the COVID-19 pandemic. As such, we did not publish an updated estimated per share NAV of our common stock in October 2020. See Note 13, Equity — Distribution Reinvestment Plan, to our accompanying condensed consolidated financial statements.
We conduct substantially all of our operations through Griffin-American Healthcare REIT III Holdings, LP, or our operating partnership. We are externally advised by Griffin-American Healthcare REIT III Advisor, LLC, or Griffin-American Advisor, or our advisor, pursuant to an advisory agreement, or the Advisory Agreement, between us and our advisor. The Advisory Agreement was effective as of February 26, 2014 and had a one-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February 14, 201711, 2020 and expires on February 26, 2018.2021. Our advisor uses its best efforts, subject to the oversight, review and approval of our board, to, among other things, research, identify, review and make investments in and dispositions of properties and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by wholly owned subsidiaries of American Healthcare Investors, and 25.0% owned by a wholly owned subsidiary of Griffin Capital. American Healthcare Investors is 47.1% owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Colony NorthStar,Capital, Inc. (NYSE: CLNS)CLNY), or Colony NorthStar (formerly known as NorthStar Asset Management Group Inc. prior to its merger with Colony Capital, Inc. and NorthStar Realty Finance Corp. on January 10, 2017), and 7.8% owned by James F. Flaherty III, a former partner of Colony NorthStar.Capital. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, the dealer manager for our initial offering, or our dealer manager, Colony NorthStar,Capital, or Mr. Flaherty; however, we are affiliated with Griffin-American Advisor,our advisor, American Healthcare Investors and AHI Group Holdings.
We currently operate through six reportable business segments: medical office buildings, hospitals, skilled nursing facilities, senior housing, senior housing — RIDEA and integrated senior health campuses. As of September 30, 2017,2020, we owned and/or operated 9597 properties, comprising 99101 buildings, and 107118 integrated senior health campuses including completed development projects, or approximately 12,516,00013,880,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $2,837,375,000.$3,031,654,000. In addition, as of September 30, 2017,2020, we have invested $98,011,000 inalso owned a real estate-related investments, net of principal repayments. As of September 30, 2017, our portfolio capitalization rate was approximately 7.4%, which estimate was based upon total property portfolio net operating income from each property’s forward looking pro forma projectionsinvestment purchased for the expected year one property performance, including any contractual rent increases contained in such leases for year one, divided by the contract purchase price of the total property portfolio, exclusive of any acquisition fees and expenses paid.$60,429,000.
Critical Accounting Policies
The complete listing of our Critical Accounting Policies was previously disclosed in our 20162019 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017,26, 2020, and there have been no material changes to our Critical Accounting Policies as disclosed therein, except as noted below.below or included within Note 2, Summary of Significant Accounting Policies, to our accompanying condensed consolidated financial statements.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 20162019 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017.

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Property Acquisitions
In accordance with Accounting Standards Codification Topic 805, Business Combinations, and Accounting Standards Update, or ASU, 2017-01, Clarifying the Definition of a Business, or ASU 2017-01, we determine whether a transaction is a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired and liabilities assumed are not a business, we account for the transaction as an asset acquisition. Under both methods, we recognize the identifiable assets acquired and liabilities assumed; however, for a transaction accounted for as an asset acquisition, we allocate the purchase price to the identifiable assets acquired and liabilities assumed based on their relative fair values. We immediately expense acquisition related expenses associated with a business combination and capitalize acquisition related expenses directly associated with an asset acquisition.26, 2020.
Recently Issued or Adopted Accounting Pronouncements
For a discussion of recently issued or adopted accounting pronouncements, see Note 2, Summary of Significant Accounting Policies — Recently Issued or Adopted Accounting Pronouncements, to our accompanying condensed consolidated financial statements.
Acquisitions and Dispositions in 20172020
For a discussion of our acquisitions and dispositions of investments in 2017,2020, see Note 2, Summary of Significant Accounting Policies — Impairment of Long-Lived Assets, Note 2, Summary of Significant Accounting Policies — Properties Held for Sale and Note 3, Real Estate Investments, Net, and Note 17, Business Combinations, to our accompanying condensed consolidated financial statements.
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Factors Which May Influence Results of Operations
WeDue to the ongoing COVID-19 pandemic in the United States and globally, our residents, tenants, operating partners and managers have been materially impacted. The situation continues to present a meaningful challenge for us as an owner and operator of healthcare facilities, as the impact of the virus continues to result in a massive strain throughout the healthcare system. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and skilled nursing facilities, and we continue to work diligently to implement aggressive protocols at such facilities in line with the Centers for Disease Control and Prevention and Centers for Medicare and Medicaid Services guidelines to limit the exposure and spread of COVID-19.
Each type of real estate asset we own has been impacted by COVID-19 to varying degrees. The COVID-19 pandemic has negatively impacted the businesses of our medical office tenants and their ability to pay rent on a timely basis. In the early months of the pandemic when many of the states had implemented “stay at home” orders, in excess of 50.0% of our tenants in medical office buildings had been classified by state governments as “non-essential” and were ordered to either shut down entirely, or significantly limit hours of operations, which prevented or significantly limited our tenants from seeing patients in their offices and thereby creating unprecedented revenue pressure on such tenants. Substantially all of our physician practices and other medical service providers of non-essential and elective services in our medical office buildings are now open. However, the number of patients returning to such offices varies across practice types and geographic markets as people continue to delay office visits indefinitely due to the fears or uncertainties associated with COVID-19 despite the availability of services. Additionally, while restrictions have been at least partially lifted in many states, there remains a risk of reclosures in states where infection rates continue to rise, which may put additional pressure on our operations.
For our managed senior housing — RIDEA facilities and integrated senior health campuses, based on preliminary information available to management as of October 31, 2020, we have experienced an approximate 13.3% decline in our resident occupancies since February 2020 largely due to a decline in move-ins of prospective residents because of shelter-in-place, re-opening and other quarantine restrictions imposed by government regulations and guidelines. In addition, we continue to experience challenges in attracting prospective residents to such facilities and campuses because they are choosing to delay moving into communities until the threat posed by the virus has declined. Further, the elimination of elective hospital procedures, which drive post-acute skilled nursing admissions, has impacted our resident occupancy levels of our integrated senior health campuses. Our facilities have adopted different phased-in approaches to facility operations depending on the market in which they operate, which range from stringent restrictions of essential visitors and frequent testing of staff and residents to allowing screened visitors and limited activities. At the same time that our managed senior housing — RIDEA facilities and integrated senior health campuses are facing a reduction in revenue associated with lower resident occupancies, they experienced up to a 30.0% increase in costs to care for residents, particularly increased labor costs to maintain staffing levels to care for the aged population during this crisis, costs of testing employees and residents for COVID-19 and costs to procure the volume of PPE and other supplies required to maintain health and safety measures and protocols. Such costs have begun to moderate somewhat during the third quarter of 2020. Our leased, non-RIDEA senior housing and skilled nursing facility tenants have also experienced and may continue to experience similar pressures related to occupancy declines and expense increases, which may impact their ability to pay rent and have an adverse effect on our operations. Therefore, our immediate focus continues to be on resident occupancy recovery and operating expense management.
The impacts of the COVID-19 pandemic have been significant, rapidly evolving and may continue into the future. Managers of our RIDEA properties continue to evaluate their options for financial assistance, such as utilizing programs within the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, passed by the federal government on March 27, 2020, as well as other state and local government relief programs. The CARES Act includes multiple opportunities for immediate cash relief in the form of grants, tax benefits and Medicare reimbursement programs. Some of our tenants within our non-RIDEA properties have sought financial assistance from the CARES Act through programs such as the Payroll Protection Program and deferral of payroll tax payments. However, these government assistance programs are not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally, that may reasonably be expected to have a materialfully offset the negative financial impact favorableof the COVID-19 pandemic, and there can be no assurance that these programs will continue or unfavorable, on revenues or incomethe extent to which they will be expanded. Therefore, the ultimate impact of such relief from the acquisition, managementCARES Act and operationother enacted and future legislation and regulation, including the extent to which relief funds from such programs will provide meaningful support for lost revenue and increasing costs, is uncertain.
The information in this Quarterly Report on Form 10-Q is based on data currently available to us and will likely change as the COVID-19 pandemic progresses. As such, we continue to closely monitor COVID-19 developments and are continuously assessing the implications to our business, residents, tenants, operating partners, managers and our portfolio of properties other than those listed ininvestments. We anticipate that the government-imposed or self-imposed lockdowns and restrictions have created pent-up demand for doctors’ visits, move-ins into senior housing facilities and elective procedures, which will eventually drive skilled nursing occupancies higher; however, we cannot predict with reasonable certainty when such demand will return to pre-COVID-19 levels. The COVID-19 pandemic has had, and may continue to have, an adverse effect on our business, and
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therefore, we are unable to predict the full extent or nature of the future impact to our financial condition and results of operations at this time. We expect the trends discussed above with respect to the impact of the COVID-19 pandemic to continue. Thus, the lasting impact of the COVID-19 pandemic on our future results could be significant and will largely depend on future developments, including the duration of the crisis and the success of efforts to contain it, which are highly uncertain and cannot be predicted with confidence at this time. See the “Results of Operations” and “Liquidity and Capital Resources” sections below, as well as Part II, Item 1A.1A, Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously disclosed in our 2016 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017.
Revenues
The amount of revenues generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space and space available from lease terminations at the then existing rental rates. Negative trends in one or more of these factors could adversely affect our revenue in future periods.for a further discussion.
Scheduled Lease Expirations
Excluding our senior housing— RIDEA facilities and our integrated senior health campuses, as of September 30, 2017,2020, our properties were 94.6%91.5% leased and during the remainder of 2017,2020, 2.4% of the leased GLA is scheduled to expire. For the three months ended September 30, 2017, our senior housing— RIDEA facilities and integrated senior health campuses were 85.5% and 85.5% leased, respectively. For the nine months ended September 30, 2017, our senior housing— RIDEA facilities and integrated senior health campuses were 84.7% and 85.5% leased, respectively. Substantially all of our leases with residents at such properties are for a term of one year or less. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next twelve months. In the future, if we are unable to negotiate renewals, we will try to identify new tenants or collaborate with existing tenants who are seeking additional space to occupy.
As of September 30, 2017,2020, our remaining weighted average lease term was 8.67.3 years, excluding our senior housing— RIDEA facilities and our integrated senior health campuses.
Our combined senior housing— RIDEA facilities and integrated senior health campuses were 76.1% and 78.4% leased, respectively, for the three and nine months ended September 30, 2020. Substantially all of our leases with residents at such properties are for a term of one year or less.
Results of Operations
Comparison of Three and Nine Months Ended September 30, 20172020 and 20162019
Our primary sources of revenue include rent and resident fees and services from our properties. Our primary expenses include property operating expenses and rental expenses. In general, and under a normal operating environment, we expect amounts related to our portfolio of operating properties to increase in the future based on a full year of operations as well as any additional real estateongoing property expansions and real estate-related investments we may acquire.developments.
We segregate our operations into reporting segments in order to assess the performance of our business in the same way that management reviews our performance and makes operating decisions. Accordingly, when we acquired our first medical office building in June 2014; senior housing facility in September 2014; hospital in December 2014; senior housing — RIDEA portfolio in May 2015; skilled nursing facilities in October 2015; and integrated senior health campuses in December 2015, we established a new reportable business segment at each such time. As of September 30, 2017,2020, we operated through six reportable

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business segments: medical office buildings, hospitals, skilled nursing facilities, senior housing, senior housing — RIDEA and integrated senior health campuses.
The COVID-19 pandemic has had a significant impact on the operations of our real estate portfolio. Although we have experienced a delay in receiving rent payments from our tenants, as of September 30, 2020, we have collected 100% of contractual rent from our leased, non-RIDEA senior housing and skilled nursing facility tenants. In addition, substantially all of the contractual rent through September 2020 from our medical office building tenants has been received. However, given the significant uncertainty of the impact of the COVID-19 pandemic, we are unable to predict the impact it will have on such tenants’ continued ability to pay rent. We received lease concession requests from some of our medical office building tenants primarily during the second quarter of 2020 that resulted in an insignificant number of concessions granted, such as in the form of rent abatements, in conjunction with a lease term extension for up to seven years, or rent payment deferrals requiring repayment within one year. Such lease concessions granted do not have a material impact to our condensed consolidated financial statements. No contractual rent for our medical office building tenants was forgiven.
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Except where otherwise noted, the changes in our consolidated results of operations for 2020 as compared to 2019 are primarily due to owning 99 buildingsthe disruption to our normal operations as a result of the COVID-19 pandemic and 107grant income received, as well as the development and expansion of our portfolio of integrated senior health campuses. In addition, there are changes in our results of operations by reporting segment due to the transitioning of the operations of seven senior housing facilities within North Carolina ALF Portfolio to a RIDEA structure on December 1, 2019. As of September 30, 2020 and 2019, we owned and/or operated the following types of properties:
September 30,
 20202019
 Number of
Buildings/
Campuses		Aggregate
Contract
Purchase Price		Leased
%		Number of
Buildings/
Campuses		Aggregate
Contract
Purchase Price		Leased
%
Integrated senior health campuses118 $1,582,563,000 (1)113$1,528,470,000 (1)
Medical office buildings63 657,885,000 88.6 %64664,135,000 89.1 %
Senior housing — RIDEA20 433,891,000 (2)13320,035,000 (2)
Senior housing9 89,535,000 100 %16 203,391,000 100 %
Skilled nursing facilities7 128,000,000 100 %7128,000,000 100 %
Hospitals2 139,780,000 100 %2 139,780,000 100 %
Total/weighted average(3)219 $3,031,654,000 91.5 %215 $2,983,811,000 92.4 %
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(1)For the three months ended September 30, 2020 and 2019, the leased percentage for the resident units of our integrated senior health campuses as ofwas 76.8% and 86.9%, respectively. For the nine months ended September 30, 2017, as compared to owning 91 buildings2020 and 1022019, the leased percentage for the resident units of our integrated senior health campuses as of was 79.0% and 86.1%, respectively.
(2)For the three months ended September 30, 2016. As2020 and 2019, the leased percentage for the resident units of our senior housing — RIDEA facilities was 72.6% and 82.3%, respectively. For the nine months ended September 30, 20172020 and 2016, we owned2019, the leased percentage for the resident units of our senior housing — RIDEA facilities was 75.5% and 82.8%, respectively.
(3)Leased percentage excludes our senior housing — RIDEA facilities and integrated senior health campuses.
Revenues and Grant Income
The amount of revenues generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease available space at the then existing rental rates. Revenues and grant income by reportable segment consisted of the following typesfor the periods then ended:
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Resident Fees and Services
Integrated senior health campuses$242,714,000 $257,048,000 $743,340,000 $764,803,000 
Senior housing — RIDEA21,217,000 16,752,000 65,134,000 49,751,000 
Total resident fees and services263,931,000 273,800,000 808,474,000 814,554,000 
Real Estate Revenue
Medical office buildings19,675,000 19,890,000 58,853,000 60,548,000 
Skilled nursing facilities3,676,000 2,672,000 12,415,000 9,998,000 
Senior housing4,245,000 2,601,000 11,038,000 14,184,000 
Hospitals2,737,000 2,799,000 8,258,000 8,467,000 
Total real estate revenue30,333,000 27,962,000 90,564,000 93,197,000 
Grant Income
Integrated senior health campuses740,000 — 30,730,000 — 
Total grant income740,000 — 30,730,000 — 
Total revenues and grant income$295,004,000 $301,762,000 $929,768,000 $907,751,000 
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 September 30,
 2017 2016
 
Number
of
Buildings/
Campuses
 
Aggregate Contract
Purchase Price
 Leased % 
Number
of
Buildings/
Campuses
 
Aggregate Contract
Purchase Price
 Leased %
Integrated senior health campuses107
 $1,417,074,000
 (1) 102
 $1,356,780,000
 (1)
Medical office buildings63
 659,095,000
 92.3% 60
 638,645,000
 92.8%
Senior housing14
 173,391,000
 100% 10
 134,860,000
 100%
Senior housing — RIDEA13
 320,035,000
 (2) 13
 320,035,000
 (2)
Skilled nursing facilities7
 128,000,000
 100% 6
 105,500,000
 100%
Hospitals2
 139,780,000
 100% 2
 139,780,000
 100%
Total/weighted average(3)206
 $2,837,375,000
 94.6% 193
 $2,695,600,000
 94.7%
___________
(1)For the three months ended September 30, 2017 and 2016, the leased percentage for the resident units of our integrated senior health campuses was 85.5% and 86.9%, respectively. For the nine months ended September 30, 2017 and 2016, the leased percentage for the resident units of our integrated senior health campuses was 85.5% and 87.7%, respectively.
(2)For the three months ended September 30, 2017 and 2016, the leased percentage for the resident units of our senior housing — RIDEA facilities was 85.5% and 85.5%, respectively. For the nine months ended September 30, 2017 and 2016, the leased percentage for the resident units of our senior housing — RIDEA facilities was 84.7% and 84.9%, respectively.
(3)Leased percentage excludes our senior housing — RIDEA facilities and integrated senior health campuses.
Revenues
For the three and nine months ended September 30, 20172020 and 2016,2019, resident fees and services primarily consisted of rental fees related to resident leases, extended health care fees and other ancillary services. For the three and nine months ended September 30, 20172020 and 2016,2019, real estate revenue primarily consisted of base rent and expense recoveries.
Revenues by reportable segment consisted For the three and nine months ended September 30, 2020, we recognized $740,000 and $30,730,000, respectively, of the followinggrant income at our integrated senior health campuses related to government grants received through CARES Act economic relief programs. An additional $20,735,000 of such government grants were received, which we have deferred and anticipate to recognize as grant income through mid-year 2021. See Note 2, Summary of Significant Accounting Policies — Government Grants, to our accompanying condensed consolidated financial statements for the periods then ended:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Resident Fees and Services       
Integrated senior health campuses$214,555,000
 $202,236,000
 $634,252,000
 $604,953,000
Senior housing — RIDEA16,213,000
 15,871,000
 48,048,000
 46,612,000
Total resident fees and services230,768,000
 218,107,000
 682,300,000
 651,565,000
Real Estate Revenue       
Medical office buildings19,971,000
 19,686,000
 58,879,000
 54,302,000
Senior housing5,270,000
 4,543,000
 15,598,000
 13,840,000
Skilled nursing facilities3,775,000
 2,994,000
 11,228,000
 5,305,000
Hospitals2,964,000
 3,600,000
 9,717,000
 13,744,000
Total real estate revenue31,980,000
 30,823,000
 95,422,000
 87,191,000
Total revenues$262,748,000
 $248,930,000
 $777,722,000

$738,756,000

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a further discussion.
Property Operating Expenses and Rental Expenses
For the three months ended September 30, 2017 and 2016, property operating expenses primarily consisted of administration and benefits expense of $176,251,000 and $164,859,000, respectively. For the nine months ended September 30, 2017 and 2016, property operating expenses primarily consisted of administration and benefits expense of $520,058,000 and $491,437,000, respectively. Property operating expenses and property operating expenses as a percentage of resident fees and services revenue and grant income, as well as rental expenses and rental expenses as a percentage of real estate revenue,revenues, by operatingreportable segment consisted of the following for the periods then ended:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Property Operating Expenses
Integrated senior health campuses$225,199,000 92.5 %$230,349,000 89.6 %$683,332,000 88.3 %$681,996,000 89.2 %
Senior housing — RIDEA15,790,000 74.4 %11,509,000 68.7 %47,588,000 73.1 %34,704,000 69.8 %
Total property operating expenses$240,989,000 91.1 %$241,858,000 88.3 %$730,920,000 87.1 %$716,700,000 88.0 %
Rental Expenses
Medical office buildings$7,304,000 37.1 %$8,140,000 40.9 %$22,536,000 38.3 %$23,553,000 38.9 %
Skilled nursing facilities369,000 10.0 %346,000 12.9 %1,195,000 9.6 %1,076,000 10.8 %
Hospitals113,000 4.1 %149,000 5.3 %329,000 4.0 %434,000 5.1 %
Senior housing9,000 0.2 %553,000 21.3 %52,000 0.5 %776,000 5.5 %
Total rental expenses$7,795,000 25.7 %$9,188,000 32.9 %$24,112,000 26.6 %$25,839,000 27.7 %
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Property Operating Expenses               
Integrated senior health campuses$188,224,000
 87.7% $176,580,000
 88.0% $563,592,000
 88.9% $537,110,000
 88.8%
Senior housing — RIDEA10,823,000
 66.8% 10,660,000
 66.0% 32,507,000
 67.7% 31,616,000
 67.8%
Total property operating expenses$199,047,000
 86.3% $187,240,000
 86.4% $596,099,000
 87.4% $568,726,000
 87.3%
                
Rental Expenses               
Medical office buildings$7,343,000
 36.8% $7,142,000
 33.0% $22,068,000
 37.5% $19,727,000
 36.3%
Skilled nursing facilities415,000
 11.0% 231,000
 2.6% 1,204,000
 10.7% 385,000
 7.3%
Hospitals375,000
 12.7% 145,000
 13.7% 1,152,000
 11.9% 1,075,000
 7.8%
Senior housing166,000
 3.1% 135,000
 2.9% 501,000
 3.2% 395,000
 2.9%
Total rental expenses$8,299,000
 26.0% $7,653,000
 23.4% $24,925,000
 26.1% $21,582,000
 24.8%
For the three months ended September 30, 2020 and 2019, property operating expenses primarily consisted of administration and benefits expense of $209,944,000 and $212,791,000, respectively. For the nine months ended September 30, 2020 and 2019, property operating expenses primarily consisted of administration and benefits expense of $635,972,000 and $627,617,000, respectively. Overall, property operating expenses have significantly increased due to labor costs, the single largest expense line item for skilled nursing and senior housing facilities, as well as the costs of COVID-19 testing of employees and residents and the costs of PPE and other supplies required as a result of the COVID-19 pandemic. Integrated senior health campuses and senior housing — RIDEA facilities typically have a higher percentage of direct operating expenses to revenue than multi-tenant medical office buildings, hospitals, and leased, non-RIDEA senior housing facilities and skilled nursing facilities.facilities due to the nature of RIDEA facilities where we conduct day-to-day operations. We anticipate that the percentage of operating expenses to revenue willmay fluctuate based on the types of property we acquire, own and/or operate in the future.
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General and Administrative
General and administrative expenses consisted of the following for the periods then ended:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Asset management and property management oversight fees — affiliates$5,518,000 $5,021,000 $16,391,000 $15,018,000 
Professional and legal fees501,000 1,226,000 1,901,000 2,391,000 
Transfer agent services298,000 348,000 928,000 1,005,000 
Stock compensation expense195,000 195,000 585,000 585,000 
Bank charges153,000 72,000 431,000 174,000 
Directors’ and officers’ liability insurance82,000 78,000 247,000 236,000 
Board of directors fees76,000 68,000 230,000 208,000 
Postage and delivery69,000 14,000 231,000 155,000 
Restricted stock compensation28,000 72,000 128,000 172,000 
Franchise taxes22,000 56,000 168,000 254,000 
Bad debt expense— 473,000 — 745,000 
Other27,000 52,000 84,000 161,000 
Total$6,969,000 $7,675,000 $21,324,000 $21,104,000 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Asset management fees — affiliates$4,713,000
 $4,427,000
 $14,054,000
 $12,373,000
Bad debt expense2,313,000
 1,160,000
 5,220,000
 3,308,000
Professional and legal fees992,000
 783,000
 2,077,000
 2,564,000
Transfer agent services306,000
 375,000
 997,000
 1,189,000
Franchise taxes241,000
 (139,000) 400,000
 288,000
Stock compensation expense195,000
 196,000
 390,000
 589,000
Bank charges104,000
 94,000
 301,000
 258,000
Directors’ and officers’ liability insurance80,000
 78,000
 241,000
 233,000
Restricted stock compensation71,000
 90,000
 171,000
 151,000
Board of directors fees61,000
 54,000
 182,000
 181,000
Other194,000
 114,000
 609,000
 245,000
Total$9,270,000
 $7,232,000
 $24,642,000
 $21,379,000
The increase in general and administrative expenses for the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016 was primarily due to the increase in asset management fees and bad debt expense, partially offset by the decrease in professional and legal fees. The increase in asset management fees for the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016 was

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primarily the result of the increase in our average invested assets in 2017 as compared to 2016 through capital expenditures and property acquistions.
Acquisition Related Expenses
For the three and nine months ended September 30, 2017, acquisition related expenses were $71,000 and $532,000, respectively, which primarily related to our one business combination in 2017 as well as additional expenses associated with our prior year property acquisitions accounted for as business combinations. For the three and nine months ended September 30, 2016, acquisition related expenses were $15,936,000 and $24,184,000, respectively, which primarily related to expenses associated with our four and 13 property acquisitions, respectively, accounted for as business combinations, including acquisition fees of $3,524,000 and $8,551,000, respectively, incurred to our advisor and its affiliates.
Depreciation and Amortization
For the three months ended September 30, 20172020 and 2016,2019, depreciation and amortization was $27,579,000$24,591,000 and $71,384,000,$36,778,000, respectively, which primarily consisted of depreciation on our operating properties of $20,611,000$22,699,000 and $18,050,000,$25,062,000, respectively, and amortization on our identified intangible assets of $6,841,000$1,456,000 and $53,045,000,$11,435,000, respectively.
For the nine months ended September 30, 20172020 and 2016,2019, depreciation and amortization was $88,442,000$74,250,000 and $212,596,000,$87,149,000, respectively, which primarily consisted of depreciation on our operating properties of $61,453,000$67,959,000 and $49,719,000,$68,796,000, respectively, and amortization onof our identified intangible assets of $26,599,000$5,120,000 and $162,090,000,$17,530,000, respectively.
The decrease in depreciation and amortization expense duringfor the three and nine months ended September 30, 2017 as2020, compared to the threecorresponding prior year periods, is primarily due to the September 2019 write-off of tenant improvements and nine months ended September 30, 2016 was primarily the result of amortization expense on our identified intangible assets recognized during the three and nine months ended September 30, 2016 of $46,704,000 and $150,732,000, respectively, which related to $211,317,000 of in-place leases in connection with the termination of our integrated senior health campuses and senior housing — RIDEA properties that were fully amortized during 2016 and therefore no expense was incurred during 2017.a management services agreement with an operator in 2019.
Interest Expense
For the three and nine months ended September 30, 2017 and 2016, interestInterest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods then ended:
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Interest expense:
Lines of credit and term loans and derivative financial instruments$7,448,000 $8,757,000 $23,709,000 $27,975,000 
Mortgage loans payable8,044,000 8,383,000 24,502,000 24,254,000 
Amortization of deferred financing costs:
Lines of credit and term loans955,000 882,000 2,488,000 2,882,000 
Mortgage loans payable277,000 483,000 913,000 1,122,000 
Amortization of debt discount/premium, net206,000 164,000 621,000 502,000 
(Gain) loss in fair value of derivative financial instruments(1,763,000)1,169,000 5,671,000 5,846,000 
Loss on extinguishment of debt— 2,179,000 — 2,179,000 
Interest on finance lease liabilities82,000 146,000��413,000 277,000 
Interest expense on financing obligations and other liabilities217,000 52,000 769,000 474,000 
Total$15,466,000 $22,215,000 $59,086,000 $65,511,000 
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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Interest expense — mortgage loans payable$7,109,000
 $5,570,000
 $19,450,000
 $13,400,000
Interest expense — lines of credit and term loans and derivative financial instruments5,976,000
 6,075,000
 18,795,000
 15,552,000
Amortization of deferred financing costs — lines of credit and term loans978,000
 902,000
 2,828,000
 2,549,000
Amortization of deferred financing costs — mortgage loans payable296,000
 392,000
 1,120,000
 577,000
Amortization of debt discount/premium, net142,000
 88,000
 858,000
 272,000
Loss (gain) in fair value of derivative financial instruments59,000
 (989,000) (44,000) 54,000
Loss on extinguishment of mortgage loan payable—
 —
 1,432,000
 —
Interest expense on other liabilities272,000
 —
 873,000
 —
Total$14,832,000
 $12,038,000
 $45,312,000
 $32,404,000
The decrease in total interest expense for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, was primarily related to the decrease in interest expense as a result of the termination of an agreement for our previous credit facility, the extinguishment of a mortgage loan payable during 2019 and decrease in interest rates on our variable rate debt, partially offset by the fair value adjustments on our derivative financial instruments, which was due to a decrease in London Inter-bank Offered Rate, or LIBOR, rates relative to our interest rate swap contracts.
Impairment of Real Estate Investments
For the nine months ended September 30, 2020, we recognized an impairment charge of $3,711,000 on one skilled nursing facility within Fox Grape SNF Portfolio, $1,905,000 on one medical office building within Mount Olympia MOB Portfolio and $2,719,000 on two integrated senior health campuses within Trilogy Investors, LLC, or Trilogy, for an aggregate impairment charge of $8,335,000. We subsequently disposed of such impaired medical office building in July 2020 and recognized a net gain on sale of $15,000. See Note 2, Summary of Significant Accounting Policies — Impairment of Long-Lived Assets and Note 2, Summary of Significant Accounting Policies — Properties Held for Sale, to our accompanying condensed consolidated financial statements for a further discussion. No impairment charges on real estate investments were recognized for both the three and nine months ended September 30, 2019.
Liquidity and Capital Resources
Our sources of funds primarily consist of operating cash flows and borrowings. We terminated the primary portion of our initial offering on March 12, 2015. In the normal course of business, our principal demands for funds are for our payment of operating expenses, capital improvement expenditures, development of real estate investments, interest on our current and future indebtedness, and distributions to our stockholders and for acquisitions of real estate and real estate-related investments.
Our total capacity to pay operating expenses, interest and distributions and acquire real estate and real estate-related investments is a functionrepurchases of our current cash position, our borrowing capacity on our lines of credit, as well as any future indebtedness that we may incur. As of September 30, 2017, our cash on hand was $35,876,000 and we had $316,965,000 available on our lines of credit and term loans. We believe that these resources will be sufficient to satisfy our cash

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requirements for the foreseeable future, and we do not anticipate a need to raise funds from other sources within the next 12 months.
common stock. We estimate that we will require approximately $12,069,000$13,493,000 to pay interest on our outstanding indebtedness infor the remainder of 2017,2020, based on interest rates in effect as of September 30, 2017. In addition, we estimate2020, and that we will require $2,349,000$3,381,000 to pay principal on our outstanding indebtedness infor the remainder of 2017.2020. We also require resources to make certain payments to our advisor and its affiliates. See Note 14, Related Party Transactions, to our accompanying condensed consolidated financial statements for a further discussion of our payments to our advisor and its affiliates. Generally, cash needs for such items will be met from operations and borrowings.
Our advisor evaluates potential investmentstotal capacity to pay operating expenses, capital improvement expenditures, interest, distributions and engages in negotiations withrepurchases, as well as acquire and/or develop real estate sellers, developers, brokers, investment managers, lenders and othersinvestments, is a function of our current cash position, our borrowing capacity on our behalf. Whenlines of credit, as well as any future indebtedness that we acquiremay incur.
Due to the impact the COVID-19 pandemic has had on the United States and globally, and the ongoing uncertainty of the severity and duration of the COVID-19 pandemic and its effects, our board has taken steps since March 2020 to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects. Consequently, on March 31, 2020, our board approved a property,daily distribution rate for April and May 2020 equal to $0.000821918 per share of our common stock, which was equal to an annualized distribution rate of $0.30 per share, a decrease from the annualized rate of $0.60 per share previously paid by us. On March 31, 2020, our board also partially suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders. Repurchase requests resulting from the death or qualifying disability of stockholders were not suspended, but remained subject to all terms and conditions of our share repurchase plan, including our board’s discretion to determine whether we had sufficient funds available to repurchase any shares. Additionally, in response to the continued uncertainty of the COVID-19 pandemic and its impact to our portfolio of investments, to further maximize our liquidity, on May 29, 2020, our board approved the suspension of all stockholder distributions and the Amended and Restated DRIP until such time, if any, as our board determines to authorize new distributions and to reinstate such plan. Such suspensions were effective upon the completion of all shares issued with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. See the “Distributions” section below for a further discussion. Furthermore, on May 29, 2020, our board approved the suspension of our share repurchase plan with respect to all share repurchase requests received after May 31, 2020, including repurchases resulting from death or qualifying disability of stockholders. Our board will continue to assess our distribution policy in light of our operations and future capital needs and shall determine if and when it is in the best interest of our company and our stockholders to reinstate distributions, the Amended and Restated DRIP or our share repurchase plan. In addition to the actions taken by our board described above, our advisor preparesagreed to defer 50.0% of the asset management fees that it would otherwise be entitled to receive for services performed by our advisor or its affiliates from June 1, 2020 to November 30, 2020. See Note 14, Related Party Transactions, to our accompanying condensed consolidated financial statements for a further discussion of such deferred asset management fees.
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As of September 30, 2020, our cash on hand was $133,332,000 and we had $134,366,000 available on our lines of credit. Such cash on hand included $12,547,000 of government grants and $50,910,000 in Medicare advance payments received by Trilogy, of which we currently own 67.6%, through economic stimulus programs of the CARES Act. See Note 2, Summary of Significant Accounting Policies — Government Grants and Note 11, Commitments and Contingencies — Impact of the COVID-19 Pandemic, to our accompanying condensed consolidated financial statements for a further discussion of such relief funds. We believe that such proceeds of cash and available lines of credit will be sufficient to satisfy our cash requirements for the foreseeable future, and we do not anticipate a need to raise funds from other sources within the next 12 months.
A capital plan for each investment is established upon acquisition that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also includeinvestment, including 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 operating cash generated by the investment, capital reserves, a line of credit or other loansloan established with respect to the investment, operating cash generated by the investment,other borrowings, or additional equity investments from us or joint venture partners or, when necessary,partners. As of September 30, 2020, we had $12,698,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital reserves. Any capital reserve would be established from proceeds from sales of other investments, borrowings, operating cash generated by other investments or other cash on hand. In some cases, a lender may require us to establish capital reserves for a particular investment.expenditures. The capital plan for each investment will beis adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs.
Other Liquidity Needs
In the event that there is a shortfall in net cash available due to various factors, including, without limitation, the timing of distributions or the timing of the collection of receivables, we may seek to obtain capital to pay distributions by means of secured or unsecured debt financing through one or more third parties, or our advisor or its affiliates. We may also pay distributions from cash from capital transactions, including, without limitation, the sale of one or more of our properties.
Based on the budget for the properties we ownedown as of September 30, 2017,2020, we estimate that our discretionary expenditures for developments and capital improvements and tenant improvements willcould require up to $18,204,000$15,743,000 for the remaining three months of 2017. As2020. However, in light of September 30, 2017,the COVID-19 pandemic and to further preserve cash, since March 2020, we had $11,114,000 of restricted cash in loan impounds and reserve accounts for capital expenditures, some of which may be used to fund our estimatedsuspended all non-essential, discretionary expenditures for capital improvements, and tenant improvements. We cannot provide assurance, however,as well as developments and/or expansions, that were anticipated during 2020 throughout our real estate investment portfolio. In particular, we will not exceed these estimated expenditure and distribution levels or be able to obtain additional sources of financing on commercially favorable terms or at all.
If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of asset sales, or increasedsuspended capital expenditures that are not directly associated with the maintenance or expansion of tenant occupancy and leasing costs compared to historical levels due to competitive market conditions for new and renewed leases, the effect would be a reductionenhancement of net cash provided by operating activities. If such a reductionincome, or NOI. The duration of net cash provided by operating activities is realized, we may have a cash flow deficit in subsequent periods. Our estimateour suspension of net cash available is based on various assumptions whichdevelopments and capital expenditures are difficultuncertain and an update to predict, including the levelsactual amounts forecasted to be expended for the remainder of leasing activity and related leasing costs. Any changes in these assumptions could impact our financial results and our ability to fund working capital and unanticipated cash needs.the year cannot be estimated at this time.
Cash Flows
The following table sets forth changes in cash flows:
 Nine Months Ended September 30,
 2017 2016
Cash and cash equivalents — beginning of period$29,123,000
 $48,953,000
Net cash provided by operating activities88,540,000
 92,398,000
Net cash used in investing activities(90,521,000) (311,913,000)
Net cash provided by financing activities8,602,000
 207,781,000
Effect of foreign currency translation on cash and cash equivalents132,000
 (72,000)
Cash and cash equivalents — end of period$35,876,000
 $37,147,000

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Nine Months Ended September 30,
 20202019
Cash, cash equivalents and restricted cash — beginning of period$89,880,000 $72,705,000 
Net cash provided by operating activities191,685,000 91,792,000 
Net cash used in investing activities(112,474,000)(72,055,000)
Net cash provided by (used in) financing activities598,000 (8,161,000)
Effect of foreign currency translation on cash, cash equivalents and restricted cash(73,000)(108,000)
Cash, cash equivalents and restricted cash — end of period$169,616,000 $84,173,000 
The following summary discussion of our changes in our cash flows is based on our accompanying condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Operating Activities
For the nine months ended September 30, 20172020 and 2016,2019, cash flows provided by operating activities primarily related to the cash flows provided by our property operations and $30,730,000 of grant income, offset by the payment of general and administrative expenses. See Resultsthe “Results of OperationsOperations” section above for a further discussion. We anticipateIn general, cash flows fromprovided by operating activities will be affected by the timing of cash receipts and payments. In addition, for the nine months ended September 30, 2020, cash flows provided by operating activities included approximately $20,735,000 of government grants and $52,322,000 of Medicare advance payments that have been received and deferred in other liabilities to increasebe recognized in the future as we acquire additional real estaterevenue or grant income, as applicable. See Note 2, Summary of Significant Accounting Policies — Government Grants and real estate-related investments.Note 11, Commitments and Contingencies — Impact of the COVID-19 Pandemic, to our accompanying condensed consolidated financial statements for a further discussion of such deferred revenue and government grants.
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Investing Activities
For the nine months ended September 30, 2017,2020, cash flows used in investing activities primarily related to our 2017 acquisitions, including ourdevelopments and capital expenditures of $93,657,000 and acquisitions of previously leased real estate investments, including our land acquisition, in the amount of $102,241,000$29,447,000, partially offset by proceeds from real estate dispositions of $12,105,000. For the nine months ended September 30, 2019, cash flows used in investing activities primarily related to developments and capital expenditures of $25,804,000,$65,740,000 and 2019 property acquisitions in the amount of $32,793,000, partially offset by principal repayments on real estate notes receivable of $26,752,000 and proceeds from real estate dispositions of $15,993,000. For the nine months ended September 30, 2016, cash flows used in investing activities related primarily to our 13 property acquisitions in the amount of $277,949,000 and capital expenditures of $30,441,000. We may continue to acquire additional real estate and real estate-related investments, but generally anticipate that$28,650,000. In general, cash flows used in investing activities will continuebe affected by the timing of capital expenditures and development projectsand the number of acquisitions we complete in future years as compared to decrease due to fewer anticipated acquisitions as a result of the termination of the primary portion of our initial offering in March 2015.prior years.
Financing Activities
For the nine months ended September 30, 2017,2020, cash flows provided by financing activities primarily related to borrowings under mortgage loans payable in the amount of $230,452,000, partially offset by the settlement of mortgage loans payable in the amount of $100,775,000,$59,033,000, net payments onborrowings under our lines of credit and term loans in the amount of $56,283,000,$39,755,000 and the sale of a 9.4% membership interest in a consolidated limited liability company that owns Southlake TX Hospital for $11,000,000, partially offset by scheduled payments on our mortgage loans payable of $49,056,000, distributions to our common stockholders of $41,526,000 and$26,997,000, share repurchases of $24,022,000.$23,107,000 and our early payoff of mortgage loans payable of $2,601,000. For the nine months ended September 30, 2016,2019, cash flows provided byused in financing activities primarily related to net borrowings under our linesshare repurchases of credit$72,200,000 and term loan in the amount of $259,484,000, partially offset by distributions to our common stockholders of $38,343,000 and$46,716,000, partially offset by borrowings under mortgage loans payable in the amount of $182,417,000. The decrease in share repurchases and distributions paid in 2020 compared to 2019 was primarily related to actions taken by our board to protect our capital and maximize our liquidity in response to the COVID-19 pandemic, such as the decrease in our daily distribution rate approved by our board in March 2020 followed by the suspension of $14,833,000.all stockholder distributions in May 2020. See the “Distributions” section below for a further discussion. Overall, we anticipate cash flows from financing activities to decrease in the future since we terminated the primary portion of our initial offering on March 12, 2015.future. However, we anticipate borrowings under our lines of credit and term loans and other indebtedness to increase if we acquire additional real estate and real estate-related investments.
Distributions
OurPrior to March 31, 2020, our board has authorized, on a quarterly basis, a daily distribution to our stockholders of record as of the close of business on each day of the quarterly periods commencing on May 14, 2014 and ending on DecemberMarch 31, 2017.2020. The distributions were or will be calculated based on 365 days in the calendar year and arewere equal to $0.001643836 per share of our common stock, which iswas equal to an annualized distribution rate of 6.0%, assuming a purchase price of $10.00$0.60 per share. The daily distributions were or will be aggregated and paid monthly in arrears in cash or shares of our common stock pursuant to theour DRIP and the Secondary DRIP Offering,Offerings, only from legally available funds.
In response to the COVID-19 pandemic and its effects to our business and operations, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects. Consequently, on March 31, 2020, our board authorized a daily distribution to our stockholders of record as of the close of business day on each day of the period commencing on April 1, 2020 and ending on May 31, 2020. The daily distributions were calculated based on 365 days in the calendar year and were equal to $0.000821918 per share of our common stock, which was equal to an annualized distribution of $0.30 per share, a decrease from the annualized rate of $0.60 per share previously paid by us. These daily distributions were aggregated and paid in cash or shares of our common stock pursuant to our DRIP Offerings monthly in arrears, only from legally available funds. Furthermore, in response to the continued uncertainty of the COVID-19 pandemic and its impact to our portfolio of investments, on May 29, 2020, our board authorized the suspension of all stockholder distributions upon the completion of the payment of distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. Our board also approved the suspension of the Amended and Restated DRIP effective upon the completion of all shares issued pursuant to the Amended and Restated DRIP with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020 until such time, if any, as our board determines to authorize new distributions and to reinstate the Amended and Restated DRIP. See our Current Report on Form 8-K filed with the SEC on June 4, 2020 for more information.
The amount of theany distributions paid to our stockholders is determined quarterly by our board and is dependent on a number of factors, including funds available for payment of distributions, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our qualification as a REIT under the Code. We have not established any limit on the amount of offering proceeds that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences.

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The distributions paid for the nine months ended September 30, 20172020 and 2016,2019, along with the amount of distributions reinvested pursuant to the Secondaryour DRIP Offering,Offerings, and the sources of our distributions as compared to cash flows from operations were as follows:
Nine Months Ended September 30,
 20202019
Distributions paid in cash$26,997,000 $46,716,000 
Distributions reinvested21,861,000 42,100,000 
$48,858,000 $88,816,000 
Sources of distributions:
Cash flows from operations$48,858,000 100 %$88,816,000 100 %
Proceeds from borrowings— — — — 
$48,858,000 100 %$88,816,000 100 %
 Nine Months Ended September 30,
 2017 2016
Distributions paid in cash$41,526,000
   $38,343,000
  
Distributions reinvested47,453,000
   48,692,000
  
 $88,979,000
   $87,035,000
  
Sources of distributions:       
Cash flows from operations$88,540,000
 99.5% $87,035,000
 100%
Proceeds from borrowings439,000
 0.5
 —
 —
 $88,979,000
 100% $87,035,000
 100%
Under GAAP, certain acquisition related expenses, such as expenses related to property acquisitions accounted for as business combinations, are expensed, and therefore, are subtracted from cash flows from operations. However, these expenses may be paid from debt.
AnyAs of September 30, 2020, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and all or any portion of a distribution to our stockholders may have been paid from net offering proceeds.proceeds and borrowings. The payment of distributions from our initialnet offering proceeds could reduceand borrowings have reduced the amount of capital we ultimately investinvested in assets and negatively impactimpacted the amount of income available for future distributions.
As of September 30, 2017, we had an amount payable of $1,992,000 to our advisor or its affiliates primarily for asset and property management fees, which will be paid from cash flows from operations in the future as it becomes due and payable by us in the ordinary course of business consistent with our past practice.
As of September 30, 2017, no amounts due to our advisor or its affiliates had been deferred, waived or forgiven other than $37,000 in asset management fees waived by our advisor in 2014, which was equal to the amount of distributions payable to our stockholders for the period from May 14, 2014, the date we received and accepted subscriptions aggregating at least the minimum offering of $2,000,000 required pursuant to our initial offering, through June 5, 2014, the date we acquired our first property. In addition, our advisor agreed to waive the disposition fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement for the dispositions of investments within our integrated senior health campuses segment in 2017. See Note 3, Real Estate Investments, Net — Dispositions in 2017, and Note 14, Related Party Transactions — Liquidity Stage — Dispositions Fees, to our accompanying condensed consolidated financial statements for a further discussion. Our advisor did not receive any additional securities, shares of our stock, or any other form of consideration or any repayment as a result of the waiver of such asset management fees and disposition fees. Other than the waiver of such asset management fees by our advisor in order to provide us with additional funds to pay initial distributions to our stockholders through June 5, 2014 and waiver of the disposition fees in 2017, our advisor and its affiliates, including our co-sponsors, have no obligation to defer or forgive fees owed by us to our advisor or its affiliates or to advance any funds to us. In the future, if our advisor or its affiliates do not defer, waive or forgive amounts due to them, this would negatively affect our cash flows from operations, which could result in us paying distributions, or a portion thereof, using borrowed funds. As a result, the amount of proceeds from borrowings available for investment and operations would be reduced, or we may incur additional interest expense as a result of borrowed funds.

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The distributions paid for the nine months ended September 30, 20172020 and 2016,2019, along with the amount of distributions reinvested pursuant to the Secondaryour DRIP Offering,Offerings, and the sources of our distributions as compared to funds from operations attributable to controlling interest, or FFO, were as follows:
Nine Months Ended September 30,Nine Months Ended September 30,
2017 2016 20202019
Distributions paid in cash$41,526,000
   $38,343,000
  Distributions paid in cash$26,997,000 $46,716,000 
Distributions reinvested47,453,000
   48,692,000
  Distributions reinvested21,861,000 42,100,000 
$88,979,000
   $87,035,000
  $48,858,000 $88,816,000 
Sources of distributions:       Sources of distributions:
FFO attributable to controlling interest$78,175,000
 87.9% $47,646,000
 54.7%FFO attributable to controlling interest$48,858,000 100 %$62,244,000 70.1 %
Proceeds from borrowings10,804,000
 12.1
 39,389,000
 45.3
Proceeds from borrowings— — 26,572,000 29.9 
$88,979,000
 100% $87,035,000
 100%
$48,858,000 100 %$88,816,000 100 %
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. For a further discussion of FFO, a non-GAAP financial measure, including a reconciliation of our GAAP net income (loss) to FFO, see Fundsthe “Funds from Operations and Modified Funds from OperationsOperations” section below.
Financing
We intend to continue to finance all or a portion of the purchase price of our investments in real estate and real estate-related investments by borrowing funds. We anticipate that our overall leverage will not exceedapproximate 45.0% of the combined fair market value of all of our properties and other real estate-related investments, as determined at the end of each calendar year. For these purposes, the market value of each asset will be equal to the contract purchase price paid for the asset or, if the asset was appraised subsequent to the date of purchase, then the market value will be equal to the value reported in the most recent independent appraisal of the asset. Our policies do not limit the amount we may borrow with respect to any individual investment. As of September 30, 2017,2020, our aggregate borrowings were 37.2%46.0% of the combined market value of all of our real estate and real estate-related investments.
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Under our charter, we have a limitation on borrowing that precludes us from borrowing in excess of 300% of our net assets without the approval of a majority of our independent directors. Net assets for purposes of this calculation are defined to be our total assets (other than intangibles), valued at cost prior to deducting depreciation, amortization, bad debt and other similar non-cash reserves, less total liabilities. Generally, the preceding calculation is expected to approximate 75.0% of the aggregate cost of our real estate and real estate-related investments before depreciation, amortization, bad debt and other similar non-cash reserves. In addition, we may incur mortgage debt and pledge some or all of our real properties as security for that debt to obtain funds to acquire additional real estate or for working capital. We may also borrow funds to satisfy the REIT tax qualification requirement that we distribute at least 90.0% of our annual taxable income, excluding net capital gains, to our stockholders. Furthermore, we may borrow if we otherwise deem it necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes. As of November 14, 201716, 2020 and September 30, 2017,2020, our leverage did not exceed 300% of the value of our net assets.
Mortgage Loans Payable, Net
For a discussion of our mortgage loans payable, net, see Note 7, Mortgage Loans Payable, Net, to our accompanying condensed consolidated financial statements.
Lines of Credit and Term Loans
For a discussion of our lines of credit and term loans, see Note 8, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements.
REIT Requirements
In order to maintain our qualification as a REIT for federal income tax purposes, we are required to make distributions to our stockholders of at leasta minimum of 90.0% of our annual taxable income, excluding net capital gains. Such distributions are required to be paid at least 20.0% in cash and 80.0% in stock. In response to the COVID-19 pandemic, in May 2020, the Internal Revenue Service temporarily reduced the cash distribution requirement to a minimum of 10.0%, which is applicable with respect to the aggregate distributions declared on or after April 1, 2020 until December 31, 2020. In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to pay distributions by means of secured and unsecured debt financing through one or more unaffiliated third parties. We may also pay distributions from cash from capital transactions including, without limitation, the sale of one or more of our properties or from the proceeds of our initial offering.

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Commitments and Contingencies
For a discussion of our commitments and contingencies, see Note 11, Commitments and Contingencies, to our accompanying condensed consolidated financial statements.
Debt Service Requirements
A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of September 30, 2017,2020, we had $638,584,000$823,594,000 ($615,346,000, including800,170,000, net of discount/premium and deferred financing costs, net)costs) of fixed-rate and variable-rate mortgage loans payable outstanding secured by our properties. As of September 30, 2017,2020, we had $593,035,000$855,634,000 outstanding and $316,965,000$134,366,000 remained available under our lines of credit and term loans.credit. See Note 7, Mortgage Loans Payable, Net and Note 8, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements.
We are required by the terms of certain loan documents to meet certainvarious financial and non-financial covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ratios and reporting requirements.ratios. As of November 14, 2017,September 30, 2020, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loans. The extent and severity of the COVID-19 pandemic on our business continues to evolve, and any continued future deterioration of operations in excess of management's projections as a result of COVID-19 could impact future compliance with these covenants. If any future covenants are violated, we anticipate seeking a waiver or amending the debt covenants with the lenders when and if such event should occur. However, there can be no assurances that management will be able to effectively achieve such plans. As of September 30, 2017,2020, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps and interest rate cap, was 3.79%3.61% per annum.
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Contractual Obligations
The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and our lines of credit and term loans; (ii) interest payments on our mortgage loans payable, lines of credit and term loans and fixed interest rate swaps and interest rate cap; andloans; (iii) ground and other lease obligations, capitalobligations; (iv) financing obligations; and (v) finance leases and other liabilities as of September 30, 2017:2020:
 Payments Due by Period
 2017 2018-2019 2020-2021 Thereafter Total
Principal payments — fixed-rate debt$2,335,000
  $20,016,000
 $32,064,000
 $474,435,000
 $528,850,000
Interest payments — fixed-rate debt4,676,000
  37,690,000
 34,902,000
 234,248,000
 311,516,000
Principal payments — variable-rate debt14,000
 682,067,000
 20,688,000
 —
 702,769,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2017)7,393,000
 40,791,000
 1,319,000
 —
 49,503,000
Ground and other lease obligations5,282,000
  45,231,000
 47,927,000
 225,725,000
 324,165,000
Capital leases1,937,000
 12,609,000
 5,146,000
 85,000
 19,777,000
Other liabilities—
 2,000,000
 —
 —
 2,000,000
Total$21,637,000
  $840,404,000
 $142,046,000
 $934,493,000
 $1,938,580,000
The table above does not reflect any payments expected under our contingent consideration obligations in the estimated amount of $8,950,000, the majority of which we expect to pay in 2018. For a further discussion of our contingent consideration obligations, see Note 15, Fair Value Measurements — Assets and Liabilities Reported at Fair Value — Contingent Consideration, to our accompanying condensed consolidated financial statements.
 Payments Due by Period
 20202021-20222023-2024ThereafterTotal
Principal payments — fixed-rate debt$3,329,000 $76,213,000 $96,207,000 $546,994,000 $722,743,000 
Interest payments — fixed-rate debt6,590,000 51,156,000 43,631,000 272,423,000 373,800,000 
Principal payments — variable-rate debt52,000 633,254,000 323,179,000 — 956,485,000 
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2020)6,903,000 36,966,000 6,531,000 — 50,400,000 
Ground and other lease obligations6,330,000 47,874,000 47,954,000 190,561,000 292,719,000 
Financing obligations8,794,000 18,127,000 2,771,000 1,287,000 30,979,000 
Finance leases90,000 173,000 16,000 — 279,000 
Total$32,088,000 $863,763,000 $520,289,000 $1,011,265,000 $2,427,405,000 
Off-Balance Sheet Arrangements
As of September 30, 2017,2020, we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.

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Inflation
During the nine months ended September 30, 20172020 and 2016,2019, inflation has not significantly affected our operations because of the moderate inflation rate; however, we expect to be exposed to inflation risk as income from future long-term leases will be the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that will protect us from the impact of inflation. These provisions will include negotiated rental increases, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements on a per square foot allowance.reimbursements. However, due to the long-term nature of the anticipated leases, among other factors, the leases may not re-set frequently enough to cover inflation.
Related Party Transactions
For a discussion of related party transactions, see Note 14, Related Party Transactions, to our accompanying condensed consolidated financial statements.
Funds from Operations and Modified Funds from Operations
Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, a non-GAAP measure, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. The use of funds from operations is recommended by the REIT industry as a supplemental performance measure, and our management uses FFO to evaluate our performance over time. FFO is not equivalent to our net income (loss) as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on funds from operations approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines funds from operations as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of propertycertain real estate assets and asset impairment writedowns of certain real estate assets and investments, plus depreciation and amortization related to real estate, and after adjustments for unconsolidated partnerships and joint ventures. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that impairments are based on estimated future undiscounted cash flows. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations. Our FFO calculation complies with NAREIT’s policy described above.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, which is 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 to maintain the value disclosed. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. In addition, we believe it is appropriate to exclude impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions, which can change over time. Testing for an impairment of an asset is a continuous process and is analyzed on a quarterly basis. If certain impairment indications exist in an asset, and if the asset’s carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property and any other ancillary cash flows at a property or group level under GAAP) from such asset, an impairment charge would be recognized. 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, it could be difficult to recover any impairment charges through the eventual sale of the property.
Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related
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depreciation and amortization and impairments, provides a further understanding of our performance to investors and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income (loss).
However, FFO and modified funds from operations attributable to controlling interest, or MFFO, as described below, 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 our operating performance. The method utilized to evaluate the value and performance of real

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estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.
Changes in the accounting and reporting rules under GAAP that were put into effect and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed as operating expenses under GAAP. We believe these fees and expenses do not affect our overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. 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 have used the proceeds raised in our initial offering to acquire properties, 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 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 assets and intend to have a limited life. Due to the above factors and other unique features of publicly registered, non-listed REITs, theThe IPA, an industry trade group, has standardized a measure known as modified funds from operations, which the IPA has recommended as a supplemental performance measure for publicly registered, non-listed REITs and which we believe to be another appropriate supplemental performance measure to reflect the operating performance of a publicly registered, non-listed REIT having the characteristics described above. MFFO is not equivalent to our net income (loss) as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes expensed acquisition fees and expenses that affect our operations only in periods in which properties are acquired and that we consider more reflective of investing activities, as well as other non-operating items included in FFO, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our offering stage has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the publicly registered, non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our offering stage and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our offering stage has been completed and properties have been acquired, as it excludes expensed acquisition fees and expenses that have a negative effect on our operating performance during the periods in which properties are acquired.
We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline issued by the IPA in November 2010. The Practice Guideline defines modified funds from operations as funds from operations further adjusted for the following items included in the determination of GAAP net income (loss): acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above- and below-market leases and liabilities (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 payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); 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; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect modified funds from operations on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income (loss) in calculating cash flows from operations and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. We are responsible for managing interest rate, hedge and foreign exchange risk, and we do not rely on another party to manage such risk. In as much as interest rate hedges will not be a fundamental part of our operations, we believe it is appropriate to exclude such gains and losses in calculating MFFO, as such gains and losses are based on market fluctuations and may not be directly related or attributable to our operations.
Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses (which include gains andor losses on contingent consideration), amortization of above- and below-market leases, amortization of loan and closing costs, change in deferred rent, receivables, gains or losses from the early extinguishment of debt, fair value adjustments of derivative financial instruments, gains or losses on foreign currency transactions and the adjustments of such items related to unconsolidated propertiesentities and noncontrolling interests. The other

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adjustments included in the IPA’s Practice Guideline are not applicable to us for the three and nine months ended September 30, 2017 and 2016. Acquisition fees and expenses are paid in cash by us, and we have not set aside cash on hand to be used to fund acquisition fees and expenses. The purchase of real estate and real estate-related investments, and the corresponding expenses associated with that process, is a key operational feature of our business plan in order to generate operating revenues and cash flows to make distributions to our stockholders. However, we do not intend to fund acquisition fees and expensesperiods presented in the future from operating revenues and cash flows, nor from the saletable below.
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Table of properties and subsequent redeployment of capital and concurrent incurring of acquisition fees and expenses. Acquisition fees and expenses include payments to our advisor or its affiliates and third parties. Such fees and expenses are not reimbursed by our advisor or its affiliates and third parties, and therefore if there is no further cash on hand to fund future acquisition fees and expenses, such fees and expenses will need to be paid from additional debt. Certain acquisition related expenses under GAAP, such as expenses incurred in connection with property acquisitions accounted for as business combinations, are considered operating expenses and as expenses 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 other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. In the future, we may pay acquisition fees or reimburse acquisition expenses due to our advisor and its affiliates, or a portion thereof, with net proceeds from borrowed funds, operational earnings or cash flows, net proceeds from the sale of properties or ancillary cash flows. As a result, the amount of proceeds from borrowings 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 cash on hand.Contents
Further, under GAAP, 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 addition, weWe view fair value adjustments of derivatives and gains and losses from dispositions of assets as items which are unrealized and may not ultimately be realized or as items which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.
Our management uses 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, that 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 initial offering and other financing sources and not from operations. By excluding expensed acquisition fees and expenses, the use of MFFO provides information consistent with management’s analysis of the operating performance of the properties. 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.
Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate funds from operations and modified funds from operations the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations, which is an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed.complete. FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and MFFO.
Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.

For both the three and nine months ended September 30, 2020, we recognized government grants as grant income or as a reduction of property operating expenses, as applicable, and within loss from unconsolidated entities. Such amounts were granted through federal and state government programs, such as through the CARES Act, and which were established for eligible healthcare providers to preserve liquidity in response to the COVID-19 pandemic. See the “Results of Operations” section above for a further discussion. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial condition and results of operations. Without such relief proceeds, the COVID-19 pandemic impact would have had a material adverse impact to our FFO and MFFO. For the three and nine months ended September 30, 2020, FFO would have been approximately $20,770,000 and $51,779,000, respectively, excluding government grants recognized. For the three and nine months ended September 30, 2020, MFFO would have been approximately $15,989,000 and $57,368,000, respectively, excluding government grants recognized.
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The following is a reconciliation of net income (loss),or loss, which is the most directly comparable GAAP financial measure, to FFO and MFFO for the three and nine months ended September 30, 2017 and 2016:periods presented below:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$4,461,000
 $(56,366,000) $(1,543,000) $(155,337,000)
Add:       
Depreciation and amortization — consolidated properties27,579,000
 71,384,000
 88,442,000
 212,596,000
Depreciation and amortization — unconsolidated properties270,000
 267,000
 795,000
 665,000
Impairment of real estate investments—
 —
 4,883,000
 —
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests176,000
 13,921,000
 6,051,000
 39,245,000
Less:       
Loss (gain) on dispositions of real estate investments9,000
 —
 (3,370,000) —
Depreciation, amortization, impairments and (gain) loss on dispositions related to redeemable noncontrolling interests and noncontrolling interests(4,792,000) (17,529,000) (17,083,000) (49,523,000)
FFO attributable to controlling interest$27,703,000
 $11,677,000
 $78,175,000
 $47,646,000
        
Acquisition related expenses(1)$71,000
 $15,936,000
 $532,000
 $24,184,000
Amortization of above- and below-market leases(2)183,000
 225,000
 538,000
 716,000
Amortization of loan and closing costs(3)57,000
 231,000
 164,000
 607,000
Change in deferred rent receivables(4)(1,110,000) (4,520,000) (3,913,000) (8,017,000)
Loss on extinguishment of mortgage loan payable(5)—
 —
 1,432,000
 —
Loss (gain) in fair value of derivative financial instruments(6)59,000
 (989,000) (44,000) 54,000
Foreign currency (gain) loss(7)(1,384,000) 1,502,000
 (3,697,000) 6,544,000
Adjustments for unconsolidated properties(8)582,000
 713,000
 1,520,000
 1,627,000
Adjustments for redeemable noncontrolling interests and noncontrolling interests(8)(495,000) (567,000) (1,659,000) (1,045,000)
MFFO attributable to controlling interest$25,666,000
 $24,208,000
 $73,048,000
 $72,316,000
Weighted average common shares outstanding — basic and diluted198,733,528
 195,027,512
 197,832,280
 193,660,666
Net income (loss) per common share — basic and diluted$0.02
 $(0.29) $(0.01) $(0.80)
FFO attributable to controlling interest per common share — basic and diluted$0.14
 $0.06
 $0.40
 $0.25
MFFO attributable to controlling interest per common share — basic and diluted$0.13
 $0.12
 $0.37
 $0.37
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Net (loss) income$(680,000)$(17,103,000)$12,324,000 $(10,400,000)
Add:
Depreciation and amortization related to real estate — consolidated properties24,591,000 36,778,000 74,250,000 87,149,000 
Depreciation and amortization related to real estate — unconsolidated entities762,000 367,000 2,270,000 819,000 
Impairment of real estate investments— — 8,335,000 — 
Less:
Gain on dispositions of real estate investments(1,037,000)— (1,037,000)— 
Net loss (income) attributable to noncontrolling interests1,375,000 (201,000)(7,779,000)(2,979,000)
Depreciation, amortization, impairments and gain on dispositions — noncontrolling interests(4,061,000)(4,106,000)(13,743,000)(12,345,000)
FFO attributable to controlling interest$20,950,000 $15,735,000 $74,620,000 $62,244,000 
Acquisition related expenses(1)$54,000 $4,000 $307,000 $(292,000)
Amortization of above- and below-market leases(2)42,000 40,000 77,000 175,000 
Amortization of closing costs(3)44,000 37,000 125,000 237,000 
Change in deferred rent(4)(1,067,000)2,450,000 (1,471,000)1,136,000 
Loss on extinguishment of debt(5)— 2,179,000 — 2,179,000 
(Gain) loss in fair value of derivative financial instruments(6)(1,763,000)1,169,000 5,671,000 5,846,000 
Foreign currency (gain) loss(7)(1,945,000)1,464,000 1,303,000 1,654,000 
Adjustments for unconsolidated entities(8)200,000 344,000 754,000 1,099,000 
Adjustments for noncontrolling interests(8)(346,000)(1,110,000)(1,177,000)(2,035,000)
MFFO attributable to controlling interest$16,169,000 $22,312,000 $80,209,000 $72,243,000 
Weighted average common shares outstanding — basic and diluted193,856,887 195,669,002 194,273,579 196,705,085 
Net (loss) income per common share — basic and diluted$— $(0.09)$0.06 $(0.05)
FFO attributable to controlling interest per common share — basic and diluted$0.11 $0.08 $0.38 $0.32 
MFFO attributable to controlling interest per common share — basic and diluted$0.08 $0.11 $0.41 $0.37 
___________
(1)In evaluating investments in real estate, we differentiate 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 acquisition activity and have other similar operating characteristics. By excluding expensed acquisition related expenses, we believe 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 to our advisor or its affiliates and third parties. Certain acquisition related expenses under GAAP, such as expenses incurred in connection with property acquisitions accounted for as business combinations, are considered operating expenses and as expenses 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 other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property.

(1)In evaluating investments in real estate, we differentiate 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 acquisition activity and have other similar operating characteristics. By excluding expensed acquisition related expenses, we believe 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 to our advisor or its affiliates and third parties.
(2)Under GAAP, above- and below-market leases are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other 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, including inflation, interest rates, the business cycle, unemployment and consumer spending, we believe that by excluding charges relating to the amortization of above- and below-market leases, MFFO may provide useful supplemental information on the performance of the real estate.
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(3)Under GAAP, direct closing costs are amortized over the term of our debt security investment as an adjustment to the yield on our debt security investment. This may result in income recognition that is different than the contractual cash flows under our debt security investment. By adjusting for the amortization of the closing costs related to our debt security investment, MFFO may provide useful supplemental information on the realized economic impact of our debt security investment terms, providing insight on the expected contractual cash flows of such debt security investment, and aligns results with our analysis of operating performance.
(2)Under GAAP, above- and below-market leases are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other 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, including inflation, interest rates, the business cycle, unemployment and consumer spending, we believe that by excluding charges relating to the amortization of above- and below-market leases, MFFO may provide useful supplemental information on the performance of the real estate.
(3)Under GAAP, direct loan and closing costs are amortized over the term of our notes receivable and debt security investment as an adjustment to the yield on our notes receivable or debt security investment. This may result in income recognition that is different than the contractual cash flows under our notes receivable and debt security investment. By adjusting for the amortization of the loan and closing costs related to our real estate notes receivable and debt security investment, MFFO may provide useful supplemental information on the realized economic impact of our notes receivable and debt security investment terms, providing insight on the expected contractual cash flows of such notes receivable and debt security investment, and aligns results with our analysis of operating performance.
(4)Under GAAP, rental revenue or rental expense is recognized on a straight-line basis over the terms of the related lease (including rent holidays). This may result in income or expense 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 results with our analysis of operating performance.
(5)The loss associated with the early extinguishment of debt includes the write-off of unamortized deferred financing fees, as well as expenses, penalties or other fees incurred in the early extinguishment of debt. We believe that adjusting for such non-recurring losses provides useful supplemental information because such charges (or losses) may not be reflective of on-going transactions and operations and is consistent with management’s analysis of our operating performance.
(6)Under GAAP, we are required to record our derivative financial instruments at fair value at each reporting period. We believe that adjusting for the change in fair value of our derivative financial instruments is appropriate because such adjustments may not be reflective of on-going operations and reflect unrealized impacts on value based only on then current market conditions, although they may be based upon general market conditions. The need to reflect the change in fair value of our derivative financial instruments is a continuous process and is analyzed on a quarterly basis in accordance with GAAP.
(7)We believe that adjusting for the change in foreign currency exchange rates provides useful information because such adjustments may not be reflective of on-going operations.
(8)
Includes all adjustments to eliminate the unconsolidated properties’ share or redeemable noncontrolling interests and noncontrolling interests’ share, as applicable, of the adjustments described in notes (1) – (7) above to convert our FFO to MFFO.
(4)Under GAAP, as a lessor, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays). As a lessee, we record amortization of right-of-use assets and accretion of lease liabilities for our operating leases. This may result in income or expense recognition that is significantly different than the underlying contract terms. By adjusting such amounts, 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 results with our analysis of operating performance.
(5)The loss associated with the early extinguishment of debt primarily includes the write-off of unamortized deferred financing fees, write-off of unamortized debt discount, penalties or other fees incurred. We believe that adjusting for such non-recurring losses provides useful supplemental information because such charges (or losses) may not be reflective of on-going business transactions and operations and is consistent with management’s analysis of our operating performance.
(6)Under GAAP, we are required to include changes in fair value of our derivative financial instruments in the determination of net income or loss. We believe that adjusting for the change in fair value of our derivative financial instruments to arrive at MFFO is appropriate because such adjustments may not be reflective of on-going operations and reflect unrealized impacts on value based only on then current market conditions, although they may be based upon general market conditions. The need to reflect the change in fair value of our derivative financial instruments is a continuous process and is analyzed on a quarterly basis in accordance with GAAP.
(7)We believe that adjusting for the change in foreign currency exchange rates provides useful information because such adjustments may not be reflective of on-going operations.
(8)Includes all adjustments to eliminate the unconsolidated entities’ share or noncontrolling interests’ share, as applicable, of the adjustments described in notes (1) – (7) above to convert our FFO to MFFO.
Net Operating Income
Net operating income, or NOI is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, acquisition related expenses, depreciation and amortization, interest expense, gain or loss on dispositions, impairment of real estate investments, income or loss from unconsolidated entities, foreign currency gain or loss, other income and income tax benefit (expense). Acquisition fees and expenses are paid in cash by us, and we have not set aside cash on hand to be used to fund acquisition fees and expenses. The purchase of real estate and real estate-related investments, and the corresponding expenses associated with that process, is a key operational feature of our business plan in order to generate operating revenues and cash flows to make distributions to our stockholders. Acquisition fees and expenses include payments to our advisor or its affiliates and third parties. Such fees and expenses are not reimbursed by our advisor or its affiliates and third parties, and therefore if there is no further cash on hand to fund future acquisition fees and expenses, such fees and expenses will need to be paid from additional debt. As a result, the amount of proceeds available for investment, operations and non-operating expenses 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 cash on hand. Certain acquisition related expenses under GAAP, such as expenses incurred in connection with property acquisitions accounted for as business combinations, are considered operating expenses and as expenses included in the determination of net income (loss), which is a performance measure under GAAP. 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

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other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property.expense.
NOI is not equivalent to our net income (loss) as determined under GAAP and may not be a useful measure in measuring operational income or cash flows. Furthermore, NOI is not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations, which isas an indication of our liquidity, or indicative of fundscash flow available to fund our cash needs including our ability to make distributions to our stockholders. NOI 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 our operating performance. Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any acquisition related expenses.
We believe that NOI is an appropriate supplemental performance measure to reflect the operating performance of our operating assets because NOI excludes certain items that are not associated with the managementoperations of the properties. We believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.
For both the three and nine months ended September 30, 2020, we recognized government grants as grant income or as a reduction of property operating expenses, as applicable. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial condition. Without such relief proceeds, the COVID-19 pandemic impact would have had a material adverse impact to our NOI. For the three and nine months ended September 30, 2020, NOI would have been approximately $45,480,000 and $143,730,000, respectively, excluding government grants recognized.
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To facilitate understanding of this financial measure, the following is a reconciliation of net income (loss),or loss, which is the most directly comparable GAAP financial measure, to NOI for the three and nine months ended September 30, 2017 and 2016:periods presented below:
 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net (loss) income$(680,000)$(17,103,000)$12,324,000 $(10,400,000)
General and administrative6,969,000 7,675,000 21,324,000 21,104,000 
Acquisition related expenses54,000 4,000 307,000 (292,000)
Depreciation and amortization24,591,000 36,778,000 74,250,000 87,149,000 
Interest expense15,466,000 22,215,000 59,086,000 65,511,000 
Gain on dispositions of real estate investments(1,037,000)— (1,037,000)— 
Impairment of real estate investments— — 8,335,000 — 
Loss from unconsolidated entities2,855,000 766,000 3,065,000 1,713,000 
Foreign currency (gain) loss(1,945,000)1,464,000 1,303,000 1,654,000 
Other income(203,000)(1,923,000)(1,279,000)(2,377,000)
Income tax expense (benefit)150,000 840,000 (2,942,000)1,150,000 
Net operating income$46,220,000 $50,716,000 $174,736,000 $165,212,000 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$4,461,000
 $(56,366,000) $(1,543,000) $(155,337,000)
General and administrative9,270,000
 7,232,000
 24,642,000
 21,379,000
Acquisition related expenses71,000
 15,936,000
 532,000
 24,184,000
Depreciation and amortization27,579,000
 71,384,000
 88,442,000
 212,596,000
Interest expense14,832,000
 12,038,000
 45,312,000
 32,404,000
Loss (gain) on dispositions of real estate investments9,000
 —
 (3,370,000) —
Impairment of real estate investments—
 —
 4,883,000
 —
Loss from unconsolidated entities1,494,000
 2,355,000
 3,668,000
 6,916,000
Foreign currency (gain) loss(1,384,000) 1,502,000
 (3,697,000) 6,544,000
Other income(210,000) (42,000) (673,000) (411,000)
Income tax (benefit) expense(720,000) (2,000) (1,498,000) 173,000
Net operating income$55,402,000
 $54,037,000
 $156,698,000
 $148,448,000
Subsequent Event
For a discussion of a subsequent event, see Note 21, Subsequent Event, to our accompanying condensed consolidated financial statements.
Item 3. 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, we expect that the primary market risk to which we will be exposed is interest rate risk. There were no material changes in our market risk exposures, or in the methods we use to manage market risk, from those that were provided for in our 20162019 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk.26, 2020.
Interest Rate Risk
We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire properties and make loans and other permitted investments. We are also exposed to the effects of changes in interest rates as a result of our investments in real estate notes receivable. Our interest rate risk is monitored using a variety of techniques. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs while taking into account variable interest rate risk. To achieve our objectives, we may borrow or lend at fixed or variable rates.

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We have entered into, and in the future may continue to enter into, derivative financial instruments such as interest rate swaps and interest rate caps in order to mitigate our interest rate risk on a related financial instrument, and for which we have not and may not elect hedge accounting treatment. Because weWe have not elected to apply hedge accounting treatment to these derivatives,derivatives; therefore, changes in the fair value of interest rate derivative financial instruments are recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive income (loss). As of September 30, 2017,2020, our interest rate cap and interest rate swaps are recorded in other assets, net and security deposits, prepaid rent and other liabilities, in our accompanying condensed consolidated balance sheets at their aggregate fair value of $2,026,000.$0 and $(9,642,000), respectively. We do not enter into derivative transactions for speculative purposes.
In July 2017, the Financial Conduct Authority, or FCA, that regulates the LIBOR, announced its intention to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate, or SOFR, as its preferred alternative to United States dollar LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
We have variable rate debt outstanding and derivative financial instruments maturing on various dates from 2021 to 2025, as discussed further above, that are indexed to LIBOR. As such, we are monitoring and evaluating the related risks of the discontinuation of LIBOR, which include possible changes to the interest on loans or amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value
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transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty. If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected. While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.
As of September 30, 2020, the table below presents as of September 30, 2017, the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
 Expected Maturity Date
 20202021202220232024ThereafterTotalFair Value
Assets
Debt security held-to-maturity$— $— $— $— $— $93,433,000 $93,433,000 $93,364,000 
Weighted average interest rate on maturing fixed-rate debt security— %— %— %— %— %4.24 %4.24 %— 
Liabilities
Fixed-rate debt — principal payments$3,329,000 $13,618,000 $62,595,000 $29,666,000 $66,541,000 $546,994,000 $722,743,000 $723,228,000 
Weighted average interest rate on maturing fixed-rate debt3.65 %3.66 %4.13 %4.11 %3.66 %4.00 %3.64 %— 
Variable-rate debt — principal payments$52,000 $59,754,000 $573,500,000 $312,788,000 $10,391,000 $— $956,485,000 $960,449,000 
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2020)2.50 %2.16 %2.71 %2.96 %5.25 %— %2.83 %— 
 Expected Maturity Date
 2017 2018 2019 2020 2021 Thereafter Total Fair Value
Assets               
Fixed-rate notes receivable — principal payments$—
 $—
 $28,650,000
 $—
 $—
 $—
 $28,650,000
 $29,708,000
Weighted average interest rate on maturing fixed-rate notes receivable—% —% 6.75% —% —% —% 6.75% —
Variable-rate notes receivable — principal payments$4,526,000
 $—
 $—
 $—
 $—
 $—
 $4,526,000
 $4,532,000
Weighted average interest rate on maturing variable-rate notes receivable (based on rates in effect as of September 30, 2017)7.24% —% —% —% —% —% 7.24% —
Debt security held-to-maturity$—
 $—
 $—
 $—
 $—
 $93,433,000
 $93,433,000
 $93,387,000
Weighted average interest rate on maturing fixed-rate debt security—% —% —% —% —% 4.24% 4.24% —
Liabilities               
Fixed-rate debt — principal payments$2,335,000
 $9,825,000
 $10,191,000
 $21,385,000
 $10,679,000
 $474,435,000
 $528,850,000
 $461,667,000
Weighted average interest rate on maturing fixed-rate debt3.63% 3.65% 3.66% 4.88% 3.60% 3.39% 3.46% —
Variable-rate debt — principal payments$14,000
 $78,271,000
 $603,796,000
 $12,474,000
 $8,214,000
 $—
 $702,769,000
 $704,754,000
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2017)5.73% 5.49% 3.74% 7.23% 5.38% —% 4.01% —
Real Estate Notes Receivable and Debt Security Investment, Net
As of September 30, 2017,2020, the net carrying value of our real estate notes receivable and debt security investment net was $100,133,000.$75,037,000. As we expect to hold our fixed-rate notes receivable and debt security investment to maturity and the amounts due under such notes receivable and debt security investment would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed-rate notes receivable and debt security investment, would have a significant impact on our operations. Conversely, movements in interest rates on our variable-rate notes receivable may change our future earnings and cash flows, but not significantly affect the fair value of those instruments. See Note 15, Fair Value Measurements, to our accompanying condensed consolidated financial statements, for a discussion of the fair value of our real estate notes receivable and our investment in a held-to-maturity debt security.
The weighted average effective interest rate on our outstanding real estate notes receivable and debt security investment net was 4.91%4.24% per annum based on rates in effect as of September 30, 2017. A decrease in the variable interest rate on our real estate notes receivable constitutes a market risk. As of September 30, 2017, a 0.50% decrease in the market rates of interest would have no impact on our future earnings and cash flows due to interest rate floors on our variable-rate real estate notes receivable.2020.
Mortgage Loans Payable, Net and Lines of Credit and Term Loans
Mortgage loans payable were $638,584,000$823,594,000 ($615,346,000, including800,170,000, net of discount/premium and deferred financing costs, net)costs) as of September 30, 2017.2020. As of September 30, 2017,2020, we had 4660 fixed-rate mortgage loans payable and four11 variable-rate mortgage loans payable with effective interest rates ranging from 2.45% to 7.17%5.25% per annum and a weighted average effective interest rate of 4.00%3.60%. In

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addition, as of September 30, 2017,2020, we had $593,035,000$855,634,000 outstanding under our lines of credit and term loans, at a weighted-averageweighted average interest rate of 3.68%2.77% per annum.
As of September 30, 2017,2020, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps and interest rate cap, was 3.79%3.61% per annum. An increase in the variable interest rate on our variable-rate mortgage loans payable and lines of credit and term loans constitutes a market risk. As of September 30, 2017,2020, we have a fixed-rate interest rate cap on one of our variable-rate mortgage loans payable and three fixed-rate interest rate swaps on one of our lines of credit and term loans andloan; an increase in the variable interest rate thereon would have no effect on our overall annual interest expense. As of September 30, 2017,2020, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on all of our other variable-rate mortgage loans payable and lines of credit and term loans by $4,342,000,$2,416,000, or 8.51%3.72% of total annualized interest expense on our mortgage loans payable and lines of credit and term loans. See Note 7, Mortgage Loans Payable, Net and Note 8, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements.
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Foreign Currency Exchange Rate Risk
Foreign currency exchange rate risk is the possibility that our financial results could be better or worse than planned because of changes in foreign currency exchange rates. Based solely on our results for the nine months ended September 30, 2017,2020, if foreign currency exchange rates were to increase or decrease by 1.00%, our net income from these investments would decrease or increase, as applicable, by approximately $14,000$17,000 for the same period.
Other Market Risk
In addition to changes in interest rates and foreign currency exchange rates, the value of our future investments is 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.
Item 4. 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 under 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 are 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, an evaluation as of September 30, 20172020 was conducted 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 September 30, 2017,2020, were effective at the reasonable assurance level.
(b) Changes in internal control over financial reporting. There were no changes in internal control over financial reporting that occurred during the fiscal quarter ended September 30, 20172020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
None.For a discussion of our legal proceedings, see Note 11, Commitments and Contingencies — Litigation, to our accompanying condensed consolidated financial statements.
Item 1A. Risk Factors.
The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT III, Inc. and its subsidiaries, including Griffin-American Healthcare REIT III Holdings, LP, except where the context otherwise requires.noted.
There were no material changes from the risk factors previously disclosed in our 20162019 Annual Report on Form 10-K, as filed with the SEC on March 15, 2017,26, 2020, except as noted below.
Investment Risks
We have not had sufficient cash available from operations to pay distributions, and therefore, we have paid a portion of distributions from the net proceeds of our initial offering and borrowings, and in the future, may continue to pay distributions from borrowings or from other sources in anticipation of future cash flows or from other sources.flows. Any such distributions may reduce the amount of capital we ultimately invest in assets and may negatively impact the value of our stockholders’ investment and may cause subsequent investors to experience dilution.investment.
We have used the net proceeds from our initial offering, borrowings and certain fees payable to our advisor which have been waived, and in the future, may use borrowed funds or other sources, to pay cash distributions to our stockholders, which may reduce the amount of proceeds available for investment and operations, cause us to incur additional interest expense as a result of borrowed funds or cause subsequent investors to experience dilution. Further, if the aggregate amount of cash distributed in any given year exceeds the amount of our current and accumulated earnings and profits, the excess amount will be deemed a return of capital. Therefore, distributions payable to our stockholders may partially include a return of capital, rather than a return on capital.capital, and we have paid a portion of our distributions from the net proceeds of our initial offering. We have not established any limit on the amount of net proceeds from our initial offering or borrowings that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences. The actual amount and timing of distributions is determined by our board, in its sole discretion and typically depends on the amount of funds available for distribution, which will depend on items such as our financial condition, current and projected capital expenditure requirements, tax considerations and annual distribution requirements needed to qualifymaintain our qualification as a REIT. As a result, our distribution rate and payment frequency may vary from time to time.
OurPrior to March 31, 2020, our board has authorized, on a quarterly basis, a daily distribution to our stockholders of record as of the close of business on each day of the quarterly periods commencing on May 14, 2014 and ending on DecemberMarch 31, 2017.2020. The daily distributions were or will be calculated based on 365 days in the calendar year and arewere equal to $0.001643836 per share of our common stock, which was equal to an annualized distribution of $0.60 per share. The daily distributions were aggregated and paid monthly in arrears in cash or shares of our common stock pursuant to our DRIP Offerings, only from legally available funds.
In response to the COVID-19 pandemic and its effects to our business and operations, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects. Consequently, on March 31, 2020, our board authorized a daily distribution to our stockholders of record as of the close of business day on each day of the period commencing on April 1, 2020 and ending on May 31, 2020. The daily distributions were calculated based on 365 days in the calendar year and were equal to $0.000821918 per share of our common stock, which is equal to an annualized distribution of $0.30 per share, a decrease from the annualized rate of 6.0%, assuming a purchase price of $10.00$0.60 per share.share previously paid by us. These daily distributions were or will be aggregated and paid in cash or shares of our common stock pursuant to theour DRIP portion of our initial offering and the Secondary DRIP OfferingOfferings monthly in arrears, only from legally available funds. Furthermore in response to the continued uncertainty of the COVID-19 pandemic and its impact to our portfolio of investments, on May 29, 2020, our board authorized the suspension of all stockholder distributions upon the completion of the payment of distributions payable to stockholders of record on or prior to the close of business on May 31, 2020. Our board also approved the suspension of the Amended and Restated DRIP effective upon the completion of all shares issued pursuant to the Amended and Restated DRIP with respect to distributions payable to stockholders of record on or prior to the close of business on May 31, 2020 until such time, if any, as our board determines to authorize new distributions and to reinstate the Amended and Restated DRIP. See our Current Report on Form 8-K filed with the SEC on June 4, 2020 for more information.
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The distributions paid for the nine months ended September 30, 20172020 and 2016,2019, along with the amount of distributions reinvested pursuant to the Secondaryour DRIP OfferingOfferings, and the sources of our distributions as compared to cash flows from operations were as follows:
Nine Months Ended September 30,
 20202019
Distributions paid in cash$26,997,000 $46,716,000 
Distributions reinvested21,861,000 42,100,000 
$48,858,000 $88,816,000 
Sources of distributions:
Cash flows from operations$48,858,000 100 %$88,816,000 100 %
Proceeds from borrowings— — — — 
$48,858,000 100 %$88,816,000 100 %
 Nine Months Ended September 30,
 2017 2016
Distributions paid in cash$41,526,000
   $38,343,000
  
Distributions reinvested47,453,000
   48,692,000
  
 $88,979,000
   $87,035,000
  
Sources of distributions:       
Cash flows from operations$88,540,000
 99.5% $87,035,000
 100%
Proceeds from borrowings439,000
 0.5
 —
 —
 $88,979,000
 100% $87,035,000
 100%
Under GAAP, certain acquisition related expenses, such as expenses related to property acquisitions accounted for as business combinations, are expensed, and therefore subtracted from cash flows from operations. However, these expenses may be paid from debt.

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AnySeptember 30, 2020, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and all or any portion of a distribution to our stockholders may have been paid from net offering proceeds.proceeds and borrowings. The payment of distributions from our initialnet offering proceeds could reduceand borrowings have reduced the amount of capital we ultimately investinvested in assets and negatively impactimpacted the amount of income available for future distributions.
As of September 30, 2017, we had an amount payable of $1,992,000 to our advisor or its affiliates primarily for asset and property management fees, which will be paid from cash flows from operations in the future as it becomes due and payable by us in the ordinary course of business consistent with our past practice.
As of September 30, 2017, no amounts due to our advisor or its affiliates had been deferred, waived or forgiven other than $37,000 in asset management fees waived by our advisor in 2014, which was equal to the amount of distributions payable to our stockholders for the period from May 14, 2014, the date we received and accepted subscriptions aggregating at least the minimum offering of $2,000,000 required pursuant to the initial offering, through June 5, 2014, the day prior to the date we acquired our first property. In addition, our advisor agreed to waive the disposition fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement for the dispositions of investments within our integrated senior health campuses segment in 2017. See Note 3, Real Estate Investments, Net — Dispositions in 2017, and Note 14, Related Party Transactions — Liquidity Stage — Dispositions Fees, to our accompanying condensed consolidated financial statements for a further discussion. Our advisor did not receive any additional securities, shares of our stock, or any other form of consideration or any repayment as a result of the waiver of such asset management fees and disposition fees. Other than the waiver of such asset management fees by our advisor in order to provide us with additional funds to pay initial distributions to our stockholders through June 5, 2014 and waiver of the disposition fees in 2017, our advisor and its affiliates, including our co-sponsors, have no obligation to defer or forgive fees owed by us to our advisor or its affiliates or to advance any funds to us. In the future, if our advisor or its affiliates do not defer, waive or forgive amounts due to them, this would negatively affect our cash flows from operations, which could result in us paying distributions, or a portion thereof, using borrowed funds. As a result, the amount of proceeds from borrowings available for investment and operations would be reduced, or we may incur additional interest expense as a result of borrowed funds.
The distributions paid for the nine months ended September 30, 20172020 and 2016,2019, along with the amount of distributions reinvested pursuant the Secondaryour DRIP OfferingOfferings, and the sources of our distributions as compared to FFO were as follows:
Nine Months Ended September 30,Nine Months Ended September 30,
2017 2016 20202019
Distributions paid in cash$41,526,000
   $38,343,000
  Distributions paid in cash$26,997,000 $46,716,000 
Distributions reinvested47,453,000
   48,692,000
  Distributions reinvested21,861,000 42,100,000 
$88,979,000
   $87,035,000
  $48,858,000 $88,816,000 
Sources of distributions:       Sources of distributions:
FFO attributable to controlling interest$78,175,000
 87.9% $47,646,000
 54.7%FFO attributable to controlling interest$48,858,000 100 %$62,244,000 70.1 %
Proceeds from borrowings10,804,000
 12.1
 39,389,000
 45.3
Proceeds from borrowings— — 26,572,000 29.9 
$88,979,000
 100% $87,035,000
 100%$48,858,000 100 %$88,816,000 100 %
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. For a further discussion of FFO, a non-GAAP financial measure, including a reconciliation of our GAAP net income (loss) to FFO, see Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations and Modified Funds from Operations.
The estimated value per share of our common stock may not reflectbe an accurate reflection of fair value of our assets and liabilities and likely will not represent the valueamount of net proceeds that stockholders will receive for their investment.would result if we were liquidated, dissolved or completed a merger or other sale of our company. In addition, at this time, the audit committee of our board continues to deem it prudent to delay the determination of our annual estimated per share NAV until sometime in the future when we are able to more clearly discern the short- and long-term ramifications on valuation assumptions and methodologies and resulting healthcare real estate asset values due to the impacts of the COVID-19 pandemic.
On October 4, 2017,3, 2019, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established a revisedan updated estimated per share NAV of our common stock of $9.27.$9.40. We are providingprovided this revisedupdated estimated per share NAV to assist broker-dealers in connection with their obligations under National Association of Securities Dealers ConductFINRA Rule 2340, as required by FINRA2231, with respect to customer account statements. The valuation was performed in accordance with the methodology provided in the Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the IPA in April 2013, in addition to guidance from the SEC.
The revisedupdated estimated per share NAV was determined after consultation with our advisor and an independent third-party valuation firm, the engagement of which was approved by the audit committee of theour board. FINRA rules provide no guidance on the methodology an issuer must use to determine its estimated per share NAV. As with any valuation methodology, our

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independent valuation firm’s methodology iswas based upon a number of estimates and assumptions that may not behave been accurate or complete. Different parties with different assumptions and estimates could derive a different estimated per share NAV, and these differences could be significant.
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The revisedupdated estimated per share NAV was not audited or reviewed by our independent registered public accounting firm and doesdid not represent the fair value of our assets or liabilities according to GAAP. In addition, the updated estimated per share NAV was an estimate as of a given point in time and the value of our shares will fluctuate over time as a result of, among other things, developments related to individual assets and changes in the real estate and capital markets. Accordingly, with respect to the revisedupdated estimated per share NAV, we can give no assurance that:
•a stockholder would be able to resell his or her shares at our revisedupdated estimated per share NAV;
•a stockholder would ultimately realize distributions per share equal to our revisedupdated 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 our revisedupdated estimated per share NAV on a national securities exchange;
•an independent third-party appraiser or other third-party valuation firm, other than the third-party valuation firm engaged by theour board to assist in its determination of the revisedupdated estimated per share NAV, would agree with our estimated per share NAV; or
•the methodology used to estimate our revisedupdated per share NAV would be acceptable to FINRA or comply with reporting requirements under the Employee Retirement Income Security Act of 1974, the Code, other applicable law, or ERISA, reporting requirements.the applicable provisions of a retirement plan or individual retirement account.
Further, the updated estimated revised per share NAV iswas based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding on a fully diluted basis, calculated as of June 30, 2017. The value2019, prior to the reported emergence of our shares may fluctuate over time in response to developments related to individual assetsCOVID-19 in the United States. The COVID-19 pandemic has had, and may continue to have, an adverse effect on our business. However, the lasting impact of the COVID-19 pandemic on our portfolio of investments will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, including new information which may emerge concerning the managementseverity of those assetsthe COVID-19 pandemic, the success of actions taken to contain or treat COVID-19 and in response to the real estatereactions by consumers, companies, governmental entities and financecapital markets. Going forward,Although, we generally intend to engage an independent valuation firm to assist us with publishingpublish an updated estimated per share NAV on at least an annual basis.basis, at this time, the audit committee of our board continues to deem it prudent to delay the determination of our annual estimated per share NAV until sometime in the future when we are able to more clearly discern the short- and long-term ramifications on valuation assumptions and methodologies and resulting healthcare real estate asset values due to the impacts of the COVID-19 pandemic. As such, we did not publish an updated estimated per share NAV of our common stock in October 2020. We cannot provide any assurance as to when our board will be able to determine an updated estimated per share NAV. Our board will, however, continue to monitor the commercial and healthcare real estate markets and will update stockholders regarding an updated estimated per share NAV when market conditions permit.
For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the revisedupdated estimated per share NAV, see our Current Report on Form 8-K filed with the SEC on October 5, 2017.4, 2019.
Our results of operations, our ability to pay distributions to our stockholders and our ability to dispose of our investments are subject to international, national and local economic factors we cannot control or predict.
Our results of operations are subject to the risks of an international or national economic slowdown or downturn and other changes in international, national and local economic conditions. The following factors may have affected, and may continue to affect, income from our properties, our ability to acquire and dispose of properties and yields from our properties:
•poor economic times may result in defaults by tenants of our properties due to bankruptcy, lack of liquidity, or operational failures. We have provided an insignificant number of rent concessions, and may continue to provide rent concessions, tenant improvement expenditures or reduced rental rates to maintain or increase occupancy levels;
•fluctuations in property values as a result of increases or decreases in supply and demand, occupancies and rental rates may cause the properties that we own to decrease in value. Consequently, we may not be able to recover the carrying amount of our properties, which may require us to recognize an impairment charge or record a loss on sale in earnings;
•reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;
•constricted access to credit may result in tenant defaults or non-renewals under leases;
•layoffs may lead to a lower demand for medical services and cause vacancies to increase, and a lack of future population and job growth may make it difficult to maintain or increase occupancy levels;
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•future disruptions in the financial markets, deterioration in economic conditions or a public health crisis, such as the COVID-19 pandemic, have resulted and may continue to result in lower occupancy in our facilities, increased vacancy rates for commercial real estate due to generally lower demand for rentable space, as well as an oversupply of rentable space;
•governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or impasses; and
•increased insurance premiums, real estate taxes or utilities or other expenses may reduce funds available for distribution or, to the extent such increases are passed through to tenants, may lead to tenant defaults. Also, any such increased expenses may make it difficult to increase rents to tenants on turnover, which may limit our ability to increase our returns.
The length and severity of any economic slowdown or downturn cannot be predicted with confidence at this time. Our results of operations, our ability to continue to pay distributions to our stockholders and our ability to dispose of our investments have been and we expect that we may continue to be negatively impacted to the extent an economic slowdown or downturn is prolonged or becomes more severe.
Risk Related to our Business
In light of the impact that the COVID-19 pandemic has had on our business operations, we have suspended distribution payments to our stockholders and suspended our share repurchase plan, and there is no assurance as to when we will commence the payment of distributions to our stockholders or reinstate our share repurchase plan, if at all.
In light of the impact that the COVID-19 pandemic has had on our business operations and cash flows, and the uncertainty as to the ultimate severity and duration of the outbreak and its effects, on March 31, 2020, our board reduced our monthly distributions to stockholders from an annualized rate of $0.60 per share to $0.30 per share of our common stock effective with the April 2020 distribution paid in May 2020 as well as partially suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders. Additionally, on May 31, 2020, in an effort to further preserve capital and strengthen our financial position in light of the COVID-19 impact, our board suspended the payment of all distributions to stockholders, the Amended and Restated DRIP and our share repurchase plan with respect to all repurchase requests. Our board will continue to evaluate the ongoing and future effects of the COVID-19 pandemic on our financial condition, earnings, debt covenants and other possible needs for cash, and applicable law, in considering our ability to reinstate distributions and our share repurchase plan in the future. Our stockholders have no contractual or other legal right to distributions or share repurchases that have not been authorized by our board. There can be no assurance when or if distributions and share repurchases will be authorized in the future, and if authorized, whether distributions or share repurchases will be in amounts consistent with our historical levels of distributions and share repurchases.
The COVID-19 pandemic has adversely impacted, and will likely continue to adversely impact, our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.
In December 2019, COVID-19 was identified in Wuhan, China. This virus continues to spread globally including in the United States. As a result of the COVID-19 pandemic and related shelter-in-place, business re-opening and quarantine restrictions, our property values, NOI and revenues may decline, and our tenants, operating partners and managers have been and may continue to be limited in their ability to generate income, service patients and residents and/or properly manage our properties. In addition, based on preliminary information available to management as of October 31, 2020, we have experienced an approximate 13.3% decline in resident occupancies since February 2020, as well as an up to 30.0% increase in costs to care for residents, at our senior housing — RIDEA facilities and integrated senior health campuses. Such costs have begun to moderate somewhat during the third quarter of 2020. Our leased, non-RIDEA senior housing and skilled nursing facility tenants have also experienced and may continue to experience similar pressures related to occupancy declines and expense increases, which may impact their ability to pay rent and have an adverse effect on our operations. However, through October 2020, all rents have been collected from such leased, non-RIDEA senior housing and skilled nursing facility tenants. Given the significant uncertainty of the impact of the COVID-19 pandemic, we are unable to predict the impact it will have on such tenants’ continued ability to pay rent. Therefore, information provided regarding October rent collections should not serve as an indication of expected future rent collections. As such, our immediate focus continues to be on resident occupancy recovery and operating expense management. While restrictions have been at least partially lifted in many states, there remains a risk of reclosures in states where infection rates continue to rise, which may put additional pressure on our operations. Additionally, the public perception of a risk of a pandemic or media coverage of the COVID-19 pandemic and related deaths or confirmed cases, or public perception of health risks linked to perceived regional healthcare safety in our senior housing or skilled nursing facilities, particularly if focused on regions in which our properties are located, may adversely affect our business operations by
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reducing occupancy demand at our facilities. Furthermore, the COVID-19 pandemic has also adversely impacted and may continue to adversely impact the ability of our medical office building tenants, many of whom have been restricted in their ability to work and to pay their rent as and when due. We have also held discussions with our tenants, operating partners and managers and they have expressed that the ultimate impact of the COVID-19 pandemic on their business operations is uncertain.
Issues related to financing also are exacerbated in times of significant dislocation in the financial markets, such as those being experienced now related to the COVID-19 pandemic. It is possible our lenders will become unwilling or unable to provide us with financing, and we may not be able to replace the debt financing of such lender on favorable terms, or at all. In addition, if the regulatory capital requirements imposed on our lenders change, they may be required to significantly increase the cost of the financing that they provide to us. As a result, our lenders may revise the terms of such financings to us, which could adversely impact our liquidity and our ability to make payments on our existing obligations.
Furthermore, we and our co-sponsors and their employees that provide services to us rely on processes and activities that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties. In response to the COVID-19 pandemic, business practices have been modified with all or a portion of our co-sponsors’ employees working remotely from their homes to have our operations uninterrupted as much as possible. Additionally, technology in such employees’ homes may not be as robust as in our co-sponsors’ offices and could cause the networks, information systems, applications and other tools available to such employees to be more limited or less reliable than in our co-sponsors’ offices. The continuation of these work-from-home measures may introduce increased cybersecurity risk. These cybersecurity risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, greater risk of a security breach resulting in destruction or misuse of valuable information and potential impairment of our ability to perform certain functions, all of which could expose us to risks of data or financial loss, litigation and liability and could disrupt our operations and the operations of any impacted third-parties.
The information in this Quarterly Report on Form 10-Q is based on data currently available to us and will likely change as the COVID-19 pandemic progresses. The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including new information which may emerge concerning the severity of the COVID-19 pandemic and the actions to contain the COVID-19 pandemic or treat its impact, among others. We expect the significance of the COVID-19 pandemic, including the extent of its effect on our financial and operational results, to be dictated by, among other things, its duration, the success of efforts to contain it and the impact of actions taken in response. For instance, government initiatives, such as the Payroll Protection Program and deferral of payroll tax payments program within the CARES Act, enacted to provide substantial financial support to businesses could provide helpful mitigation for us and certain of our tenants, operating partners and managers. However, these government assistance programs are not expected to fully offset the negative financial impact of the COVID-19 pandemic, and there can be no assurance that these programs will continue or the extent to which they will be expanded. Therefore, the ultimate impact of such relief from these programs is not yet clear. Furthermore, we expect the trends discussed above with respect to the impact of the COVID-19 pandemic to continue. As such, we are continuously monitoring the impact of the COVID-19 pandemic on our business, residents, tenants, operating partners, managers, portfolio of investments and on the United States and global economies. While we are not able at this time to estimate the long-term impact of the COVID-19 pandemic on our financial and operational results, it could be material.
Risks Related to Investments in Real Estate
A high concentration of our properties in a particular geographic area would magnify the effects of downturns in that geographic area.
To the extent that weWe have a concentration of properties in any particular geographic area,areas; therefore, any adverse situation that disproportionately effects that geographic areaone of those areas would have a magnified adverse effect on our portfolio. As of November 14, 2017,16, 2020, properties located in Indiana accounted for approximately 35.4%38.3% of theour total property portfolio’s annualized base rent or annualized net operating income of our total property portfolio.income. Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.
ReductionsTerrorist attacks, acts of violence or war, political protests and unrest or public health crises may affect the markets in reimbursementwhich we operate and have a material adverse effect on our financial condition and results of operations.
Terrorist attacks, acts of violence or war, political protests and unrest or public health crises (including the COVID-19 pandemic) may negatively affect our operations and our stockholders’ investments. We may acquire real estate assets located in areas that are susceptible to terrorist attacks, acts of violence or war, political protests or public health crises. These events may
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directly impact the value of our assets through damage, destruction, loss or increased security costs. Although we may obtain terrorism insurance, we may not be able to obtain sufficient coverage to fund any losses we may incur. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Further, certain losses resulting from third-party payers, including Medicarethese types of events are uninsurable or not insurable at reasonable costs. More generally, any terrorist attack, other act of violence or war, political protests and Medicaid,unrest or public health crises could result in increased volatility in, or damage to, the United States and worldwide financial markets and economy, all of which could adversely affect our tenants’ ability to pay rent on their leases or our ability to borrow money or issue capital stock at acceptable prices, which could have a material adverse effect on our financial condition and results of operations.
Our business, tenants, residents and operators may face litigation and experience rising liability and insurance costs, which may adversely affect our financial condition, results of operations, liquidity or cash flows.
We currently intend to pursue insurance recovery for any losses caused by the profitabilityCOVID-19 pandemic, but there can be no assurance that coverage will be available under our existing policies or if such coverage is available, which and how much of our losses will be covered and what other limitations may apply. Due to the likely increase in claims as a result of the impact of the COVID-19 pandemic, insurance companies may limit or stop offering coverage to companies like ours for pandemic related claims and/or significantly increase the cost of insurance so that it is no longer available at commercially reasonable rates.
With respect to our senior housing — RIDEA facilities and integrated senior health campuses, we are ultimately responsible for operational risks and other liabilities of the facility, other than those arising out of certain actions by our operator, such as gross negligence or willful misconduct. As such, operational risks include, and our resulting revenues therefore depend on, the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles. Furthermore, because we bear such operational risks and liabilities related to our senior housing — RIDEA facilities and integrated senior health campuses, we may be directly adversely impacted by potential litigation related to the COVID-19 pandemic that have occurred or may occur at those facilities, and our insurance coverage may not cover or may not be sufficient to cover any potential losses.
Additionally, as a result of the COVID-19 pandemic, the cost of insurance for our tenants, operators and hinderresidents is expected to increase as well, and such insurance may not cover certain claims related to COVID-19, which could impair their ability to makepay rent payments to us.
Sources Our exposure to COVID-19 related litigation risk may be further increased if our operators or residents of revenue for our tenants include the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payers to reduce healthcare costs will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. In addition, the healthcare billing rules and regulations are complex, and the failure of any of our tenants to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government sponsored payment programs. Moreover, the state and federal governmental healthcare programsfacilities are subject to reductionsbankruptcy or insolvency. Combined with the factors above, these trends in insurance coverage may adversely affect our financial condition, results of operations, liquidity or cash flows.
Risks Related to Debt Financing
Changes in banks’ inter-bank lending rate reporting practices or the method pursuant to which LIBOR is determined may adversely affect the value of the financial obligations to be held or issued by stateus that are linked to LIBOR.
LIBOR and federal legislative actions. The American Taxpayer Relief Actother indices which are deemed “benchmarks” are the subject of 2012 prevented the reduction in physician reimbursementrecent national, international and other regulatory guidance and proposals for reform. Some of Medicare from being implemented in 2013. The Protecting Accessthese reforms are already effective while others are still to Medicare Act of 2014 prevented the reduction of 24.4%be implemented. These reforms may cause such “benchmarks” to perform differently than in the physician fee schedule by replacing the scheduled reduction with a 0.5% increase to the physician fee schedule through December 31, 2014, and a 0% increase for January 1, 2015 through March 31, 2015. The potential 21.0% cut in reimbursementpast, or have other consequences which cannot be predicted. It currently appears that, was toover time, United States dollar LIBOR may be effective April 1, 2015 was removedreplaced by the Medicare Access & CHIP Reauthorization ActSOFR published by the Federal Reserve Bank of 2015, or MACRA,New York. However, the manner and replaced with two new methodologies that will focus upon payment based upon quality outcomes. The first modeltiming of this shift is the Merit-Based Incentive Payment System, or MIPS, which combines the Physician Quality Reporting System, or PQRS,currently unknown. Market participants are still considering how various types of financial instruments and Meaningful Use program with the Value Based Modifier programsecuritization vehicles should react to provide for one payment model based upon (i) quality, (ii) resource use, (iii) clinical practice improvement and (iv) advancing care information through the usea discontinuation of certified Electronic Health Record, or EHR, technology. The second model is the Advanced Alternative Payment Models, or APM, which requires the physician to participate in a risk share arrangement for reimbursement related to his or her patients while utilizing a certified health record and reporting on specific quality metrics. There are a number of physicians that will not qualify for the APM payment method. Therefore, this change in reimbursement models may impact our tenants’ payments and create uncertainty in the tenants’ financial condition.

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The healthcare industry continues to face various challenges, including increased government and private payer pressure on healthcare providers to control or reduce costs.LIBOR. It is possible that not all of our tenantsassets and liabilities will continue to experience a shift in payer mixtransition away from fee-for-service payers, resultingLIBOR at the same time, or to the same alternative reference rate, in an increaseeach case increasing the difficulty of hedging. For example, switching existing financial instruments and hedging transactions from LIBOR to SOFR requires calculations of a spread. Industry organizations are attempting to structure the spread calculation in a manner that minimizes the percentagepossibility of revenues attributable to reimbursement based upon value based principlestransfer between counterparties, borrowers and quality driven managed care programs,lenders by virtue of the transition, but there is no assurance that the calculated spread will be fair and general industry trendsaccurate or that include pressures to control healthcare costs.all asset types and all types of securitization vehicles will use the same spread. We and other market participants have less experience understanding and modeling SOFR-based assets and liabilities than LIBOR-based assets and liabilities, increasing the difficulty of investing, hedging and risk management. The federal government’s goalprocess of transition involves operational risks. It is to move approximately 90.0% of its reimbursementalso possible that no transition will occur for providers to be based upon quality outcome models. Pressures to control healthcare costs and a shift away from traditional health insurance reimbursement to payments based upon quality outcomes have increased the uncertainty of payments.
In 2014, state insurance exchanges were implemented which provide a new mechanism for individuals to obtain insurance.many financial instruments. At this time, the number of payers that are participating in the state insurance exchanges varies, and in some regions there are very limited insurance plans available for individuals to choose from when purchasing insurance. In addition, not all healthcare providers will maintain participation agreements with the payers that are participating in the state health insurance exchange. Therefore, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that our tenants may incur a change in their reimbursement ifbe implemented. Uncertainty as to the tenant does not have a participation agreement with the state insurance exchange payers and a large numbernature of individuals elect to purchase insurance from the state insurance exchange. Further, thesuch potential changes, alternative reference rates of reimbursement from the state insurance exchange payers to healthcare providers will vary greatly. The rates of reimbursement will be subject to negotiation between the healthcare provider and the payer, whichor other reforms may vary based uponadversely affect the market for or value of any securities on which the healthcare provider’s quality metrics,interest or dividend is determined by reference to LIBOR, loans, derivatives and other financial obligations or on our overall financial condition or results of operations. More generally, any of the numberabove changes or any other consequential changes to LIBOR or any other “benchmark” as a result of providers participatinginternational, national or other proposals for reform or other initiatives, or any further uncertainty in relation to the areatiming and the patient population, among other factors. Therefore, it is uncertain whether healthcare providers will incur a decrease in reimbursement from the state insurance exchange, which may impact a tenant’s ability to pay rent.
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Actmanner of 2010, or the Patient Protection and Affordable Care Act, and on March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Actimplementation of 2010, or the Reconciliation Act, which in part modified the Patient Protection and Affordable Care Act. Together, the two acts serve as the primary vehicle for comprehensive healthcare reform in the U.S., or collectively the Healthcare Reform Act. The insurance plans that participated on the health insurance exchanges created by the Healthcare Reform Act were expecting to receive risk corridor payments to address the high risk claims that they paid through the exchange product. However, the federal government currently owes the insurance companies approximately $8.3 billion under the risk corridor payment program that is currently disputed by the federal government. The federal government is currently defending several lawsuits from the insurance plans that participate on the health insurance exchange. If the insurance companies do not receive the payments, the insurance companies may cease to participate on the insurance exchange which limits insurance options for patients. If patients do not have access to insurance coverage, it may adversely impact the tenants’ revenues and the tenants’ ability to pay rent.
In addition, the healthcare legislation passed in 2010 included new payment models with new shared savings programs and demonstration programs that include bundled payment models and payments contingent upon reporting on satisfaction of quality benchmarks. The new payment models will likely change how physicians are paid for services. Thesesuch changes, could have a material adverse effect on the value of financial condition of someassets and liabilities based on or all of our tenants. The financial impact on our tenants could restrict their abilitylinked to make rent payments to us, which would have a material adverse effect on our business, financial condition and results of operations and our ability to pay distributions to our stockholders.
Furthermore, beginning in 2016, the Centers for Medicare and Medicaid Services has applied a negative payment adjustment to individual eligible professionals, Comprehensive Primary Care practice sites, and group practices participating in the PQRS group practice reporting option (including Accountable Care Organizations) that do not satisfactorily report PQRS in 2014. Program participation during a calendar year will affect payments two years later. Providers can appeal the determination, but if the provider is not successful, the provider’s reimbursement may be adversely impacted, which would adversely impact a tenant’s ability to make rent payments to us.
Moreover, President Trump signed an Executive Order on January 20, 2017 to “ease the burden of Obamacare.“benchmark.” On May 4, 2017, members of the House of Representatives approved legislation to repeal portions of the Healthcare Reform Act, which legislation was submitted to the Senate for approval. On July 25, 2017, the Senate rejected a complete repeal and, further, on July 27, 2017, the Senate rejected a repeal on the Healthcare Reform Act’s individual and employer mandates and a temporary repeal on the medical device tax. Furthermore, on October 12, 2017, President Trump signed an Executive Order the purpose of which was to, among other things, (i) cut healthcare cost-sharing reduction subsidies, (ii) allow more small businesses to join together to purchase insurance coverage, (iii) extend short-term coverage policies, and (iv) expand employers’ ability to provide workers cash to buy coverage elsewhere. The Executive Order required the government agencies to draft regulations for consideration related to Associated Health Plans, short-term limited duration insurance and health reimbursement arrangements. At this time, the proposed legislation has not been drafted. The Trump Administration also ceased to provide the cost-share subsidies to the insurance companies that offered the silver plan benefits on the Health Information Exchange. The termination of the cost-share subsidies would impact the subsidy payments due in 2017 and will likely adversely impact the insurance companies, causing an increase in the premium payments for the individual beneficiaries in 2018. 19 State Attorney

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Generals filed suit to force the Trump Administration to reinstate the cost-share subsidy payments. On October 25, 2017, a California judge ruled in favor of the Trump Administration and found that the federal government was not required to immediately reinstate payment for the cost-share subsidy. The injunction sought by the Attorney Generals’ lawsuit was denied. Therefore, our tenants will likely see an increase in individuals who are self-pay or have a lower health benefit plan due to the increase in the premium payments. Our tenants’ collections and revenues may be adversely impacted by the change in the payor mix of their patients and it may adversely impact the tenants’ ability to make rent payments.
On October 17, 2017, Senate health committee leaders unveiled a new, bipartisan deal to stabilize Healthcare Reform Act markets. This new deal aims to guarantee cost-sharing subsidies for two years and restore the Healthcare Reform Act’s outreach funding cut off by the Trump administration in exchange for allowing states to pursue alternative regulations without critically gutting the Healthcare Reform Act’s basic mandated benefits and framework. Therefore, at this time, it is uncertain whether any healthcare reform legislation will ultimately become law. If our tenants’ patients do not have insurance, it could adversely impact the tenants’ ability to pay rent and operate a practice.
In addition, the Trump administration has commented on the possibility that it may seek to cease the additional subsidies to the qualified health plans that provide coverage for beneficiaries on the health insurance exchange. There are also multiple lawsuits in several judicial districts brought by qualified health plans to recover the prior risk corridor payments that were anticipated to be paid as part of the health insurance exchange program. The multiple lawsuits are moving through the judicial process. Further, there is a current lawsuit, United States House of Representatives vs. Price, which alleges that the Executive Branch of the United States of America exceeded its authority in implementing the risk corridor payments under the Healthcare Reform Act and therefore the payments should not be made. At this time, the case is pending. If the Trump administration or the court system determines that risk corridor or risk share payments are not required to be paid to the qualified health plans offering insurance coverage on the health insurance exchange program, the insurance companies may cease participation, causing millions of beneficiaries to lose insurance coverage. Therefore, our tenants may have an increase of self-pay patients and collections may decline, adversely impacting the tenants’ ability to pay rent.
Comprehensive healthcare reform legislation, the effects of which are not yet known, could materially adversely affect our business, financial condition and results of operations and our ability to pay distributions to our stockholders.
The Healthcare Reform Act is intended to reduce the number of individuals in the U.S. without health insurance and effect significant other changes to the ways in which healthcare is organized, delivered and reimbursed. Included within the legislation is a limitation on physician-owned hospitals from expanding, unless the facility satisfies very narrow federal exceptions to this limitation. Therefore, if our tenants are physicians that own and refer to a hospital, the hospital would be limited in its operations and expansion potential, which may limit the hospital’s services and resulting revenues and may impact the owner’s ability to make rental payments. The legislation will become effective through a phased approach, having begun in 2010 and concluding in 2018. On June 28, 2012, the United States Supreme Court upheld the individual mandate under the Healthcare Reform Act, although substantially limiting its expansion of Medicaid. At this time, the effects of healthcare reform and its impact on our properties are not yet known but could materially adversely affect our business, financial condition, results of operations and ability to pay distributions to our stockholders.
On May 4, 2017, members of the House of Representatives approved legislation to repeal portions of the Healthcare Reform Act, which legislation was submitted to the Senate for approval. On July 25, 2017, the Senate rejected a complete repeal and, further, on July 27, 2017, the Senate rejected a repeal on the Healthcare Reform Act’s individual and employer mandates and a temporary repeal on the medical device tax. Furthermore, on October 12, 2017, President Trump signed an Executive Order the purpose of which was to, among other things, (i) cut healthcare cost-sharing reduction subsidies, (ii) allow more small businesses to join together to purchase insurance coverage, (iii) extend short-term coverage policies, and (iv) expand employers’ ability to provide workers cash to buy coverage elsewhere. On October 17, 2017, Senate health committee leaders unveiled a new, bipartisan deal to stabilize Healthcare Reform Act markets. This new deal aims to guarantee cost-sharing subsidies for two years and restore the Healthcare Reform Act’s outreach funding cut off by the Trump administration in exchange for allowing states to pursue alternative regulations without critically gutting the Healthcare Reform Act’s basic mandated benefits and framework. However, while President Trump initially praised the new proposed deal, by October 18, 2017, he criticized the deal as an insurance company bailout because of the subsidy funding. Therefore, at this time, it is uncertain whether any healthcare reform legislation will ultimately become law. If our tenants’ patients do not have insurance, it could adversely impact the tenants’ ability to pay rent and operate a practice.
Although the Healthcare Reform Act has not been replaced or repealed, the Trump administration has commented on the possibility that it may seek to cease subsidies to the qualified health plans that provide coverage for beneficiaries on the health insurance exchange. There are also multiple lawsuits in several judicial districts brought by qualified health plans to recover the prior risk corridor payments that were anticipated to be paid as part of the health insurance exchange program. The multiple lawsuits are moving through the judicial process. Further, there is a current lawsuit, United States House of Representatives vs. Price, which alleges that the Executive Branch of the United States of America exceeded its authority in implementing the risk

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corridor payments under the Healthcare Reform Act and therefore the payments should not be made. At this time, the case is pending. If the Trump administration or the court system determines that risk corridor or risk share payments are not required to be paid to the qualified health plans offering insurance coverage on the health insurance exchange program, the insurance companies may cease participation, causing millions of beneficiaries to lose insurance coverage. Therefore, our tenants may have an increase of self-pay patients and collections may decline, adversely impacting the tenants’ ability to pay rent.
We, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses may be subject to various government reviews, audits and investigations that could adversely affect our business, including an obligation to refund amounts previously paid to us, potential criminal charges, the imposition of fines, and/or the loss of the right to participate in Medicare and Medicaid programs.
As a result of our tenants’ participation in the Medicaid and Medicare programs, we, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses are subject to various governmental reviews, audits and investigations to verify compliance with these programs and applicable laws and regulations. We, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses are also subject to audits under various government programs, including Recovery Audit Contractors, Zone Program Integrity Contractors, Program Safeguard Contractors and Medicaid Integrity Contractors programs, in which third party firms engaged by Centers for Medicare & Medicaid Services, or CMS, conduct extensive reviews of claims data and medical and other records to identify potential improper payments under the Medicare and Medicaid programs. Private pay sources also reserve the right to conduct audits. Billing and reimbursement errors and disagreements occur in the healthcare industry. We, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses may be engaged in reviews, audits and appeals of claims for reimbursement due to the subjectivities inherent in the process related to patient diagnosis and care, record keeping, claims processing and other aspects of the patient service and reimbursement processes, and the errors and disagreements those subjectivities can produce. An adverse review, audit or investigation could result in:
an obligation to refund amounts previously paid to us, our tenants or our operators pursuant to the Medicare or Medicaid programs or from private payors, in amounts that could be material to our business;
state or federal agencies imposing fines, penalties and other sanctions on us, our tenants or our operators;
loss of our right, our tenants’ right or our operators’ right to participate in the Medicare or Medicaid programs or one or more private payor networks;
an increase in private litigation against us, our tenants or our operators; and
damage to our reputation in various markets.
While we, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses have always been subject to post-payment audits and reviews, more intensive “probe reviews” appear to be a permanent procedure with our fiscal intermediaries. Generally, findings of overpayment from CMS contractors are eligible for appeal through the CMS defined continuum, but there may be rare instances that are not eligible for appeal. We, our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses utilize all defenses at our disposal to demonstrate that the services provided meet all clinical and regulatory requirements for reimbursement.
If the government or court were to conclude that such errors, deficiencies or disagreements constituted criminal violations, or were to conclude that such errors, deficiencies or disagreements resulted in the submission of false claims to federal healthcare programs, or if the government were to discover other problems in addition to the ones identified by the probe reviews that rose to actionable levels, we and certain of our officers, and our tenants and operators for our skilled nursing, senior housing and integrated senior health campuses and certain of their officers, might face potential criminal charges and/or civil claims, administrative sanctions and penalties for amounts that could be material to our business, results of operations and financial condition. In addition, we and/or some of the key personnel of our operating subsidiaries, or those of our tenants and operators for our skilled nursing, senior housing and integrated senior health campuses, could be temporarily or permanently excluded from future participation in state and federal healthcare reimbursement programs such as Medicaid and Medicare. In any event, it is likely that a governmental investigation alone, regardless of its outcome, would divert material time, resources and attention from our management team and our staff, or those of our tenants and our operators for our skilled nursing, senior housing and integrated senior health campuses and could have a materially detrimental impact on our results of operations during and after any such investigation or proceedings.
In cases where claim and documentation review by any CMS contractor results in repeated poor performance, a facility can be subjected to protracted oversight. This oversight may include repeat education and re-probe, extended pre-payment review, referral to recovery audit or integrity contractors, or extrapolation of an error rate to other reimbursement outside of specifically reviewed claims. Sustained failure to demonstrate improvement towards meeting all claim filing and documentation requirements could ultimately lead to Medicare and Medicaid decertification, which could have a materially

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detrimental impact on our results of operations. Adverse actions by CMS may also cause third party payer or licensure authorities to audit our tenants. These additional audits could result in termination of third party payer agreements or licensure of the facility, which would also adversely impact our operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
On July 1, 2017, we issued 15,000 shares of restricted common stock to our independent directors. These shares of restricted common stock were issued pursuant to our incentive plan in a private transaction exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act. The restricted common stock awards vested 20.0% on the grant date and 20.0% will vest on each of the first four anniversaries of the grant date.None.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
OurIn response to the COVID-19 pandemic and its effects to our business and operations, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects by partially suspending our share repurchase plan allowson March 31, 2020, effective with respect to all share repurchase requests submitted for repurchase other than repurchases resulting from the death or qualifying disability of stockholders. Repurchase requests that resulted from the death or qualifying disability of stockholders were not suspended, but remained subject to all terms and conditions of our share repurchase plan, including our board’s discretion to determine whether we had sufficient funds available to repurchase any shares. Subsequently, on May 29, 2020, our board suspended our share repurchase plan with respect to all share repurchase requests received after May 31, 2020, including repurchases resulting from the death or qualifying disability of stockholders. On July 1, 2020, we paid the final share repurchase requests that were honored prior to the suspension of our share repurchase plan. Our board shall determine if and when it is in the best interest of our company and stockholders to reinstate our share repurchase plan.
Prior to the suspension of the share repurchase plan, our share repurchase plan allowed for repurchases of shares of our common stock by us when certain criteria are met. Share repurchases will bewere made at the sole discretion of our board. All share repurchases are subjectThe number of shares that we repurchased was limited during any calendar year to a one-year holding period, except for repurchases made in connection with a stockholder’s death or “qualifying disability,” as defined in5.0% of the weighted average number of shares of our share repurchase plan and will be repurchased at a price between 92.5% and 100% of each stockholder's “Repurchase Amount,” as defined in our share repurchase plan, depending oncommon stock outstanding during the period of time their shares have been held.prior calendar year. Funds for the repurchase of shares of our common stock will come exclusivelycame from the cumulative proceeds we receivereceived from the sale of shares of our common stock pursuant to theour DRIP portion of our initial offering and the Secondary DRIP Offering.Offerings.
Effective with respect to share repurchase requests submitted during the fourth quarter 2016, the Repurchase Amount shall be equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the most recent estimated value of one share of our common stock, as determined by our board. Accordingly, we repurchase shares as follows: (a) for stockholders who have continuously held their shares of our common stock for at least one year, the price will be 92.5% of the Repurchase Amount; (b) for stockholders who have continuously held their shares of our common stock for at least two years, the price will be 95.0% of the Repurchase Amount; (c) for stockholders who have continuously held their shares of our common stock for at least three years, the price will be 97.5% of the Repurchase Amount; (d) for stockholders who have held their shares of our common stock for at least four years, the price will be 100% of the Repurchase Amount; and (e) forFor requests submitted pursuant to a death or a qualifying disability of a stockholder, the repurchase price will beRepurchase Amount was 100% of the amount per share the stockholder paid for their shares of common stock (in each case, as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to our common stock).
During the three months ended September 30, 2017,2020, we repurchased shares of our common stock as follows:
Period 

Total Number of
Shares Purchased
 

Average Price
Paid per Share
 

Total Number of Shares
Purchased As Part of
Publicly Announced
Plan or Program
 
Maximum Approximate
Dollar Value
of Shares that May
Yet Be Purchased
Under the
Plans or Programs
July 1, 2017 to July 31, 2017 —
 $—
 —
 (1)
August 1, 2017 to August 31, 2017 3,038
 $8.86
 3,038
 (1)
September 1, 2017 to September 30, 2017 1,042,201
 $8.96
 1,042,201
 (1)
Total 1,045,239
 $8.96
 1,045,239
  
PeriodTotal Number of
Shares Purchased		Average Price
Paid per Share		Total Number of Shares
Purchased As Part of
Publicly Announced
Plan or Program		Maximum Approximate
Dollar Value
of Shares that May
Yet Be Purchased
Under the
Plans or Programs
July 1, 2020 to July 31, 2020517,263 $9.90 517,263 (1)
August 1, 2020 to August 31, 2020— $— — (1)
September 1, 2020 to September 30, 2020— $— — (1)
Total517,263 $9.90 517,263 
___________
(1)Subject to funds being available, we will limit the number of shares of our common stock repurchased during any calendar year to 5.0% of the weighted average number of shares of our common stock outstanding during the prior calendar year; provided however, shares of our common stock subject to a repurchase requested upon the death of a stockholder will not be subject to this cap.
(1)A description of the maximum number of shares that may be purchased under our share repurchase plan is included in the narrative preceding the table.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.

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Item 5. Other Information.
None.
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Item 6. Exhibits.
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the period ended September 30, 20172020 (and are numbered in accordance with Item 601 of Regulation S-K).
101.INS*
Inline XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
___________
*104*Filed herewith.Cover Pager Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________
*Filed herewith.
**Furnished herewith. In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Griffin-American Healthcare REIT III, Inc.
(Registrant)
November 16, 2020By:
/s/ JEFFREYT. HANSON
DateJeffrey T. Hanson
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
November 16, 2020By:
Griffin-American Healthcare REIT III, Inc./s/ BRIAN S. PEAY
(Registrant)
Date
November 14, 2017By:
/s/ JEFFREYT. HANSON
DateJeffrey T. Hanson
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
November 14, 2017By:
/s/ BRIAN S. PEAY
DateBrian S. Peay
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)





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