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, 2017~~March 31, 2021



¨ ☐			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)



Maryland						46-1749436
(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 class

Trading Symbol(s)

Name of each exchange on which registered

None

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,~~May 14, 2021, there were ~~199,510,901~~193,889,872 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

Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020			3
Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			5
Condensed Consolidated Statements of Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			6
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			87
Notes to Condensed Consolidated Financial Statements			119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			4734
Item 3. Quantitative and Qualitative Disclosures About Market Risk			6350
Item 4. Controls and Procedures			6552

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			6653
Item 1A. Risk Factors			6653
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			7253
Item 3. Defaults Upon Senior Securities			7253
Item 4. Mine Safety Disclosures			7253
Item 5. Other Information			7353
Item 6. Exhibits			7354
Signatures			7455

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020

(Unaudited)


	March 31, 2021		December 31, 2020
ASSETS
Real estate investments, net	$	2,409,943,000	$	2,330,000,000
Debt security investment, net	76,685,000		75,851,000
Cash and cash equivalents	89,995,000		113,212,000
Accounts and other receivables, net	121,359,000		124,556,000
Restricted cash	39,711,000		38,978,000

Identified intangible assets, net	153,523,000		154,687,000
Goodwill	75,309,000		75,309,000

Operating lease right-of-use assets, net	143,239,000		203,988,000
Other assets, net	120,262,000		118,356,000
Total assets	$	3,230,026,000	$	3,234,937,000

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans payable, net(1)	$	912,883,000	$	810,478,000
Lines of credit and term loan(1)	842,234,000		843,634,000
Accounts payable and accrued liabilities(1)	170,033,000		186,651,000
Accounts payable due to affiliates(1)	2,426,000		8,026,000

Identified intangible liabilities, net	320,000		367,000
Financing obligations(1)	20,080,000		28,425,000
Operating lease liabilities(1)	136,655,000		193,634,000
Security deposits, prepaid rent and other liabilities(1)	86,940,000		88,899,000
Total liabilities	2,171,571,000		2,160,114,000

Commitments and contingencies (Note 11)	0		0

Redeemable noncontrolling interests (Note 12)	40,382,000		40,340,000

Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; 0ne issued and outstanding	0		0
Common stock, $0.01 par value per share; 1,000,000,000 shares authorized; 193,889,872 shares issued and outstanding as of both March 31, 2021 and December 31, 2020	1,939,000		1,939,000
Additional paid-in capital	1,730,096,000		1,730,448,000
Accumulated deficit	(876,118,000)		(864,271,000)
Accumulated other comprehensive loss	(1,939,000)		(2,008,000)
Total stockholders’ equity	853,978,000		866,108,000
Noncontrolling interests (Note 13)	164,095,000		168,375,000
Total equity	1,018,073,000		1,034,483,000
Total liabilities, redeemable noncontrolling interests and equity	$	3,230,026,000	$	3,234,937,000

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, net 100,133,000
101,117,000
Cash and cash equivalents 35,876,000
29,123,000
Accounts and other receivables, net 110,488,000
127,684,000
Restricted cash 29,734,000
26,554,000
Real estate deposits 3,344,000
3,173,000
Identified intangible assets, net 182,639,000
200,827,000
Goodwill 75,309,000
75,265,000
Other assets, net 100,785,000
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, net 1,708,000
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 liabilities 1,404,142,000
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, respectively 1,983,000
1,957,000
Additional paid-in capital 1,776,787,000
1,754,160,000
Accumulated deficit (574,590,000 ) (490,298,000 )
Accumulated other comprehensive loss (2,052,000 ) (3,029,000 )
Total stockholders’ equity 1,202,128,000
1,262,790,000
Noncontrolling interests (Note 13) 157,568,000
155,763,000
Total equity 1,359,696,000
1,418,553,000
Total liabilities, redeemable noncontrolling interests and equity $ 2,797,190,000
$ 2,794,518,000

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~

~~(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.

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

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Three and Nine Months Ended~~ ~~September 30, 2017~~ ~~and 2016~~2020

(Unaudited)

___________

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Resident fees and services $ 230,768,000
$ 218,107,000
$ 682,300,000
$ 651,565,000
Real estate revenue 31,980,000
30,823,000
95,422,000
87,191,000
Total revenues 262,748,000
248,930,000
777,722,000
738,756,000
Expenses:
Property operating expenses 199,047,000
187,240,000
596,099,000
568,726,000
Rental expenses 8,299,000
7,653,000
24,925,000
21,582,000
General and administrative 9,270,000
7,232,000
24,642,000
21,379,000
Acquisition related expenses 71,000
15,936,000
532,000
24,184,000
Depreciation and amortization 27,579,000
71,384,000
88,442,000
212,596,000
Total expenses 244,266,000

289,445,000
734,640,000
848,467,000
Other income (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 )
(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
—
Impairment of real estate investments —
—
(4,883,000 ) —
Loss from unconsolidated entities (1,494,000 ) (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 (loss) before income taxes 3,741,000
(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 interests 176,000
13,921,000
6,051,000
39,245,000
Net income (loss) attributable to controlling interest $ 4,637,000
$ (42,445,000 ) $ 4,508,000
$ (116,092,000 )
Net income (loss) per common share attributable to controlling interest — basic and diluted $ 0.02
$ (0.22 ) $ 0.02
$ (0.60 )
Weighted average number of common shares outstanding — basic and diluted 198,733,528
195,027,512
197,832,280
193,660,666
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 )
Other comprehensive income (loss):
Foreign currency translation adjustments 355,000
(427,000 ) 977,000
(1,916,000 )
Total other comprehensive income (loss) 355,000
(427,000 ) 977,000
(1,916,000 )
Comprehensive income (loss) 4,816,000
(56,793,000 ) (566,000 ) (157,253,000 )
Less: comprehensive loss attributable to noncontrolling interests 176,000
13,921,000
6,051,000
39,245,000
Comprehensive income (loss) attributable to controlling interest $ 4,992,000
$ (42,872,000 ) $ 5,485,000
$ (118,008,000 )
(1)Such liabilities of Griffin-American Healthcare REIT III, Inc. as of March 31, 2021 and December 31, 2020 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 $560,500,000 and $556,500,000 as of March 31, 2021 and December 31, 2020, respectively, which is guaranteed by Griffin-American Healthcare REIT III, Inc.

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

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~EQUITY~~OPERATIONS AND COMPREHENSIVE LOSS

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

(Unaudited)

Stockholders’ Equity
Common Stock

Number
of
Shares
Amount
Additional
Paid-In
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’
Equity

Noncontrolling
Interests
Total Equity
BALANCE — December 31, 2016 195,780,039
$ 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 DRIP 5,266,636
53,000
47,400,000
—
—
47,453,000
—
47,453,000
Issuance of vested and nonvested restricted common stock 22,500
—
40,000
—
—
40,000
—
40,000
Amortization of nonvested common stock compensation —
—
131,000
—
—
131,000
—
131,000
Stock based compensation —
—
—
—
—
—
390,000
390,000
Repurchase of common stock (2,699,995 ) (27,000 ) (23,995,000 ) —
—
(24,022,000 ) —
(24,022,000 )
Contributions from noncontrolling interest —
—
—
—
—
—
8,304,000
8,304,000
Distributions to noncontrolling interests —
—
—
—
—
—
(464,000 ) (464,000 )
Reclassification of noncontrolling interests to mezzanine equity —
—
—
—
—
—
(585,000 ) (585,000 )
Fair value adjustment to redeemable noncontrolling interests —
—
(939,000 ) —
—
(939,000 ) (402,000 ) (1,341,000 )
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 )
Other comprehensive income —
—
—
—
977,000
977,000
—
977,000
BALANCE — September 30, 2017 198,369,180
$ 1,983,000
$ 1,776,787,000
$ (574,590,000 ) $ (2,052,000 ) $ 1,202,128,000
$ 157,568,000
$ 1,359,696,000


	Three Months Ended March 31,
		2021		2020
Revenues and grant income:
Resident fees and services		$	253,026,000	$	289,926,000
Real estate revenue		30,023,000		30,118,000
Grant income		8,229,000		0
Total revenues and grant income		291,278,000		320,044,000
Expenses:
Property operating expenses		245,142,000		255,740,000
Rental expenses		8,055,000		8,170,000
General and administrative		7,257,000		6,574,000
Business acquisition expenses		1,248,000		234,000
Depreciation and amortization		25,723,000		25,087,000
Total expenses		287,425,000		295,805,000

Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)		(20,365,000)		(18,534,000)
Gain (loss) in fair value of derivative financial instruments		1,821,000		(8,183,000)
Loss on disposition of real estate investment		(335,000)		0
Impairment of real estate investments		0		(5,102,000)
Loss from unconsolidated entities		(1,771,000)		(904,000)
Foreign currency gain (loss)		415,000		(3,065,000)
Other income		272,000		555,000
Loss before income taxes		(16,110,000)		(10,994,000)
Income tax (expense) benefit		(163,000)		3,211,000
Net loss		(16,273,000)		(7,783,000)
Less: net loss (income) attributable to noncontrolling interests		4,426,000		(2,127,000)
Net loss attributable to controlling interest		$	(11,847,000)	$	(9,910,000)
Net loss per common share attributable to controlling interest — basic and diluted		$	(0.06)	$	(0.05)
Weighted average number of common shares outstanding — basic and diluted		193,856,872		194,844,516

Net loss		$	(16,273,000)	$	(7,783,000)
Other comprehensive income (loss):
Foreign currency translation adjustments		69,000		(533,000)
Total other comprehensive income (loss)		69,000		(533,000)
Comprehensive loss		(16,204,000)		(8,316,000)
Less: comprehensive loss (income) attributable to noncontrolling interests		4,426,000		(2,127,000)
Comprehensive loss attributable to controlling interest		$	(11,778,000)	$	(10,443,000)

Stockholders’ Equity
Common Stock

Number
of
Shares
Amount
Additional
Paid-In
Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’
Equity

Noncontrolling
Interests
Total Equity
BALANCE — December 31, 2015 191,135,158
$ 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 DRIP 5,124,834
51,000
48,641,000
—
—
48,692,000
—
48,692,000
Issuance of vested and nonvested restricted common stock 30,000
—
60,000
—
—
60,000
—
60,000
Amortization of nonvested common stock compensation —
—
91,000
—
—
91,000
—
91,000
Stock based compensation —
—
—
—
—
—
589,000
589,000
Repurchase of common stock (1,564,814 ) (15,000 ) (14,818,000 ) —
—
(14,833,000 ) —
(14,833,000 )
Contribution from noncontrolling interests —
—
—
—
—
—
19,753,000
19,753,000
Distributions to noncontrolling interests —
—
—
—
—
—
(229,000 ) (229,000 )
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 )
Other comprehensive loss —
—
—
—
(1,916,000 ) (1,916,000 ) —
(1,916,000 )
BALANCE — September 30, 2016 194,725,178
$ 1,947,000
$ 1,752,386,000
$ (430,744,000 ) $ (2,422,000 ) $ 1,321,167,000
$ 172,001,000
$ 1,493,168,000

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)~~

~~For the Nine Months Ended September 30, 2017 and 2016~~

~~(Unaudited)~~

~~___________~~


~~(1)~~	~~Amount excludes $(613,000) of net loss 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.

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, 2021 and 2020

(Unaudited)



	Stockholders’ Equity
	Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — December 31, 2020	193,889,872	$	1,939,000	$	1,730,448,000	$	(864,271,000)	$	(2,008,000)	$	866,108,000	$	168,375,000	$	1,034,483,000

Offering costs — common stock	—	—		(1,000)		—		—		(1,000)		—		(1,000)


Amortization of nonvested common stock compensation	—	—		27,000		—		—		27,000		—		27,000


Stock based compensation	—	—		—		—		—		—		(14,000)		(14,000)


Distributions to noncontrolling interests	—	—		—		—		—		—		(176,000)		(176,000)


Adjustment to value of redeemable noncontrolling interests	—	—		(378,000)		—		—		(378,000)		(148,000)		(526,000)

Net loss	—	—		—		(11,847,000)		—		(11,847,000)		(3,942,000)		(15,789,000)		(1)
Other comprehensive income	—	—		—		—		69,000		69,000		—		69,000
BALANCE — March 31, 2021	193,889,872	$	1,939,000	$	1,730,096,000	$	(876,118,000)	$	(1,939,000)	$	853,978,000	$	164,095,000	$	1,018,073,000



	Stockholders’ Equity
	Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — December 31, 2019	193,967,474	$	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 DRIP	1,398,021	14,000		13,127,000		—		—		13,141,000		—		13,141,000

Amortization of nonvested common stock compensation	—	—		43,000		—		—		43,000		—		43,000
Stock based compensation	—	—		—		—		—		—		195,000		195,000




Distributions to noncontrolling interests	—	—		—		—		—		—		(4,000)		(4,000)

Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(195,000)		(195,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(11,000)		—		—		(11,000)		(4,000)		(15,000)
Distributions declared ($0.15 per share)	—	—		—		(29,154,000)		—		(29,154,000)		—		(29,154,000)
Net (loss) income	—	—		—		(9,910,000)		—		(9,910,000)		1,899,000		(8,011,000)		(1)
Other comprehensive loss	—	—		—		—		(533,000)		(533,000)		—		(533,000)
BALANCE — March 31, 2020	195,365,495	$	1,953,000	$	1,741,580,000	$	(866,614,000)	$	(2,788,000)	$	874,131,000	$	159,999,000	$	1,034,130,000

___________

(1)For the three months ended March 31, 2021 and 2020, amounts exclude $(484,000) and $228,000, respectively, of net (loss) 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.

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

(Unaudited)


	Three Months Ended March 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(16,273,000)	$	(7,783,000)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	25,723,000		25,087,000
Other amortization	5,955,000		7,689,000
Deferred rent	(1,023,000)		(1,096,000)
Stock based compensation	(14,000)		195,000
Stock based compensation — nonvested restricted common stock	27,000		43,000


Loss from unconsolidated entities	1,771,000		904,000

Loss on disposition of real estate investment	335,000		0
Foreign currency (gain) loss	(416,000)		3,007,000

Deferred income taxes	0		(3,329,000)
Loss on debt extinguishment	2,288,000		0


Change in fair value of derivative financial instruments	(1,821,000)		8,183,000
Impairment of real estate investments	0		5,102,000
Changes in operating assets and liabilities:
Accounts and other receivables	3,203,000		5,039,000
Other assets	(4,440,000)		(3,104,000)
Accounts payable and accrued liabilities	(10,891,000)		(6,090,000)
Accounts payable due to affiliates	(5,160,000)		(35,000)
Operating lease liabilities	(4,358,000)		(6,033,000)
Security deposits, prepaid rent and other liabilities	(161,000)		(1,896,000)
Net cash (used in) provided by operating activities	(5,255,000)		25,883,000
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of real estate investments	(78,542,000)		(1,478,000)
Developments and capital expenditures	(29,196,000)		(37,217,000)
Proceeds from disposition of real estate investment	1,248,000		0



Investments in unconsolidated entities	(325,000)		(350,000)

Real estate and other deposits	(26,000)		(173,000)


Net cash used in investing activities	(106,841,000)		(39,218,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under mortgage loans payable	205,826,000		8,239,000
Payments on mortgage loans payable	(3,480,000)		(3,137,000)
Early payoff of mortgage loans payable	(101,734,000)		0
Borrowings under the lines of credit and term loan	16,600,000		28,500,000
Payments on the lines of credit and term loan	(18,000,000)		(10,000,000)
Deferred financing costs	(799,000)		(849,000)
Debt extinguishment costs	(125,000)		0



Payments on financing obligations	(8,481,000)		(1,615,000)


Distributions paid	0		(16,032,000)



Distributions to noncontrolling interests	(172,000)		0



Security deposits and other	(30,000)		(3,000)

Net cash provided by financing activities	89,605,000		5,103,000

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 amortization 88,442,000
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 compensation 390,000
589,000
Stock based compensation — nonvested restricted common stock 171,000
151,000
Loss from unconsolidated entities 3,668,000
6,916,000
Bad debt expense, net 5,220,000
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 payable 1,432,000
—
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 investments 4,883,000
—
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 liabilities 8,832,000
31,282,000
Accounts payable due to affiliates (79,000 ) 970,000
Security deposits, prepaid rent and other liabilities 610,000
7,841,000
Net cash provided by operating activities 88,540,000
92,398,000
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate investments (102,241,000 ) (277,949,000 )
Proceeds from real estate dispositions 15,993,000
—
Advances on real estate notes receivable —
(1,942,000 )
Principal repayments on real estate notes receivable 26,752,000
—
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 settlements 85,000
—
Net cash used in investing activities (90,521,000 )
(311,913,000 )
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under mortgage loans payable 230,452,000
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 loans 764,575,000
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~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

(Unaudited)

Nine Months Ended September 30,
2017 2016
Deferred financing costs $ (5,485,000 ) $ (10,775,000 )
Mortgage loan payable extinguishment costs (493,000 ) —
Other obligations 9,487,000
—
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 interest 8,304,000
19,753,000
Distributions to noncontrolling interests (460,000 ) (237,000 )
Contributions from redeemable noncontrolling interests 975,000
2,295,000
Distributions to redeemable noncontrolling interests (384,000 ) (198,000 )
Security deposits 131,000
99,000
Payment of offering costs (10,000 ) (11,000 )
Distributions paid (41,526,000 ) (38,343,000 )
Net cash provided by financing activities 8,602,000
207,781,000
NET CHANGE IN CASH AND CASH EQUIVALENTS 6,621,000
(11,734,000 )
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH AND CASH EQUIVALENTS 132,000
(72,000 )
CASH AND CASH EQUIVALENTS — Beginning of period 29,123,000
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

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)~~

~~For the Nine Months Ended September 30, 2017 and 2016~~

~~(Unaudited)~~


						Three Months Ended March 31,
						2021		2020
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH					NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(22,491,000)	$	(8,232,000)
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH					EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	7,000		(134,000)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period					CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	152,190,000		89,880,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period					CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	129,706,000	$	81,514,000

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH					RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:					Beginning of period:
Cash and cash equivalents					Cash and cash equivalents	$	113,212,000	$	53,149,000
Restricted cash					Restricted cash	38,978,000		36,731,000
Cash, cash equivalents and restricted cash					Cash, cash equivalents and restricted cash	$	152,190,000	$	89,880,000

End of period:					End of period:
Cash and cash equivalents					Cash and cash equivalents	$	89,995,000	$	44,683,000
Restricted cash					Restricted cash	39,711,000		36,831,000
Cash, cash equivalents and restricted cash					Cash, cash equivalents and restricted cash	$	129,706,000	$	81,514,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:					Cash paid for:
Interest					Interest	$	16,079,000	$	17,181,000
Income taxes					Income taxes	$	169,000	$	111,000
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES					SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Investing Activities:					Investing Activities:
Accrued developments and capital expenditures					Accrued developments and capital expenditures	$	16,020,000	$	22,579,000
Capital expenditures from financing obligations					Capital expenditures from financing obligations	$	136,000	$	0

Tenant improvement overage					Tenant improvement overage	$	41,000	$	896,000

Net decrease in other assets in connection with our acquisitions and disposition of real estate investments					Net decrease in other assets in connection with our acquisitions and disposition of real estate investments	$	(186,000)	$	0

	Nine Months Ended September 30,
	2017		2016
Financing Activities:					Financing Activities:

Issuance of common stock under the DRIP	$	47,453,000	$	48,692,000	Issuance of common stock under the DRIP	$	0	$	13,141,000

Distributions declared but not paid	$	9,830,000	$	9,647,000	Distributions declared but not paid	$	0	$	9,955,000

Reclassification of noncontrolling interests to mezzanine equity	$	585,000	$	—	Reclassification of noncontrolling interests to mezzanine equity	$	0	$	195,000
Accrued deferred financing costs	$	87,000	$	—
Settlement of mortgage loan payable	$	2,040,000	$	—

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

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

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. We invest~~invests 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 have originated and acquired secured loans and may also originate and acquire ~~secured loans and~~other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current ~~income.~~income; however, we have selectively developed, and may continue to selectively develop, real estate properties. 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.

~~As of April 22, 2015, the deregistration date of our~~We raised $1,842,618,000 through a best efforts initial public offering, or our initial offering, ~~we had received~~that commenced on February 26, 2014, and ~~accepted subscriptions in our initial offering for~~issued 184,930,598 shares of our common ~~stock, or $1,842,618,000, excluding~~stock. In addition, during our initial offering, we issued 1,948,563 shares of our common stock ~~issued~~ pursuant to our initial distribution reinvestment plan, or the ~~DRIP. As~~Initial DRIP, for a total of $18,511,000 in distributions reinvested. Following the deregistration of our initial offering on April 22, 2015, we continued issuing shares of our common stock pursuant to the Initial DRIP through a subsequent offering, or the 2015 DRIP 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 were issued pursuant to the 2015 DRIP Offering. A total of ~~$18,511,000~~$245,396,000 in distributions were reinvested that resulted in ~~1,948,563~~26,386,545 shares of ~~our~~ common stock being issued pursuant to the 2015 DRIP ~~portion of our initial offering.~~Offering.

On ~~March 25, 2015,~~January 30, 2019, 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~~$200,000,000 of additional shares of our common stock to be issued pursuant to our distribution reinvestment plan, or the Secondary 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 commence offering shares pursuant to the Secondary DRIP Offering until April 22, 2015, following the deregistration of our initial offering. Effective October 5, 2016, we amended and restated the DRIP, or the Amended and Restated DRIP, or the 2019 DRIP Offering, which commenced 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 authorizes the reinstatement of such plan. Such suspension was effective upon the completion of all shares issued with respect to ~~amend the price at which shares~~distributions payable to stockholders of ~~our common stock are issued pursuant~~record on or prior to the ~~Secondary DRIP Offering.~~close of business on May 31, 2020. See Note 13, Equity — Distribution Reinvestment Plan, for a further discussion. As of ~~September 30, 2017,~~March 31, 2021, a total of ~~$155,616,000~~$63,105,000 in distributions were reinvested ~~and 16,712,987~~that resulted in 6,724,348 shares of ~~our~~ common stock ~~were~~being issued pursuant to the ~~Secondary~~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.

We conduct substantially all of our operations through ~~Griffin-American~~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~~advisor that 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~~advisory agreement, as amended to clarify certain indemnification provisions and last renewed ~~pursuant to the mutual consent of the parties~~ on February ~~14, 2017 and~~22, 2021, or the Advisory Agreement, expires on February 26, ~~2018. O~~ur2022. Our advisor uses its best efforts, subject to the oversight, review and approval of our board, ~~of directors, or our board,~~ to, among other things, ~~research, identify, review~~provide asset management, property management, acquisition, disposition and ~~make investments in and dispositions of properties and securities~~other advisory services 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 a~~dvisor~~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 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. In October 2020, our board established a special committee of our board, or our special committee, which consists of all of our independent directors, to investigate and analyze strategic alternatives, including but not limited to, the sale of our assets, a listing of our shares on a national securities exchange, or a merger with another entity, including a merger with another unlisted entity that we expect would enhance our value.

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

We currently operate through ~~six~~6 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,~~March 31, 2021, we owned and/or operated 9596 properties, comprising 99100 buildings, and ~~107~~120 integrated senior health campuses including completed development projects, or approximately ~~12,516,000~~14,105,000 square feet of gross leasable area, ~~or GLA,~~ for an aggregate contract

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

purchase price of ~~$2,837,375,000.~~$3,172,649,000. In addition, as of ~~September 30, 2017,~~March 31, 2021, we ~~have invested $98,011,000 in~~also 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 operate and intend to co~~ntinue~~continue 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 are the sole general partner of ourour operating partnership, and as of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, we owned greater than a 99.99% general partnership interest therein. AsOur advisor is a limited partner, and as of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016, our advisor~~2020, 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 ~~SEC~~the 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 ~~2016~~2020 Annual Report on Form 10-K, as filed with the SEC on March ~~15, 2017.~~25, 2021.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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 goodwill and long-lived and intangible 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

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

~~Allowance~~Revenue Recognition — Resident Fees and Services Revenue

Disaggregation of Resident Fees and Services Revenue

The following table disaggregates 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 March 31,
	2021						2020
	Integrated Senior Health Campuses		Senior Housing — RIDEA(1)		Total		Integrated Senior Health Campuses		Senior Housing — RIDEA(1)		Total
Over time	$	188,258,000	$	19,459,000	$	207,717,000	$	213,266,000	$	21,260,000	$	234,526,000
Point in time	44,968,000		341,000		45,309,000		54,528,000		872,000		55,400,000
Total resident fees and services	$	233,226,000	$	19,800,000	$	253,026,000	$	267,794,000	$	22,132,000	$	289,926,000

The following table disaggregates our resident fees and services revenue by payor class:


	Three Months Ended March 31,
	2021						2020
	Integrated Senior Health Campuses		Senior Housing — RIDEA(1)		Total		Integrated Senior Health Campuses		Senior Housing — RIDEA(1)		Total
Private and other payors	$	106,110,000	$	19,419,000	$	125,529,000	$	128,267,000	$	21,700,000	$	149,967,000
Medicare	84,283,000		0		84,283,000		87,219,000		0		87,219,000
Medicaid	42,833,000		381,000		43,214,000		52,308,000		432,000		52,740,000
Total resident fees and services	$	233,226,000	$	19,800,000	$	253,026,000	$	267,794,000	$	22,132,000	$	289,926,000

___________

(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		Medicare		Medicaid		Total
Beginning balance — January 1, 2021	$	36,125,000	$	36,479,000	$	14,473,000	$	87,077,000
Ending balance — March 31, 2021	37,648,000		31,119,000		18,563,000		87,330,000
Increase/(decrease)	$	1,523,000	$	(5,360,000)	$	4,090,000	$	253,000

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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, 2021	$	10,597,000
Ending balance — March 31, 2021	11,732,000
Increase	$	1,135,000

In addition to the deferred revenue above, we received approximately $52,322,000 of Medicare advance payments during 2020 through an expanded program of the Centers for Medicare & Medicaid Services that was intended to expedite cash flow to qualified healthcare providers in response to the impact of the COVID-19 pandemic. Such amounts are included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets, and will be recognized in resident fees and services revenue once our recoupment period commences in the second quarter of 2021.

Tenant and ~~resident receivables~~Resident Receivables and ~~unbilled deferred rent~~Allowances

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 recognition~~Substantially all of ~~rents. Such~~such allowances are ~~charged~~recorded as direct reductions of resident fees and services revenue as contractual adjustments provided to ~~bad debt expense, which is included in general and administrative~~third-party payors or implicit price concessions in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss. Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the ~~tenant’s or resident’s~~residents’ 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 loss.

As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, we had ~~$10,568,000~~$8,833,000 and ~~$9,597,000,~~$9,466,000, respectively, in ~~allowance for uncollectible accounts,~~allowances, which ~~was~~were determined necessary to reduce receivables toby our estimate of the amount recoverable. For the three and nine months ended September 30, 2017, $0 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, we did not write off any receivables to bad debt expense.expected future credit losses. For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, $1,455,000~~2020, we increased allowances by $2,478,000 and ~~$1,467,000,~~$3,826,000, respectively, and reduced allowances for collections or adjustments by $1,505,000 and $2,478,000, respectively. For the three months ended March 31, 2021 and 2020, $1,606,000 and $1,974,000, respectively, of our receivables were written off against the ~~allowance~~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 ~~uncollectible accounts,~~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: (i) significant negative industry or economic trends; (ii) a significant underperformance relative to historical or projected future operating results; and (iii) a significant change in the extent or manner in which the asset is used or significant physical change in the asset. If indicators of impairment of our long-lived assets are present, we evaluate the carrying value of the related real estate investments in relation to the future undiscounted cash flows of the underlying operations. In performing this evaluation, we consider market conditions and our current intentions with respect to holding or disposing of the asset. We adjust the net book value of leased properties and other long-lived assets to fair value if the sum of the expected future undiscounted cash flows, including sales proceeds, is less than carrying value. We recognize an impairment loss at the time we make any such determination.

No impairment charges on long-lived assets were recognized for the ~~nine~~three months ended ~~September 30, 2017 and 2016, $4,685,000 and $4,059,000, respectively, of our receivables were written off against the allowance for uncollectible accounts.~~

~~As of September 30, 2017 and December~~March 31, ~~2016, we did not have any allowance for uncollectible accounts for deferred rent receivables.~~2021. 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 Acquisitions~~

~~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.

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, 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, 2017 and December~~March 31, 2016, accounts payable and accrued liabilities primarily includes insurance payable of $26,827,000 and $19,136,000, respectively, reimbursement of payroll related costs to the managers of our senior housing — RIDEA facilities and integrated senior health campuses of $23,195,000 and $20,992,000, respectively, accrued property taxes of $15,152,000 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 and $5,066,000, respectively.

~~Recently Issued or Adopted Accounting Pronouncements~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~, as codified in ASC Topic 606, which replaces the existing accounting standards for revenue recognition. ASC Topic 606 provides a five-step framework to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. ASC Topic 606 is effective for interim and annual reporting periods beginning after December 15, 2017. We are in the process of evaluating all of our revenue streams to identify any differences in

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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~, or ASU 2016-01, which amends the classification and measurement of financial instruments. ASU 2016-01 revises 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 respect to only certain of the amendments in 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 2016-02 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted for financial statements that have not yet been made available for issuance. ASU 2016-02 requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with a few optional practical expedients. As a result of the adoption of ASU 2016-02 on January 1, 2019, we will recognize all of our operating leases for which we are the lessee, including facilities leases 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, 2019 to our consolidated financial statements and disclosures.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments,~~ or ASU 2016-13, which introduces a new approach to estimate credit losses on certain types of financial instruments based on expected losses. It also modifies 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 do not expect the adoption of ASU 2016-13 on January 1, 2020, ~~to have a material impact on our 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 recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16 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 2016-16 on January 1, 2018 to have a material impact on our consolidated financial statements.

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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment~~, or ASU 2017-04, which eliminates Step 2 from the goodwill impairment test and allows an entity to perform its goodwill impairment test by comparing the fair value 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 classification of the award (or equity or liability) changes as a result 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 adoption of ASU 2017-09 on January 1, 2018 to have a material impact on our consolidated financial statements.

~~3. Real Estate Investments, Net~~

~~Our real estate investments, net consisted of the following as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016:~~

September 30,
2017
December 31,
2016
Building, improvements and construction in process $ 2,042,450,000
$ 1,981,610,000
Land 173,338,000
167,329,000
Furniture, fixtures and equipment 97,043,000
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 expense for the three months ended September 30, 2017 and 2016 was $20,611,000 and $18,050,000, respectively. Depreciation expense for the nine months ended September 30, 2017 and 2016 was $61,453,000 and $49,719,000, respectively. For the nine months ended September 30, 2017, we determined that ~~two integrated senior health campuses were~~1 skilled nursing facility was impaired, and as such, we recognized an ~~aggregate~~ impairment charge 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.$3,711,000. The fair value of ~~our remaining impaired integrated senior health campus~~such property was ~~based on its projected~~determined by the sales price from an executed purchase and sale agreement with a third-party buyer, and adjusted for anticipated selling costs, which ~~was~~is considered a Level 2 measurement within the fair value hierarchy. ~~No impairment charges were~~As of December 31, 2020, the remaining $1,056,000 carrying value of such skilled nursing facility was classified in properties held for sale, and we subsequently disposed of such property in February 2021 for a contract sales price of $1,300,000 and recognized ~~for the three and nine months ended September 30, 2016.~~

a net loss on sale of $335,000. For the three months ended ~~September 30, 2017, we incurred capital expenditures of $6,810,000 on~~March 31, 2021, 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 facilities 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 facilities 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 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~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, 2017 and July 17, 2017 for a contract purchase price of $300,000 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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 $26,000 disposition ~~fees and expense reimbursements related to~~fee for such ~~dispositions~~disposition of a skilled nursing facility that may otherwise have been due to our advisor pursuant to the Advisory Agreement. Our advisor did not receive any additional

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

securities, shares of ~~our~~ stock or any other form of consideration or any repayment as a result of the waiver of such disposition fee. For the three months ended March 31, 2020, we did not incur any disposition fees to our advisor or its affiliates.

Properties Held for Sale

A property or a group of properties is reported in discontinued operations in our condensed consolidated statements of operations and ~~expense reimbursements.~~comprehensive 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.

Our properties held for sale are included in other assets, net in our accompanying condensed consolidated balance sheets. We did not recognize impairment charges on properties held for sale for the three months ended March 31, 2021. For the three months ended March 31, 2020, we determined that the fair value of 1 integrated senior health campus that was held for sale was lower than its carrying amount, and as such, we recognized an impairment charge of $1,391,000 to reduce the carrying value of such asset to $350,000. The ~~following is a summary~~fair value of such property was determined by the sales price from executed purchase and sales agreements with third-party buyers, and adjusted for anticipated selling costs, which were considered Level 2 measurements within the fair value hierarchy.

Accounts Payable and Accrued Liabilities

As of March 31, 2021 and December 31, 2020, accounts payable and accrued liabilities primarily includes reimbursement of payroll-related costs to the managers of our ~~dispositions~~senior housing — RIDEA facilities and integrated senior health campuses of $48,517,000 and $46,540,000, respectively, insurance reserves of $35,188,000 and $36,251,000, respectively, accrued property taxes of $16,401,000 and $14,521,000, respectively, and accrued developments and capital expenditures to unaffiliated third parties of $15,672,000 and $21,508,000, respectively.

3. Real Estate Investments, Net

Our real estate investments, net consisted of the following as of March 31, 2021 and December 31, 2020:


	March 31, 2021		December 31, 2020
Building, improvements and construction in process	$	2,459,700,000	$	2,379,337,000
Land and improvements	215,826,000		200,319,000
Furniture, fixtures and equipment	182,730,000		174,994,000
	2,858,256,000		2,754,650,000
Less: accumulated depreciation	(448,313,000)		(424,650,000)
	$	2,409,943,000	$	2,330,000,000

Depreciation expense for the ~~nine~~three months ended ~~September 30, 2017, which were included in~~March 31, 2021 and 2020 was $24,190,000 and $22,742,000, respectively. For the three months ended March 31, 2021, we incurred capital expenditures of $19,189,000 for our integrated senior health campuses, ~~segment:~~

$3,537,000 for our medical office buildings and $410,000 for our senior housing —RIDEA facilities. We did 0t incur any capital expenditures for our hospitals, senior housing and skilled nursing facilities for the three months ended March 31, 2021.

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~~Included in the capital expenditure amounts above are costs for the development 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~~expansion of our ~~notes receivable~~integrated senior health campuses. For the three months ended March 31, 2021, we completed the development of 1 property for $17,007,000 and ~~debt security investment, including unamortized loan and~~we exercised our right to purchase a leased property that cost $11,004,000 to develop. In addition, for the three months ended March 31, 2021, we, through a majority-owned subsidiary of Trilogy Investors, LLC, or Trilogy, also acquired a land parcel in Indiana for a contract purchase price of $175,000 plus closing ~~costs, net as of September 30, 2017 and~~ ~~December 31, 2016~~:costs.

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


~~(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~~Acquisitions 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. Previously Leased Real Estate Investments

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021, we, through a majority-owned subsidiary of Trilogy, of which we owned 67.6% at the time of acquisition, acquired a portfolio of 6 previously leased real estate investments located in Indiana and ~~2016,~~Ohio. The following is a summary of such ~~fees~~property acquisitions for the three months ended March 31, 2021, which are included in our integrated senior health campuses segment:


Location	Date Acquired	Contract Purchase Price		Mortgage Loan Payable(1)		Acquisition Fee(2)
Kendallville, IN; and Delphos, Lima, Springfield, Sylvania and Union Township, OH	01/19/21	$	76,549,000	$	78,587,000	$	1,164,000

___________

(1)Represents the principal balance of the mortgage loan payable placed on the properties at the time of acquisition.

(2)Our advisor was paid, as compensation for services rendered in connection with the investigation, selection and ~~expenses noted above did not exceed 6.0%~~acquisition of our properties, an acquisition fee of 2.25% of the portion of the contract purchase price of the properties attributed to our ~~real estate-related investments.~~ownership interest in the Trilogy subsidiary that acquired the properties.

For the three months ended March 31, 2021, we accounted for our property acquisitions as asset acquisitions. We incurred and capitalized acquisition fees and direct acquisition related expenses of $1,814,000 for such acquisitions. The following table ~~shows~~summarizes the ~~changes~~purchase price of the assets acquired at the time of acquisition, adjusted for $57,647,000 of operating lease right-of-use assets and $54,564,000 of operating lease liabilities, and based on their relative fair values:


	2021 Acquisitions
Building and improvements	$	66,167,000
Land and improvements	16,038,000




Total assets acquired	$	82,205,000

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 March 31, 2021 and December 31, 2020, the carrying amount of ~~real estate notes receivable and~~the debt security investment was $76,685,000 and $75,851,000, respectively, net of unamortized closing costs of $1,158,000 and $1,205,000, respectively. Accretion on the debt security for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 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 security 1,821,000
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~~2020 was $881,000 and ~~nine months ended September 30, 2017 and 2016, we did not record any impairment losses on our~~$799,000, respectively, which is recorded to real estate ~~notes receivable~~revenue in our accompanying condensed consolidated statements of operations and ~~debt security investment.~~comprehensive loss. Amortization expense ~~on loan and~~of closing costs for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 was ~~$57,000~~$47,000 and ~~$231,000, respectively, and for the nine months ended September 30, 2017 and 2016, was $164,000 and $607,000,~~$40,000, respectively, which is recorded against real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~

loss. We evaluated the debt security investment for expected future credit loss by considering credit quality indicators such as the agency ratings and the underlying collateral of such investment. No credit loss was recorded for both the three months ended March 31, 2021 and 2020.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

5. Identified Intangible Assets, Net

Identified intangible assets, net consisted of the following as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020:


	March 31, 2021		December 31, 2020
Amortized intangible assets:
In-place leases, net of accumulated amortization of $22,504,000 and $22,019,000 as of March 31, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 9.3 years and 9.4 years as of March 31, 2021 and December 31, 2020, respectively)	$	22,735,000	$	23,760,000
Customer relationships, net of accumulated amortization of $523,000 and $486,000 as of March 31, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 15.4 years and 15.7 years as of March 31, 2021 and December 31, 2020, respectively)	2,317,000		2,354,000
Above-market leases, net of accumulated amortization of $1,740,000 and $1,975,000 as of March 31, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 4.5 years and 4.6 years as of March 31, 2021 and December 31, 2020, respectively)	948,000		1,032,000
Internally developed technology and software, net of accumulated amortization of $329,000 and $305,000 as of March 31, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 1.4 years and 1.7 years as of March 31, 2021 and December 31, 2020, respectively)	141,000		165,000
Unamortized intangible assets:
Certificates of need	96,595,000		96,589,000
Trade names	30,787,000		30,787,000
	$	153,523,000	$	154,687,000

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 need 81,967,000
76,142,000
Trade names 30,787,000
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~~ March 31, 2021and ~~2016~~2020 was ~~$7,205,000~~$1,196,000 and ~~$53,495,000,~~$2,106,000, respectively, which included ~~$329,000~~$83,000 and ~~$414,000,~~$112,000, 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).~~loss.

~~Amortization~~The aggregate weighted average remaining life of the identified intangible assets was 9.7 years as of both March 31, 2021 and December 31, 2020. As of March 31, 2021, estimated amortization expense on the identified intangible assets for the nine months ~~ended September 30, 2017~~ending December 31, 2021 and ~~2016~~for each of the next four years ending December 31 and thereafter 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).as follows:


Year	Amount
2021	$	3,444,000
2022	3,910,000
2023	3,141,000
2024	2,725,000
2025	2,212,000
Thereafter	10,709,000
	$	26,141,000

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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, 2017~~March 31, 2021 and December 31, ~~2016:~~2020:

September 30,
2017

December 31,
2016
Prepaid expenses, deposits and other assets $ 21,981,000
$ 16,002,000
Investments in unconsolidated entities 18,639,000
20,057,000
Inventory 16,337,000
17,266,000
Deferred rent receivables 15,978,000
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, respectively 5,418,000
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


	March 31, 2021		December 31, 2020
Deferred rent receivables	$	39,489,000	$	38,918,000
Prepaid expenses, deposits, other assets and deferred tax assets, net	24,463,000		16,618,000
Inventory	20,215,000		24,669,000
Investments in unconsolidated entities	14,986,000		16,469,000

Lease commissions, net of accumulated amortization of $3,822,000 and $3,413,000 as of March 31, 2021 and December 31, 2020, respectively	11,878,000		11,309,000
Deferred financing costs, net of accumulated amortization of $6,775,000 and $5,700,000 as of March 31, 2021 and December 31, 2020, respectively(1)	5,810,000		6,864,000
Lease inducement, net of accumulated amortization of $1,579,000 and $1,491,000 as of March 31, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 9.7 years and 9.9 years as of March 31, 2021 and December 31, 2020, respectively)	3,421,000		3,509,000
	$	120,262,000	$	118,356,000

___________


~~(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~~ (1)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, 2017~~ and ~~2016 was $127,000~~term loan. 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 Loan.

Amortization expense on deferred financing costs of our lines of credit and term ~~loans~~loan for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 was ~~$978,000~~$1,075,000 and ~~$902,000,~~$760,000, respectively, and ~~for the nine months ended September 30, 2017 and 2016 was $2,828,000 and $2,549,000, respectively. Amortization expense on deferred financing costs of our lines of credit and term loans~~ is recorded to interest expense in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss. Amortization expense on lease inducement for both the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and 2020 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. Amortization expense on lease inducement~~ is recorded against real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss.

7. Mortgage Loans Payable, Net

As of March 31, 2021 and December 31, 2020, mortgage loans payable were $934,637,000 ($912,883,000, net of discount/premium and deferred financing costs) and $834,026,000 ($810,478,000, net of discount/premium and deferred financing costs), respectively. As of March 31, 2021, we had 62 fixed-rate mortgage loans payable and 11 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.25% per annum based on interest rates in effect as of March 31, 2021 and a weighted average effective interest rate of 3.46%. As of December 31, 2020, we had 62 fixed-rate mortgage loans payable and 10 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.23% per annum based on interest rates in effect as of December 31, 2020 and a weighted average effective interest rate of 3.58%. 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 ratios and leverage ratios.

Mortgage loans payable, net consisted of the following as of March 31, 2021 and December 31, 2020:


	March 31, 2021		December 31, 2020
Total fixed-rate debt	$	741,724,000	$	742,686,000
Total variable-rate debt	192,913,000		91,340,000
Total fixed- and variable-rate debt	934,637,000		834,026,000
Less: deferred financing costs, net	(8,798,000)		(10,389,000)
Add: premium	178,000		204,000
Less: discount	(13,134,000)		(13,363,000)
Mortgage loans payable, net	$	912,883,000	$	810,478,000

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

~~7. Mortgage Loans Payable, Net~~

Mortgage loans payable were $638,584,000 ($615,346,000, including discount/premium and deferred financing costs, net) and $517,057,000 ($495,717,000, including discount/premium and deferred financing costs, net) asThe following table reflects the changes in the carrying amount of ~~September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, we had 46 fixed-rate and four variable-rate~~ mortgage loans payable, ~~with effective interest rates ranging from 2.45% to 7.17% per annum based on interest rates in effect as of September 30, 2017~~net for the three months ended March 31, 2021 and a weighted average effective interest rate of 4.00%. As of December 31, 2016, we had 31 fixed-rate mortgage loans and six variable-rate mortgage loans payable with effective interest rates ranging from 2.45% to 6.72% per annum based on interest rates in effect as of December 31, 2016 and a weighted average effective interest rate of 4.41%. We are required by the terms of certain loan documents to meet certain covenants, such as net worth ratios, fixed charge coverage ratio, leverage ratio and reporting requirements.2020:


	Three Months Ended March 31,
	2021		2020
Beginning balance	$	810,478,000	$	792,870,000
Additions:
Borrowings under mortgage loans payable	205,826,000		8,239,000

Amortization of deferred financing costs	2,627,000		395,000
Amortization of discount/premium on mortgage loans payable	203,000		208,000
Deductions:
Early payoff of mortgage loans payable	(101,734,000)		0
Scheduled principal payments on mortgage loans payable	(3,480,000)		(3,137,000)
Deferred financing costs	(1,037,000)		(801,000)
Ending balance	$	912,883,000	$	797,774,000

On ~~May 12, 2017,~~January 29, 2021, we ~~paid off a~~refinanced 10 mortgage loan ~~payable for the principal amount of $93,150,000~~payables that ~~was~~were due to mature in ~~June 2018.~~2053. We incurred ~~a total~~an aggregate loss on such debt ~~extinguishment~~extinguishments of ~~$1,432,000,~~$2,288,000, primarily related to the write-off of unamortized deferred financing costs, ~~and prepayment penalties,~~ which is recorded to interest expense in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss). The sources~~loss. For the three months ended March 31, 2020, we did not incur any loss on the extinguishment of ~~funds~~mortgage loans payable.

As of March 31, 2021, the principal payments due on our mortgage loans payable for the ~~pay-off~~nine months ending December 31, 2021 and ~~transaction costs~~for each of the next four years ending December 31 and thereafter were ~~primarily from (i) new Housing and Urban Development loans of approximately $72,019,000; and (ii) $21,600,000 in additional borrowings under the Trilogy PropCo Line of Credit,~~ as ~~defined in Note 8,~~follows:


Year	Amount
2021	$	30,611,000
2022	63,255,000
2023	106,614,000
2024	159,291,000
2025	22,694,000
Thereafter	552,172,000
	$	934,637,000

8. Lines of Credit and Term ~~Loans.~~Loan

~~Mortgage loans payable, net consisted~~2019 Corporate Line of Credit

We, through our operating partnership and certain of our subsidiaries, entered into a credit agreement, as amended, or the 2019 Corporate Credit Agreement, with Bank of America, N.A., or Bank of America; KeyBank, National Association, or KeyBank; Citizens Bank, National Association; and a syndicate of other banks, as lenders, to obtain a credit facility with an aggregate maximum principal amount of $630,000,000, or the 2019 Corporate Line of Credit. The 2019 Corporate Line of Credit consists of a senior unsecured revolving credit facility in an aggregate amount of $150,000,000 and a senior unsecured term loan facility in an aggregate amount of $480,000,000. The maximum principal amount of the ~~following~~2019 Corporate Line of Credit may be increased by up to $370,000,000, for a total principal amount of $1,000,000,000, subject to certain conditions. The 2019 Corporate Line of Credit matures on January 25, 2022, and may be extended for 1 12-month period during the term of the 2019 Corporate Credit Agreement, 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 (a) (i) the Eurodollar Rate, as ~~of September 30, 2017 and December 31, 2016:~~

September 30,
2017

December 31,
2016
Total fixed-rate debt $ 528,850,000
$ 313,265,000
Total variable-rate debt 109,734,000
203,792,000
Total fixed- and variable-rate debt 638,584,000
517,057,000
Less: deferred financing costs, net(1) (6,616,000 ) (3,861,000 )
Add: premium 1,302,000
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~~defined in the ~~carrying amount~~2019 Corporate Credit Agreement, plus (ii) a margin ranging from 1.85% to 2.80% based on our Consolidated Leverage Ratio, as defined in the 2019 Corporate Credit Agreement, or (b) (i) the greater of: (1) the prime rate publicly announced by Bank of ~~mortgage loans payable, net for~~America, (2) the ~~nine months ended September 30, 2017~~Federal Funds Rate, as defined in the 2019 Corporate Credit Agreement, plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and ~~2016:~~

Nine Months Ended September 30,
2017 2016
Beginning balance $ 495,717,000
$ 295,270,000
Additions:
Borrowings on mortgage loans payable 230,452,000
3,316,000
Assumptions of mortgage loans payable, net —
191,320,000
Amortization of deferred financing costs 2,060,000
577,000
Amortization of discount/premium on mortgage loans payable 858,000
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

(4) 0.00%, plus (ii) a margin ranging from 0.85% to 1.80% based on our Consolidated Leverage Ratio.

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

As of ~~September 30, 2017, the principal payments due on our mortgage loans payable for the three months ending~~both March 31, 2021 and December 31, ~~2017 and for each of~~2020, our aggregate borrowing capacity under the ~~next four years ending December 31 and thereafter were as follows:~~

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~~

~~2014~~2019 Corporate Line of Credit

~~On August 18, 2014, we, through our operating partnership~~ was $630,000,000. As of March 31, 2021 and ~~certain of our subsidiaries, or~~December 31, 2020, borrowings outstanding under the subsidiary guarantors, entered into a credit agreement, or the 2014 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 20142019 Corporate Line of Credit ~~to $200,000,000, subject to~~totaled $560,500,000 and $556,500,000, respectively, and the weighted average interest rate on such borrowings outstanding was 2.66% and 2.70% per annum, respectively.

2019 Trilogy Credit Facility

We, through Trilogy RER, LLC and certain ~~maximum borrowing conditions. On February 3, 2016, we, through our operating partnership, terminated the 2014 Corporate Credit Agreement, as~~subsidiaries of Trilogy OpCo, LLC, Trilogy RER, LLC, and Trilogy Pro Services, LLC, entered into an 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~~restated loan agreement, or the ~~2016 Corporate~~2019 Trilogy Credit Agreement, with KeyBank; CIT Bank, N.A.; Regions Bank; KeyBanc Capital Markets, Inc.; Regions Capital Markets; Bank of ~~America, as administrative agent, a swing line lender and a letter of credit issuer; KeyBank, as syndication agent, a swing line lender and a letter of credit issuer;~~America; The Huntington National Bank; 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 ~~line of~~ credit facility with an aggregate maximum principal amount of ~~$300,000,000,~~$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 ~~2016 Corporate Revolving~~2019 Trilogy Credit Facility. The proceeds of the 2019 Trilogy Credit Facility may be used for acquisitions, debt repayment and ~~a term loan credit facility in the~~general corporate purposes. The maximum principal amount of ~~$200,000,000, or~~ the ~~2016 Corporate Term Loan Facility, and together with the 2016 Corporate Revolving~~2019 Trilogy Credit Facility ~~the 2016 Corporate Line of Credit. Pursuant to the terms of the 2016 Corporate Credit Agreement, we~~ may ~~borrow~~be increased by up to ~~$25,000,000 in the form~~$140,000,000, for a total principal amount of ~~standby letters of credit and up~~$500,000,000, subject to ~~$25,000,000 in the form of swing line loans.~~certain conditions. The ~~2016 Corporate Line of~~2019 Trilogy Credit Facility matures on ~~February 3, 2019,~~September 5, 2023 and may be extended for ~~one~~1 12-month period during the term of the ~~2016 Corporate~~2019 Trilogy Credit Agreement, subject to the satisfaction of certain conditions, including payment of an extension fee. ~~On February 3, 2016, we also entered into separate revolving notes, or~~

At our option, 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~~2019 Trilogy 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, we entered into a First Amendment, Waiver and Commitment Increase Agreement, or the Amendment, with Bank of America, KeyBank, and the lenders named therein, to amend the 2016 Corporate Credit Agreement. The material terms of the Amendment provide for: (i) an increase in the 2016 Corporate Term Loan Facility in an amount equal to $50,000,000; (ii) the establishment of an additional capitalization rate of 8.75% for any Real Property Asset, as defined in the 2016 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 revision 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

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

2016 Corporate Credit Agreement, as in effect on the effective date of 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, subject to 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 the 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%; (vi) the Lenders’ waiver of the notice requirement regarding the change in name and form of organization of certain subsidiary guarantors, as set forth in the Amendment; and (vii) the addition of Bank of the West, or New Lender, as a party to the 2016 Corporate Credit Agreement 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 result of the Amendment, our aggregate borrowing capacity under the 2016 Corporate Line of Credit was increased to $550,000,000.

Until 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 Ratings Services and/or Fitch Ratings, loans under the 2016 Corporate Line of Credit bearbears interest at per annum rates equal to ~~at our option, either:~~(a) LIBOR plus 2.75% for LIBOR Rate Loans, as defined in the 2019 Trilogy Credit Agreement, and (b) for Base Rate Loans, as defined in the 2019 Trilogy Credit Agreement, 1.75% plus the greater of: (i)~~(a)~~ the ~~Eurodollar~~fluctuating annual rate of interest announced from time to time by KeyBank as its prime rate, (ii) 0.50% above the Federal Funds Effective Rate, as defined in the ~~2016 Corporate~~2019 Trilogy Credit Agreement, ~~as amended, plus (b) in the case of revolving loans, a margin ranging from 1.55% to 2.20% per annum based on our~~ and our consolidated subsidiaries’ consolidated leverage ratio and 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; 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)(iii) 1.00% above 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 2016 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, a margin ranging from 0.00% to 0.70% per annum 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. Accrued interest under the 2016 Corporate Credit Agreement, as amended, is payable monthly.

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 2016 Corporate Credit Agreement, as amended, during the period for which payment is made. The unused fee on Term Loan Facility is payable 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.LIBOR.

As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, our aggregate borrowing capacity under the ~~2016 Corporate Line of~~2019 Trilogy Credit Facility was ~~$550,000,000 and $500,000,000, respectively.~~$360,000,000. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, borrowings outstanding under the ~~2016 Corporate Line of~~2019 Trilogy Credit Facility totaled ~~$432,000,000~~$281,734,000 and ~~$391,000,000,~~$287,134,000, 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%~~2.86% and ~~2.53%, respectively,~~2.94% per ~~annum.~~annum, respectively.

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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~Trilogy PropCo Line of Credit~~

~~On December 1, 2015, in connection with~~Both 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 PropCo2019 Corporate 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 the Trilogy PropCo Line of Credit may be used for working capital, capital expenditures, acquisition of properties and fee interests in leasehold properties and general corporate purposes. The Trilogy PropCo Line of Credit has a four-year term, maturing on December 1, 2019 unless extended for a one-year period subject to satisfaction of certain conditions, including payment of an extension fee, or otherwise terminated in accordance with the terms thereunder. Availability of the total commitment under the Trilogy ~~PropCo Line of Credit is subject 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 in the Trilogy PropCo~~ Credit Agreement as amended, the Trilogy PropCo Borrowers shall have the option, at any time and from time to time, before the maturity date, to request the increase of the total maximum principal amount by $100,000,000 to $400,000,000. See Note 21, Subsequent Event — Amendment to Trilogy PropCo Credit Agreement, for a further discussion.

At 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 paying interest on the outstanding principal under the Trilogy PropCo Line of Credit, the Trilogy PropCo Borrowers are required to pay an unused fee to the lenderscontain various financial covenants. We were 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 Credit may be prepaid, in whole or in part, at any time, without penalty or premium, subject to customary breakage costs.

~~The Trilogy PropCo Credit Agreement, as amended, contains various affirmative and negative~~compliance with such covenants ~~that are customary for credit facilities and transactions of this type, including incurrence of debt and limitations on secured recourse indebtedness.~~

~~Our aggregate borrowing capacity under the Trilogy PropCo Line of Credit was $300,000,000~~ as of ~~September 30, 2017 and December~~March 31, 2016. As of September 30, 2017 and December 31, 2016, borrowings outstanding under the Trilogy PropCo Line of Credit totaled $155,376,000 and $238,776,000, respectively, and $144,624,000 and $61,224,000, respectively, remained available. The weighted average interest rate on borrowings outstanding as of September 30, 2017 and December 31, 2016 was 5.48% and 4.87%, respectively, per annum.2021.

~~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’ receivables of the Trilogy OpCo Borrowers. The terms of the Trilogy OpCo Line of Credit Agreement provided for a one-time increase during the term of the agreement by up 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.

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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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~~We use derivative financial instruments to manage interest rate risk associated with ~~ASC Topic 815,~~ ~~Derivatives~~one variable-rate mortgage loan payable and ~~Hedging, or ASC Topic 815, we~~our variable-rate term loan. We record such 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, 2017~~March 31, 2021 and December 31, ~~2016:~~

Fair Value
Instrument Notional Amount Index Interest Rate Maturity Date
September 30,
2017

December 31,
2016
Cap $ 17,075,000
one month LIBOR 2.25% 02/01/18 $ —
$ —
Swap 140,000,000
one month LIBOR 0.82% 02/03/19 1,334,000
1,355,000
Swap 60,000,000
one month LIBOR 0.78% 02/03/19 598,000
627,000
Swap 50,000,000
one month LIBOR 1.39% 02/03/19 94,000
—
$ 267,075,000
$ 2,026,000

$ 1,982,000
2020, which are included in other assets, net, or security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets:


						Fair Value
Instrument	Notional Amount		Index	Interest Rate	Maturity Date	March 31, 2021		December 31, 2020
Cap	$	20,000,000	one month LIBOR	3.00%	09/23/21	$	0	$	0
Swap	250,000,000		one month LIBOR	2.10%	01/25/22	(4,035,000)		(5,245,000)
Swap	130,000,000		one month LIBOR	1.98%	01/25/22	(1,969,000)		(2,561,000)
Swap	100,000,000		one month LIBOR	0.20%	01/25/22	(51,000)		(71,000)
						$	(6,055,000)	$	(7,877,000)

As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016, none~~2020, 0ne of our ~~derivatives~~derivative financial instruments were designated as hedges. ~~Derivatives~~Derivative financial instruments 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).requirements. For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, we recorded ~~$(59,000)~~$1,821,000 and ~~$989,000, respectively, and for the nine months ended September 30, 2017 and 2016, we recorded $44,000 and $(54,000)~~$(8,183,000), respectively, as an a decrease/(increase) ~~decrease~~ to interest expense in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss)~~loss related to the change in the fair value of our derivative financial instruments.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

See Note 15, Fair Value Measurements, for a further discussion of the fair value of our derivative financial instruments.

10. Identified Intangible Liabilities, Net

As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, identified intangible liabilities, net consisted of below-market leases of ~~$1,708,000~~$320,000 and ~~$2,216,000,~~$367,000, respectively, net of accumulated amortization of ~~$996,000~~$811,000 and ~~$946,000,~~$834,000, respectively. Amortization expense on below-market leases for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 was ~~$146,000~~$47,000 and ~~$189,000,~~$93,000, 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~~which is recorded to real estate revenue in our accompanying condensed consolidated

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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

statements of operations and comprehensive ~~income (loss).~~loss.

The weighted average remaining life of below-market leases was ~~4.9~~2.4 years and ~~5.1~~2.6 years as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively. As of ~~September 30, 2017,~~March 31, 2021, estimated amortization expense on below-market leases for the ~~three~~nine months ending December 31, ~~2017~~2021 and for each of the next four years ending December 31 and thereafter was as follows:


Year	Amount
2021	$	133,000
2022	89,000
2023	71,000
2024	27,000
2025	0
Thereafter	0
	$	320,000

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.

12. Redeemable Noncontrolling Interests

~~On January 15, 2013,~~As of both March 31, 2021 and December 31, 2020, our advisor ~~made an initial capital contribution~~owned all of ~~$2,000 to our operating partnership in exchange for~~the 222 limited partnership ~~units. Upon the effectiveness of the Advisory Agreement on February 26, 2014, Griffin-American Advisor became~~units outstanding in our ~~advisor.~~ operating partnership.As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, 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 our~~Our 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~~

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — ~~Liquidity Stage — Subordinated Participation Interest — Subordinated Distribution Upon Listing~~(Continued)

As of both March 31, 2021 and ~~Note 14, Related Party Transactions — Subordinated Distribution Upon Termination, for a further discussion of the redemption features of the limited partnership units.~~

On December ~~1, 2015,~~31, 2020, 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 closing~~As of ~~the acquisition,~~both March 31, 2021 and December 31, 2020, certain members of Trilogy’s ~~pre-closing~~ management ~~retained a portion of the outstanding equity interests of Trilogy held by such~~and certain members of an advisory committee to Trilogy’s ~~pre-closing management, representing in the aggregate~~board 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~closing management~~such members have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets. ~~As of September 30, 2017, Trilogy REIT Holdings and certain members of Trilogy’s pre-closing management owned approximately 96.7% and 3.3% of Trilogy, respectively.~~

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~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016:~~2020:


	Three Months Ended March 31,
	2021		2020
Beginning balance	$	40,340,000	$	44,105,000

Reclassification from equity	0		195,000


Adjustment to redemption value	526,000		15,000
Net (loss) income attributable to redeemable noncontrolling interests	(484,000)		228,000
Ending balance	$	40,382,000	$	44,543,000

Nine Months Ended September 30,
2017 2016
Beginning balance $ 31,507,000
$ 22,987,000
Additions 975,000
2,295,000
Reclassification from equity 585,000
—
Repurchase of redeemable noncontrolling interests (59,000 ) —
Distributions (384,000 ) (198,000 )
Fair value adjustment to redemption value 1,341,000
—
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 ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016, no~~2020, 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 March 31, 2021 and December 31, 2020, 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 to our advisor to make an initial capital contribution to our operating partnership.~~stock. 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 ~~Secondary~~2015 DRIP Offering. ~~The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commence~~We commenced offering shares pursuant to the ~~Secondary~~2015 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 which~~and consequently, we ceased issuing shares ~~of our common stock are issued~~ pursuant to the ~~Secondary~~2019 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 ~~Distribution~~the “Distribution Reinvestment ~~Plan~~Plan” section below for a further discussion.

Through ~~September 30, 2017,~~March 31, 2021, we had issued 184,930,598 shares of our common stock in connection with the primary portion of our initial public offering and ~~18,661,550~~35,059,456 shares of our common stock pursuant to ~~the~~our DRIP ~~and the Secondary DRIP Offering.~~Offerings. We also repurchased ~~5,327,690~~26,257,404 shares of our common stock under our share repurchase plan and granted an aggregate of ~~82,500~~135,000 shares of our restricted common stock to our independent directors through ~~September 30, 2017.~~March 31, 2021. As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, we had ~~198,369,180 and 195,780,039~~193,889,872 shares of our common stock issued and ~~outstanding, respectively.~~

outstanding.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of noncontrolling interests, by component consisted of the following for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016:~~2020:


	Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016				2021		2020
Beginning balance — foreign currency translation adjustments	$	(3,029,000	)	$	(506,000	)	Beginning balance — foreign currency translation adjustments	$	(2,008,000)	$	(2,255,000)
Net change in current period	977,000			(1,916,000		)	Net change in current period	69,000		(533,000)
Ending balance — foreign currency translation adjustments	$	(2,052,000	)	$	(2,422,000	)	Ending balance — foreign currency translation adjustments	$	(1,939,000)	$	(2,788,000)

Noncontrolling Interests

As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, 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 ~~and serve as the sole manager~~pursuant to an amended joint venture agreement with an indirect, wholly-owned subsidiary of ~~Trilogy REIT Holdings.~~ NorthStar Healthcare Income, Inc., ~~through certain~~or NHI, and a wholly-owned subsidiary of ~~its subsidiaries, owns a 30.0% ownership interest in~~the operating partnership of Griffin-American Healthcare REIT IV, Inc., or GA Healthcare REIT IV. Both GA Healthcare REIT IV and us are co-sponsored by American Healthcare Investors and Griffin Capital. We serve as the managing member of Trilogy REIT Holdings. As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, NHI and GA Healthcare REIT IV indirectly owned a 24.0% and 6.0% membership interest in Trilogy REIT Holdings, respectively. For both the three months ended March 31, 2021 and 2020, 30.0% of the net earnings of Trilogy REIT Holdings were allocated to noncontrolling interests.

In connection with ~~the~~our 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 day~~day-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-year~~five 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).~~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~~on the adoption date of Accounting Standards Update 2018-07, Improvements 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).Nonemployee Share-Based Payment Accounting, using a modified retrospective approach. For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, we recognized stock compensation expense related to the Profit Interests of $(14,000) and $195,000, ~~and $196,000,~~ respectively. ~~For the nine months ended September 30, 2017 and 2016, we recognized stock compensation expense related to the Profit Interests of $390,000 and $589,000, respectively.~~

There were no0 canceled, expired or exercised Profit Interests during both the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020. 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~~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, we~~We 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).~~loss.

~~In addition, as~~As of ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, we owned an 86.0% interest in a consolidated limited liability company that owns ~~the~~ Lakeview IN Medical ~~Plaza property we acquired on January 21, 2016.~~Plaza. As such, 14.0% of the net earnings of ~~the~~ Lakeview IN Medical Plaza ~~property~~ were allocated to noncontrolling interests for both the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020.

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, and therefore as of both March 31, 2021 and December 31, 2020, we owned a 90.6% membership interest in such consolidated limited liability company. For the three months ended March 31, 2021, 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 loss, and the carrying amount of such noncontrolling interest is presented in total equity in our accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020.

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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 ~~terminated~~deregistered on April 22, 2015. OnWe continued to offer shares of our common stock pursuant to the 2015 DRIP Offering, which commenced 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 Act~~29, 2019. We continue to ~~register a maximum of $250,000,000~~offer up to $200,000,000 of additional shares of our common stock pursuant to the ~~Secondary~~2019 DRIP ~~Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commence~~Offering, which commenced offering shares ~~pursuant to the Secondary DRIP Offering until~~on 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 Restated~~Initial DRIP ~~amended~~to amend the price at which shares of our common stock ~~are~~were 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 ~~payment~~payments 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 ~~Secondary~~2015 DRIP Offering ~~remain~~remained 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 temporary 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 authorizes the reinstatement of 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 approved and established ~~a revised~~an estimated per share NAV ~~of our common stock of $9.27. Accordingly, commencing~~annually. 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 ~~$9.27~~the current estimated per share NAV until such time as our board ~~determines a new~~determined an updated estimated per share NAV.

For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, $15,826,000~~2020, $0 and ~~$16,199,000,~~$13,141,000, respectively, in distributions were reinvested ~~that resulted in 1,756,466~~ and ~~1,705,192~~0 and 1,398,021 shares of our common stock, respectively, ~~being~~were issued pursuant to ~~the Secondary~~our DRIP ~~Offering. For the nine months ended September 30, 2017~~Offerings. As of both March 31, 2021 and ~~2016, $47,453,000 and $48,692,000, respectively,~~December 31, 2020, a total of $327,012,000 in distributions were cumulatively reinvested that resulted in ~~5,266,636 and 5,124,834~~35,059,456 shares of our common stock ~~respectively,~~ being issued pursuant to ~~the Secondary~~our DRIP ~~Offering.~~

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.Offerings.

Share Repurchase Plan

~~Our~~As discussed above, in response to the effects of the COVID-19 pandemic and to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects, on March 31, 2020, our board ~~has approved a~~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, ~~allows~~our share repurchase plan, as amended, allowed for repurchases of shares of our common stock by us when certain criteria ~~are~~were met. Share repurchases ~~will be~~were made at the sole discretion of our board. Subject to the availability of the funds for share repurchases and other certain conditions, we ~~will limit~~generally 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; 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 ~~will~~were not be subject to this cap. Funds for the repurchase of shares of our common stock ~~will come exclusively~~came from the cumulative proceeds we ~~receive~~received from the sale of shares of our common stock pursuant to ~~the~~our DRIP ~~portion of our initial offering and the Secondary DRIP Offering.~~Offerings. Furthermore, our share repurchase plan ~~provides~~provided that if there ~~are~~were insufficient funds to honor all repurchase requests, pending requests ~~will~~may be honored among all requests for repurchase in any given repurchase period as follows: first, ~~pro rata~~repurchases in full as to repurchases ~~sought upon~~that 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%

Table 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.Contents

~~Effective with respect to share repurchase requests submitted during the fourth quarter 2016, the~~

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

The Repurchase Amount, as such term is defined in our share repurchase plan, ~~as amended, shall be~~was 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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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)~~

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 be~~Repurchase 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 ~~of our common stock of $9.01. On October 4, 2017, our board approved and established a revised estimated per share NAV of our common stock of $9.27.~~annually. Accordingly, commencing with share repurchase requests submitted during the ~~fourth~~ quarter ~~of 2017, the revised~~that our board approved and established an estimated per share NAV, ~~of $9.27 will serve~~such per share NAV served as the Repurchase Amount for stockholders who purchased their shares at a price equal to or greater than ~~$9.27~~such per share NAV in our initial offering, until such time as our board ~~determines a new~~determined an updated estimated per share NAV.

For both the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, we ~~received share~~did not repurchase ~~requests~~any shares. As of both March 31, 2021 and December 31, 2020, we cumulatively repurchased ~~1,039,450 and 933,974~~26,257,404 shares of our common stock ~~respectively,~~ for an aggregate of ~~$9,317,000 and $8,835,000, respectively,~~$244,930,000, at an average repurchase price of ~~$8.96 and $9.46~~$9.33 per share, respectively. For the nine months ended September 30, 2017 and 2016, we received share repurchase requests and repurchased 2,699,995 and 1,564,814 shares of our common stock, respectively, for an aggregate of $24,022,000 and $14,833,000, respectively, at an average repurchase price of $8.90 and $9.48 per share, respectively.share.

As of September 30, 2017 and December 31, 2016, we received share repurchase requests and repurchased 5,327,690 and 2,627,695 shares of our common stock, respectively, for an aggregate of $48,724,000 and $24,702,000, respectively, at an average repurchase price of $9.15 and $9.40 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 restricted 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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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)~~

~~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, 2017 and 2016, we did not assume any forfeitures. For the three months ended September 30, 2017 and 2016, we recognized stock compensation expense related to the director grants of $71,000 and $90,000, respectively, and for the nine months ended September 30, 2017 and 2016, we recognized compensation expense related to the director grants of $171,000 and $151,000, respectively, which 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, 2016 39,000
$ 10.00
Granted 22,500
$ 9.01
Vested (15,500 ) $ 9.71
Forfeited —
$ —
Balance — September 30, 2017 46,000
$ 9.61
Expected to vest — September 30, 2017 46,000
$ 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 ~~NorthStar~~Capital 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. InOur board, including a majority of our independent directors, has reviewed the ~~aggregate,~~material transactions between our affiliates and us during the three months ended March 31, 2021. 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.

Fees and expenses incurred to our affiliates for the three months ended ~~September 30, 2017~~March 31, 2021 and 2016, we incurred $5,544,000 and $8,642,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $17,931,000 and $22,968,000, respectively, in fees and expenses to our affiliates2020 were as ~~detailed below.~~follows:

~~Acquisition and Development Stage~~


	Three Months Ended March 31,
	2021		2020
Asset management fees(1)	$	5,362,000	$	5,105,000
Acquisition fees(2)	1,334,000		36,000
Property management fees(3)	654,000		653,000
Development fees(4)	283,000		48,000
Lease fees(5)	265,000		203,000
Operating expenses(6)	63,000		61,000
Construction management fees(7)	12,000		69,000
	$	7,973,000	$	6,175,000

~~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(1)Asset management 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, 2017 and 2016, we incurred $67,000 and $3,524,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $1,700,000 and $8,551,000, 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~~general and administrative in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~ loss.

(2)Acquisition fees ~~in connection with the acquisition of properties accounted for as~~

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

~~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 and nine months ended September 30, 2017, we did not incur any development fees to our advisor or its affiliates. For the three and nine months ended September 30, 2016, we incurred $76,000 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.

~~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.

For the three months ended September 30, 2017 and 2016, we incurred $4,713,000 and $4,427,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $14,054,000 and $12,373,000, respectively, in asset management fees to our advisor or its affiliates. Asset(3)Property management fees are included in rental expenses or general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss, depending on the property type from which the fee was incurred.

~~Property Management Fee~~

~~Our advisor or its affiliates may directly serve~~(4)Development fees are capitalized 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 percentagepart of the ~~gross monthly cash receipts~~associated investments in our accompanying condensed consolidated balance sheets.

(5)Lease fees are capitalized as costs 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,~~entering into new leases and included in other assets, net ~~leased~~

in our accompanying condensed consolidated balance sheets.

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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~~(6)We reimburse 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 favorablefor operating expenses incurred in rendering services 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 dutiessubject to ~~a third party.~~

certain limitations. For the ~~three~~12 months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, we incurred $589,000 and $517,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $1,761,000 and $1,752,000, respectively, in property management fees to~~2020, our ~~advisor or its affiliates. Property management fees~~operating expenses did not exceed such limitations. Operating expenses are generally included in ~~property operating expenses~~general and ~~rental expenses~~administrative in our accompanying condensed consolidated statements of operations and comprehensive ~~income (loss).~~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, 2017 and 2016, we incurred $102,000 and $45,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $222,000 and $140,000, 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.

~~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, 2017 and 2016, we incurred $20,000 and $21,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $38,000 and $22,000, respectively, in construction management fees to our advisor or its affiliates.

(7)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),~~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.

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.

For the three months ended September 30, 2017 and 2016, our advisor or its affiliates incurred operating expenses on our behalf of $53,000 and $31,000, respectively, and for the nine months ended September 30, 2017 and 2016, our advisor or its affiliates incurred operating expenses on our behalf of $156,000 and $53,000, 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~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, 2017 and 2016, 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, our advisor agreed to waive the disposition fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement. See Note 3, Real Estate Investments, Net — Dispositions in 2017, for a further discussion. For the three and nine months ended September 30, 2016, 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, 2017 and 2016, we did not incur 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, 2017 and 2016, we did not incur 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

~~As of September 30, 2017 and 2016, we had not recorded any charges to earnings related to the subordinated distribution upon termination.~~

Accounts Payable Due to Affiliates

The following amounts were outstanding to our affiliates as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016:~~2020:


Fee	March 31, 2021		December 31, 2020
Asset management fees	$	1,795,000	$	6,958,000
Development fees	278,000		743,000
Property management fees	197,000		197,000
Lease commissions	73,000		27,000
Construction management fees	70,000		91,000
Operating expenses	13,000		10,000

	$	2,426,000	$	8,026,000

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

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,~~March 31, 2021, 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 instrument	$	0	$	0	$	0	$	0
Total assets at fair value	$	0	$	0	$	0	$	0
Liabilities:
Derivative financial instruments	$	0	$	6,055,000	$	0	$	6,055,000

Warrants	0		0		1,025,000		1,025,000
Total liabilities at fair value	$	0	$	6,055,000	$	1,025,000	$	7,080,000

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 $ —
$ 2,026,000
$ —
$ 2,026,000
Contingent consideration receivable —
—
—
—
Total assets at fair value $ —
$ 2,026,000
$ —
$ 2,026,000
Liabilities:
Contingent consideration obligations $ —
$ —
$ 8,950,000
$ 8,950,000
Warrants —
—
1,105,000
1,105,000
Total liabilities at fair value $ —
$ —
$ 10,055,000
$ 10,055,000

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2016,~~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)
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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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


	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	$	7,877,000	$	0	$	7,877,000

Warrants	0		0		1,025,000		1,025,000
Total liabilities at fair value	$	0	$	7,877,000	$	1,025,000	$	8,902,000

There were no transfers into orand out of fair value measurement levels during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020.

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, we~~We 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,~~March 31, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation 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 Consideration~~Warrants

~~Asset~~

As of 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 toboth 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, 2017~~2021 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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,~~2020, we have recorded ~~$1,105,000 and $1,250,000, respectively,~~$1,025,000 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, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, 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.~~loan.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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 ~~are~~is estimated using a discounted cash flow analysis using interest rates available to us for investments with similar terms and maturities. The fair ~~value~~values of our mortgage loans payable and our lines of credit and term ~~loans~~loan are estimated using a discounted cash flow ~~analysis~~analyses 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~~loan 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, 2017~~March 31, 2021 and December 31, ~~2016~~2020 were as follows:


	March 31, 2021				December 31, 2020
	Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value
Financial Assets:

Debt security investment	$	76,685,000	$	93,973,000	$	75,851,000	$	94,033,000
Financial Liabilities:
Mortgage loans payable	$	912,883,000	$	895,888,000	$	810,478,000	$	830,049,000
Lines of credit and term loan	$	836,424,000	$	843,530,000	$	836,770,000	$	847,048,000

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. ~~TRSs~~TRS 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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~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

The components of income ~~(loss)~~or loss before taxes for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016			2017			2016					2021		2020
Domestic	$	3,875,000		$	(56,233,000	)	$	(2,318,000	)	$	(154,887,000	)	Domestic		$	(16,032,000)	$	(10,853,000)
Foreign	(134,000		)	(135,000		)	(723,000		)	(277,000		)	Foreign		(78,000)		(141,000)
Income (loss) before income taxes	$	3,741,000		$	(56,368,000	)	$	(3,041,000	)	$	(155,164,000	)
Loss before income taxes													Loss before income taxes		$	(16,110,000)	$	(10,994,000)

The components of income tax ~~(benefit)~~benefit or expense for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016			2017			2016					2021		2020
Federal deferred	$	(1,996,000	)	$	2,859,000		$	(5,478,000	)	$	(5,535,000	)	Federal deferred		$	(4,053,000)	$	(587,000)
State deferred	(200,000		)	(68,000		)	(549,000		)	(924,000		)	State deferred		(796,000)		(65,000)
Foreign deferred	—			87,000			(61,000		)	—

Federal current	—			107,000			—			115,000			Federal current		0		(38,000)
Foreign current	90,000			(45,000		)	239,000			122,000			Foreign current		163,000		156,000
Valuation allowances	1,386,000			(2,942,000		)	4,351,000			6,395,000			Valuation allowances		4,849,000		(2,677,000)
Total income tax (benefit) expense	$	(720,000	)	$	(2,000	)	$	(1,498,000	)	$	173,000
Total income tax expense (benefit)													Total income tax expense (benefit)		$	163,000	$	(3,211,000)

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.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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 ~~losses~~loss 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 ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, 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 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 ~~September 30, 2017~~both March 31, 2021 and December 31, ~~2016,~~2020, 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 Combinations~~Leases

~~2017 Business Combination~~Lessor

We have operating leases with tenants that expire at various dates through 2050. For the three months ended March 31, 2021 and 2020, we recognized $28,667,000 and $28,823,000, respectively, of revenues related to operating lease payments, of which $4,350,000 and $4,450,000, respectively, was for variable lease payments. As of March 31, 2021, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the nine months ended ~~September 30, 2017, none~~December 31, 2021 and for each of the next four years ending December 31 and thereafter for properties that we wholly own:


Year	Amount
2021	$	67,746,000
2022	84,669,000
2023	78,401,000
2024	72,217,000
2025	63,796,000
Thereafter	421,995,000
Total	$	788,824,000

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 2090, 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 March 31, 2021, 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 ~~acquisitions were accounted for as business combinations. See Note 3, Real Estate Investments, Net, for a discussion of our 2017 property acquisitions accounted for as~~

taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

The components of lease costs were as follows:

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


		Three Months Ended March 31,
Lease Cost	Classification	2021		2020
Operating lease cost(1)	Property operating expenses and rental expenses	$	6,337,000	$	8,194,000
Finance lease cost
Amortization of leased assets	Depreciation and amortization	412,000		535,000
Interest on lease liabilities	Interest expense	118,000		169,000
Total lease cost		$	6,867,000	$	8,898,000

___________

(1)Includes short-term leases and variable lease costs, ~~and an acquisition fee paid to our advisor,~~ which are ~~included in acquisition~~immaterial.

Additional information related ~~expenses in~~to leases for the periods presented below was as follows:


Lease Term and Discount Rate	March 31, 2021		December 31, 2020
Weighted average remaining lease term (in years)
Operating leases	14.6		13.3
Finance leases	3.5		1.3
Weighted average discount rate
Operating leases	5.63	%	5.77	%
Finance leases	6.97	%	5.62	%


	Three Months Ended March 31,
Supplemental Disclosure of Cash Flows Information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows related to finance leases	$	118,000	$	169,000
Financing cash outflows related to finance leases	$	60,000	$	507,000
Leased assets obtained in exchange for finance lease liabilities	$	138,000	$	0
Right-of-use assets obtained in exchange for operating lease liabilities	$	0	$	1,628,000

Operating Leases

As of March 31, 2021, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the nine months ending December 31, 2021 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:


Year	Amount
2021	$	12,647,000
2022	16,847,000
2023	16,814,000
2024	15,819,000
2025	15,465,000
Thereafter	132,307,000
Total operating lease payments	209,899,000
Less: interest	73,244,000
Present value of operating lease liabilities	$	136,655,000

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
Land 36,345,000
Furniture, fixtures and equipment 644,000
In-place leases 40,059,000
Above-market leases 1,324,000
Certificates of need 18,410,000
Purchase option assets (56,792,000 )
Total assets acquired 436,655,000
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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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

Finance Leases

~~The unaudited pro forma adjustments assume that~~As of March 31, 2021, the ~~offering proceeds, at a price~~following table sets forth the undiscounted cash flows of ~~$10.00 per share, net of offering costs, were raised as of January 1, 2015. In addition, acquisition related expenses associated with~~our scheduled obligations for future minimum payments for the ~~property acquisitions have been excluded from the pro forma results in 2016. The pro forma results are not necessarily indicative~~nine months ending December 31, 2021 and for each of the ~~operating results that would have been obtained had the acquisitions occurred at the beginning~~next four years ending December 31 and thereafter, as well as a reconciliation of ~~the periods presented, nor are they necessarily indicative of future operating results.~~those cash flows to finance lease liabilities:


Year	Amount
2021	$	120,000
2022	56,000
2023	49,000
2024	34,000
2025	31,000
Thereafter	0
Total finance lease payments	290,000
Less: interest	33,000
Present value of finance lease liabilities	$	257,000

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,~~March 31, 2021, we evaluated our business and made resource allocations based on ~~six~~6 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 ~~these~~which 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 ~~that~~for 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.~~income, or NOI. We define segment ~~net operating income~~NOI as total revenues and grant income, less property operating expenses and rental expenses, which excludes depreciation and amortization, general and administrative expenses, business acquisition ~~related~~ expenses, interest expense, gain ~~(loss)~~or loss on ~~dispositions~~disposition of a real estate ~~investments,~~investment, 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~~NOI 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.

4029

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

Summary information for the reportable segments during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 was as follows:


																		Integrated Senior Health Campuses		Senior Housing — RIDEA		Medical Office Buildings		Senior Housing		Skilled Nursing Facilities		Hospitals		Three Months Ended March 31, 2021
		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	$	233,226,000	$	19,800,000	$	0	$	0	$	0	$	0	$	253,026,000
Real estate revenue		19,971,000		3,775,000		2,964,000		5,270,000		—		—		31,980,000			Real estate revenue	0		0		20,023,000		3,570,000		3,667,000		2,763,000		30,023,000
Total revenues		19,971,000		3,775,000		2,964,000		5,270,000		16,213,000		214,555,000		262,748,000
Grant income																	Grant income	8,229,000		0		0		0		0		0		8,229,000
Total revenues and grant income																	Total revenues and grant income	241,455,000		19,800,000		20,023,000		3,570,000		3,667,000		2,763,000		291,278,000
Expenses:																	Expenses:
Property operating expenses		—		—		—		—		10,823,000		188,224,000		199,047,000			Property operating expenses	228,639,000		16,503,000		0		0		0		0		245,142,000
Rental expenses		7,343,000		415,000		375,000		166,000		—		—		8,299,000			Rental expenses	0		0		7,537,000		15,000		369,000		134,000		8,055,000
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	$	12,816,000	$	3,297,000	$	12,486,000	$	3,555,000	$	3,298,000	$	2,629,000	$	38,081,000
Expenses:																	Expenses:
General and administrative	General and administrative													$	9,270,000		General and administrative													$	7,257,000
Acquisition related expenses														71,000
Business acquisition expenses																	Business acquisition expenses													1,248,000
Depreciation and amortization	Depreciation and amortization													27,579,000			Depreciation and amortization													25,723,000
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)	Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)													(14,773,000		)	Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)													(20,365,000)
Loss in fair value of derivative financial instruments														(59,000		)
Loss on dispositions of real estate investments														(9,000		)
Gain in fair value of derivative financial instruments																	Gain in fair value of derivative financial instruments													1,821,000
Loss on disposition of real estate investment																	Loss on disposition of real estate investment													(335,000)

Loss from unconsolidated entities	Loss from unconsolidated entities													(1,494,000		)	Loss from unconsolidated entities													(1,771,000)
Foreign currency gain	Foreign currency gain													1,384,000			Foreign currency gain													415,000
Other income	Other income													210,000			Other income													272,000
Income before income taxes														3,741,000
Income tax benefit														720,000
Net income														$	4,461,000
Loss before income taxes																	Loss before income taxes													(16,110,000)
Income tax expense																	Income tax expense													(163,000)

Net loss																	Net loss													$	(16,273,000)

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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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


	Integrated Senior Health Campuses		Senior Housing — RIDEA		Medical Office Buildings		Senior Housing		Skilled Nursing Facilities		Hospitals		Three Months Ended March 31, 2020
Revenues:
Resident fees and services	$	267,794,000	$	22,132,000	$	0	$	0	$	0	$	0	$	289,926,000
Real estate revenue	0		0		19,598,000		3,406,000		4,363,000		2,751,000		30,118,000
Total revenues	267,794,000		22,132,000		19,598,000		3,406,000		4,363,000		2,751,000		320,044,000
Expenses:
Property operating expenses	239,598,000		16,142,000		0		0		0		0		255,740,000
Rental expenses	0		0		7,638,000		21,000		406,000		105,000		8,170,000
Segment net operating income	$	28,196,000	$	5,990,000	$	11,960,000	$	3,385,000	$	3,957,000	$	2,646,000	$	56,134,000
Expenses:
General and administrative													$	6,574,000
Business acquisition expenses													234,000
Depreciation and amortization													25,087,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)													(18,534,000)
Loss in fair value of derivative financial instruments													(8,183,000)

Impairment of real estate investments													(5,102,000)
Loss from unconsolidated entities													(904,000)
Foreign currency loss													(3,065,000)
Other income													555,000
Loss before income taxes													(10,994,000)
Income tax benefit													3,211,000


Net loss													$	(7,783,000)

Total assets by reportable segment as of March 31, 2021 and December 31, 2020 were as follows:


	March 31, 2021		December 31, 2020
Integrated senior health campuses	$	1,886,043,000	$	1,886,878,000
Medical office buildings	610,651,000		610,653,000
Senior housing — RIDEA	347,229,000		348,987,000
Senior housing	154,211,000		152,406,000
Skilled nursing facilities	113,907,000		115,941,000
Hospitals	108,314,000		109,663,000
Other	9,671,000		10,409,000
Total assets	$	3,230,026,000	$	3,234,937,000

As of both March 31, 2021 and December 31, 2020, goodwill of $75,309,000 was allocated to integrated senior health campuses, and no other segments had goodwill.

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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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

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 )

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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 )

~~Assets by reportable segment as of September 30, 2017 and December 31, 2016 were as follows:~~

September 30,
2017

December 31,
2016
Integrated senior health campuses $ 1,353,987,000
$ 1,330,597,000
Medical office buildings 668,752,000
699,381,000
Senior housing — RIDEA 281,015,000
286,058,000
Senior housing 231,676,000
212,314,000
Skilled nursing facilities 129,948,000
129,984,000
Hospitals 124,320,000
127,258,000
Other 7,492,000
8,926,000
Total assets $ 2,797,190,000
$ 2,794,518,000

~~As of September 30, 2017 and December 31, 2016, goodwill of $75,309,000 and $75,265,000, respectively, was allocated to integrated senior health campuses and no other segments had goodwill.~~

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

~~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 March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,						2021		2020
	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		$	289,986,000	$	318,846,000
International	1,197,000		1,049,000		3,492,000		3,412,000		International		1,292,000		1,198,000
Total revenues	$	262,748,000	$	248,930,000	$	777,722,000	$	738,756,000
											$	291,278,000	$	320,044,000

The following is a summary of real estate investments, net by geographic regions as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016:~~

2020:


	September 30, 2017		December 31, 2016			March 31, 2021		December 31, 2020
Real estate investments, net:					Real estate investments, net:
United States	$	2,105,942,000	$	2,089,247,000	United States	$	2,359,163,000	$	2,279,257,000
International	52,940,000		49,734,000		International	50,780,000		50,743,000
Total real estate investments, net	$	2,158,882,000	$	2,138,981,000
						$	2,409,943,000	$	2,330,000,000

19. Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk are primarily ~~real estate notes receivable and~~our debt security investment, cash and cash equivalents, accounts and other receivables and restricted ~~cash and real estate deposits.~~cash. We are exposed to credit risk with respect to ~~the real estate notes receivable and~~our 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, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, 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,~~March 31, 2021, properties in ~~one~~1 state in the United States accounted for 10.0% or more of ~~the~~our total property portfolio’s annualized base rent or annualized ~~net operating income of our total property portfolio.~~NOI. Properties located in Indiana accounted for ~~35.4%~~39.7% of ~~the~~our total property portfolio’s annualized base rent or annualized ~~net operating income of our total property portfolio.~~NOI. 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,~~March 31, 2021, our ~~six~~6 reportable business segments, integrated senior health campuses, medical office buildings, senior housing —RIDEA, ~~senior housing,~~ skilled nursing facilities, hospitals and ~~hospitals~~senior housing, accounted for ~~43.4%~~46.2%, ~~30.0%~~29.9%, ~~10.3%~~10.1%, ~~6.3%~~6.2%, ~~5.9%~~4.3% and ~~4.1%~~3.3%, respectively, of our total property portfolio’s annualized base rent or annualized ~~net operating income.~~NOI. As of ~~September 30, 2017,~~March 31, 2021, none of our tenants at our properties accounted for 10.0% or more of our ~~aggregate~~total property portfolio’s annualized base rent or annualized ~~net operating income,~~NOI, which is based on contractual base rent from leases in effect ~~inclusive of~~for our non-RIDEA properties and annualized NOI for our senior housing — RIDEA facilities and integrated senior health campuses operations as of ~~September 30, 2017.~~March 31, 2021.

~~Table of Contents~~

~~GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.~~

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

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, 2017~~March 31, 2021 and ~~2016, and $19,000 and $12,000, respectively, for the nine months ended September 30, 2017 and 2016.~~2020. 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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GRIFFIN-AMERICAN HEALTHCARE REIT III, INC.

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

As of ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, there were ~~46,000~~33,000 and ~~40,000~~46,500 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 ~~September 30, 2017~~both March 31, 2021 and ~~2016,~~2020, 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.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 ~~2016~~2020 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or SEC, on March ~~15, 2017.~~25, 2021. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, together with our results of operations ~~for the three and nine months ended September 30, 2017 and 2016~~ and cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020.

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,” “opinion,” “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; the negotiation or consummation of any potential strategic transaction evaluated by our special committee of our board of directors, or our special committee; 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 are 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. We invest~~invests 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 have originated and acquired secured loans and may also originate and acquire ~~secured loans and~~other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current ~~income.~~income; however, we have selectively developed, and may continue to selectively develop, real estate properties. 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.

Table of ~~our initial offering.~~Contents

On ~~March 25, 2015,~~January 30, 2019, 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~~$200,000,000 of additional shares of our common stock to be issued pursuant to our distribution reinvestment plan, or the Secondary DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing; however, we did not commence offering shares pursuant to the Secondary DRIP Offering until April 22, 2015, following the deregistration of our initial offering. Effective October 5, 2016, we amended and restated the DRIP, or the Amended and Restated DRIP, or the 2019 DRIP Offering, which commenced 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 authorizes the reinstatement of such plan. Such suspension was effective upon the completion of all shares issued with respect to ~~amend~~distributions payable to stockholders of record on or prior to the ~~price at which~~close of business on May 31, 2020. As of March 31, 2021, a total of $63,105,000 in distributions were reinvested that resulted in 6,724,348 shares of ~~our~~ common stock ~~are~~being issued pursuant to the ~~Secondary~~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 ~~Note 13, Equity — Distribution Reinvestment Plan, to our accompanying condensed consolidated financial statements~~the “Liquidity and Capital Resources” section below for a further discussion. ~~As of September 30, 2017, a total of $155,616,000 in distributions were reinvested and 16,712,987 shares~~

We conduct substantially all of our ~~common stock were issued~~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 our advisor, pursuant to an advisory agreement between us and our advisor that was effective as of February 26, 2014 and had a one-year initial term, subject to successive one-year renewals upon the ~~Secondary DRIP Offering.~~

~~Table~~mutual consent of ~~Contents~~

~~On October 5, 2016,~~the parties. The advisory agreement, as amended to clarify certain indemnification provisions and last renewed on February 22, 2021, or the Advisory Agreement, expires on February 26, 2022. Our advisor uses its best efforts, subject to the oversight, review and approval of our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services 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 Capital, Inc. (NYSE: CLNY), or Colony Capital, and 7.8% owned by James F. Flaherty III, a former partner of Colony Capital. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, the dealer manager for our initial offering, Colony Capital, or Mr. Flaherty; however, we are affiliated with our advisor, American Healthcare Investors and AHI Group Holdings.

In October 2020, our board established our special committee, which consists of all of our independent directors, to investigate and analyze strategic alternatives, including but not limited to, the sale of our assets, a listing of our shares on a national securities exchange, or a merger with another entity, including a merger with another unlisted entity that we expect would enhance our value. There can be no assurance that this strategic alternative review process will result in a transaction being pursued or if pursued, that any such transaction would ultimately be consummated. For a further discussion, see our Current Report on Form 8-K filed with the SEC on March 19, 2021.

On March 18, 2021, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established an ~~initial~~updated 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~~$8.55 calculated as of September 30, 2020. We provide this updated estimated per share NAV ~~of our common stock of $9.27. We are providing the estimated per share NAV~~annually 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 is 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. The valuation was performed in accordance with the methodology provided in Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, 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 ~~Reports~~Report on Form 8-K filed with the SEC on ~~October 7, 2016 and October 5, 2017,~~March 19, 2021 for more information on the methodologies and assumptions used to determine, and the limitations and risks of, our ~~initial and revised~~updated estimated per share ~~NAV, respectively.~~

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 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, 2017 and expires on February 26, 2018. 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 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, Inc. (NYSE: CLNS), 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. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, the dealer manager for our initial offering, or our dealer manager, Colony NorthStar, or Mr. Flaherty; however, we are affiliated with Griffin-American Advisor, American Healthcare Investors and AHI Group Holdings.NAV.

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,~~March 31, 2021, we owned and/or operated 9596 properties, comprising 99100 buildings, and ~~107~~120 integrated senior health campuses including completed development projects, or approximately ~~12,516,000~~14,105,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of ~~$2,837,375,000.~~$3,172,649,000. In addition, as of ~~September 30, 2017,~~March 31, 2021, we ~~have invested $98,011,000 in~~also 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 ~~2016~~2020 Annual Report on Form 10-K, as filed with the SEC on March ~~15, 2017,~~25, 2021, 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.

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Interim Unaudited Financial Data

~~Our accompanying condensed consolidated~~For a discussion of interim unaudited financial ~~statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations~~data, see Note 2, Summary of ~~the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant~~Significant Accounting Policies — Interim Unaudited Financial Data, 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 ~~2016~~2020 Annual Report on Form 10-K, as filed with the SEC on March ~~15, 2017.~~25, 2021.

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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.

~~Recently Issued or Adopted Accounting Pronouncements~~Disposition in 2021

For a discussion of ~~recently issued or adopted accounting pronouncements,~~our acquisitions and disposition of investments in 2021, 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 2017~~

~~For a discussion of our acquisitions and dispositions of investments in 2017, see~~ Note 3, Real Estate Investments, Net, ~~and Note 17, Business Combinations,~~ to our accompanying condensed consolidated financial statements.

Factors Which May Influence Results of Operations

We are not aware of any material trends or uncertainties, other than the effects of the COVID-19 pandemic discussed below, the strategic alternatives review process and any potential transaction or other corporate action resulting therefrom and other national economic conditions affecting real estate generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, disposition, management and operation of ~~properties other than those listed in~~our properties. In addition, see Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously disclosed in our ~~2016~~2020 Annual Report on Form 10-K, as filed with the SEC on March ~~15, 2017.~~25, 2021.

~~Revenues~~Impact of the COVID-19 Pandemic

Due to the ongoing COVID-19 pandemic in the United States and globally, since March 2020, our residents, tenants, operating partners and managers have been materially impacted, and the prolonged economic impact remains uncertain. 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. To date, the impacts of the COVID-19 pandemic have been significant, rapidly and continuously evolving and may continue into the future, making it difficult to ascertain the long-term impact it will have on real estate markets in which we own and/or operate properties and our portfolio of investments. 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 and maintain aggressive protocols at such facilities, as well as actively collaborate with our tenants, operating partners and managers to respond and take action to mitigate the impact of the COVID-19 pandemic.

We have taken actions to strengthen our balance sheet and preserve liquidity in response to the COVID-19 pandemic, including the temporary suspension of distribution payments and the suspension of the Amended and Restated DRIP and our share repurchase plan for all stockholders. See the “Distributions” section below for a further discussion. We believe that the long-term stability of our portfolio of investments will return once the virus has been controlled. Each type of real estate asset we own has been impacted by the COVID-19 pandemic to varying degrees. In states where lockdown orders have been lifted or modified, the downward trends in our portfolio appear to have somewhat moderated, but we have not yet witnessed a significant rebound.

In the early months of the pandemic, the businesses of our medical office tenants were negatively impacted when many of the states had implemented “stay at home” orders, thereby creating unprecedented revenue pressure on such tenants and their ability to pay rent on a timely basis. 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, there remains a risk of reclosures in states where infection rates rise, or where a resurgence of COVID-19 emerges, which may put additional pressure on our operations.

For our managed senior housing — RIDEA facilities and integrated senior health campuses, we have experienced a significant decline in our resident occupancies 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, as well as the resurgence of COVID-19 cases that commenced in late 2020 and continued into early 2021. In addition, we continue to experience challenges in attracting prospective residents to such senior housing — RIDEA 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 significantly impacted our resident occupancy levels of our integrated senior health campuses. During the first quarter of 2021, we began to experience modest growth in resident occupancies in both these segments; however, we anticipate resident occupancy recovery to be slow. Based on information available to management as of April 30, 2021, resident occupancies in both these segments have declined by approximately 19.8% from February through December 2020; however, resident occupancy at such segments has increased by approximately 8.6% since December 2020. At the same time that our managed senior housing — RIDEA facilities and

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integrated senior health campuses faced a reduction in revenue associated with lower resident occupancies, such properties experienced a dramatic increase in operating costs to care for residents, particularly increased labor costs to maintain staffing levels to care for the aged population during the crisis, costs of testing employees and residents for COVID-19 and costs to procure the volume of personal protective equipment, or PPE, and other supplies required to maintain health and safety measures and protocols. Such operating expenses at our senior housing — RIDEA facilities and integrated senior health campuses significantly increased from February 2020 through the end of the fourth quarter of 2020, and have since declined through the end of the first quarter of 2021; although, such expenses are still higher than pre-pandemic levels. Since March 2020, our leased, non-RIDEA senior housing and skilled nursing facility tenants have also experienced, and may continue to experience, similar pressures discussed above related to occupancy declines and expense increases, which have impacted, and may continue to impact, their ability to pay rent and have an adverse effect on our operations. Therefore, our immediate focus for our senior housing and skilled nursing facilities for 2021 continues to be on resident occupancy recovery and operating expense management. In addition, since the fourth quarter of 2020, there have been developments around the production, availability and widespread distribution and use of effective COVID-19 vaccines, which we believe will be important to a rebound in our resident occupancy levels over time.

The ~~amount of revenues generated by our properties depends principally~~information in this Quarterly Report on ~~our ability to maintain the occupancy rates of currently leased space and to lease~~Form 10-Q is based on data currently available ~~space~~to us and ~~space available from lease terminations~~will likely change as the COVID-19 pandemic progresses. 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 investments. 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 that rely on skilled nursing for rehabilitation, which will eventually drive skilled nursing occupancies higher; however, we cannot predict with reasonable certainty when such demand will return to pre-COVID-19 pandemic levels. The medical community understands COVID-19 far better today than it did just a few months ago, and we are now equipped with greater therapeutics and other treatments to mitigate its impact. Likewise, we are optimistic about the favorable reports regarding the efficacy of vaccines. The COVID-19 pandemic has had, and may continue to have, an adverse effect on the operations of our business, and 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 ~~then existing rental rates. Negative~~ trends ~~in one~~discussed above with respect to the impact of the COVID-19 pandemic to continue. Thus, the lasting impact of the COVID-19 pandemic over the next 12 months could be significant and will largely depend on future developments, including the duration of the crisis and the success of efforts to contain or ~~more~~treat COVID-19, such as the widespread availability and use of ~~these factors could adversely affect our revenue in future periods.~~effective vaccines, which cannot be predicted with confidence at this time. See the “Results of Operations” and “Liquidity and Capital Resources” sections below for a further discussion.

Scheduled Lease Expirations

Excluding our senior housing— RIDEA facilities and ~~our~~ integrated senior health campuses, as of ~~September 30, 2017,~~March 31, 2021, our properties were ~~94.6%~~91.7% leased and during the remainder of ~~2017, 2.4%~~2021, 6.8% 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,~~March 31, 2021, our remaining weighted average lease term was ~~8.6~~6.9 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 68.0% leased for the three months ended March 31, 2021. 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, 2017~~March 31, 2021 and ~~2016~~2020

Our primary sources of revenue include rent generated by our leased, non-RIDEA properties, and resident fees and services revenue from our RIDEA properties. Our primary expenses include property operating expenses and rental expenses. In general, and under a normal operating environment without the disruption of the COVID-19 pandemic, we expect amounts related to our portfolio of operating properties to increase in the future based on ~~a full year of operations~~ongoing property expansions and developments as well as ~~any additional real estate and real estate-related investments we may acquire.~~fixed annual rent escalations on our portfolio of leased properties.

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,~~March 31, 2021, 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.

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The COVID-19 pandemic has had a significant adverse impact on the operations of our real estate portfolio. Although we have experienced some delays in receiving rent payments from our tenants, as of March 31, 2021, we have collected substantially all of the contractual rent from our leased, non-RIDEA senior housing and skilled nursing facility tenants. In addition, substantially all of the contractual rent through March 2021 from our medical office building tenants has been received. However, given the significant ongoing uncertainty of the impact of the COVID-19 pandemic over the next 12 months, we are unable to predict the impact it will have on such tenants’ continued ability to pay rent.

Except where otherwise noted, the changes in our consolidated results of operations for 2021 as compared to 2020 are primarily due to ~~owning 99 buildings~~the disruption to our normal operations as a result of the COVID-19 pandemic and ~~107~~grant income received, as well as the development and expansion of our portfolio of integrated senior health campuses. As of March 31, 2021 and 2020, we owned and/or operated the following types of properties:


	March 31,
	2021					2020
	Number of Buildings/ Campuses	Aggregate Contract Purchase Price		Leased %		Number of Buildings/ Campuses	Aggregate Contract Purchase Price		Leased %
Integrated senior health campuses	120	$	1,732,058,000	(1)		118	$	1,547,192,000	(1)
Medical office buildings	63	657,885,000		89.1	%	64	664,135,000		87.5	%
Senior housing — RIDEA	20	433,891,000		(2)		20	433,891,000		(2)
Senior housing	9	89,535,000		100	%	9	89,535,000		100	%
Skilled nursing facilities	6	119,500,000		100	%	7	128,000,000		100	%
Hospitals	2	139,780,000		100	%	2	139,780,000		100	%
Total/weighted average(3)	220	$	3,172,649,000	91.7	%	220	$	3,002,533,000	90.7	%

___________

(1)The leased percentage for the resident units of our integrated senior health campuses aswas 67.6% and 83.5% for the three months ended March 31, 2021 and 2020, respectively.

(2)The leased percentage for the resident units of ~~September 30, 2017, as compared to owning 91 buildings~~our senior housing — RIDEA facilities was 70.0% and ~~102~~82.5% for the three months ended March 31, 2021 and 2020, respectively.

(3)Leased percentage excludes our senior housing — RIDEA facilities and integrated senior health ~~campuses as~~campuses.

Revenues and Grant Income

The amount of ~~September 30, 2016. As~~revenues generated by our properties depends principally on our ability to maintain the occupancy rates of ~~September 30, 2017~~currently leased space and ~~2016, we owned~~to lease available space at the then existing rental rates. Revenues and grant income by reportable segment consisted of the following ~~types~~for the periods then ended:


	Three Months Ended March 31,
		2021		2020
Resident Fees and Services Revenue
Integrated senior health campuses		$	233,226,000	$	267,794,000
Senior housing — RIDEA		19,800,000		22,132,000
Total resident fees and services revenue		253,026,000		289,926,000
Real Estate Revenue
Medical office buildings		20,023,000		19,598,000
Skilled nursing facilities		3,667,000		4,363,000
Senior housing		3,570,000		3,406,000
Hospitals		2,763,000		2,751,000
Total real estate revenue		30,023,000		30,118,000
Grant Income
Integrated senior health campuses		8,229,000		—

Total grant income		8,229,000		—
Total revenues and grant income		$	291,278,000	$	320,044,000

Table of ~~properties:~~Contents

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 campuses 107
$ 1,417,074,000
(1 ) 102
$ 1,356,780,000
(1 )
Medical office buildings 63
659,095,000
92.3 % 60
638,645,000
92.8 %
Senior housing 14
173,391,000
100 % 10
134,860,000
100 %
Senior housing — RIDEA 13
320,035,000
(2 ) 13
320,035,000
(2 )
Skilled nursing facilities 7
128,000,000
100 % 6
105,500,000
100 %
Hospitals 2
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, 2017~~March 31, 2021 and ~~2016,~~2020, 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, 2017~~March 31, 2021 and ~~2016,~~2020, real estate revenue primarily consisted of base rent and expense recoveries.

~~Revenues by reportable segment consisted~~ The $36,900,000 decline in resident fees and services revenue for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 was primarily attributable to the impact of the ~~following~~COVID-19 pandemic on the operations of our integrated senior health campuses, which resulted in a decline in resident occupancy at such campuses of 15.7% between February 2020 and March 2021. However, 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 — RIDEA 16,213,000
15,871,000
48,048,000
46,612,000
Total resident fees and services 230,768,000
218,107,000
682,300,000
651,565,000
Real Estate Revenue
Medical office buildings 19,971,000
19,686,000
58,879,000
54,302,000
Senior housing 5,270,000
4,543,000
15,598,000
13,840,000
Skilled nursing facilities 3,775,000
2,994,000
11,228,000
5,305,000
Hospitals 2,964,000
3,600,000
9,717,000
13,744,000
Total real estate revenue 31,980,000
30,823,000
95,422,000
87,191,000
Total revenues $ 262,748,000
$ 248,930,000
$ 777,722,000

$ 738,756,000

~~Table~~three months ended March 31, 2021, we recognized $8,229,000 of ~~Contents~~

grant income at our integrated senior health campuses related to government grants received through the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, economic stimulus programs. An additional $669,000 of such government grants were received by our integrated senior health campuses as of March 31, 2021, which we have deferred and anticipate to recognize as grant income in the second quarter of 2021.

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 ~~operating~~reportable segment consisted of the following for the periods then ended:


	Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
	2017				2016				2017				2016						2021	2020
Property Operating Expenses																	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	%	Integrated senior health campuses			$	228,639,000	94.7	%	$	239,598,000	89.5	%
Senior housing — RIDEA	10,823,000		66.8	%	10,660,000		66.0	%	32,507,000		67.7	%	31,616,000		67.8	%	Senior housing — RIDEA			16,503,000		83.3	%	16,142,000		72.9	%
Total property operating expenses	$	199,047,000	86.3	%	$	187,240,000	86.4	%	$	596,099,000	87.4	%	$	568,726,000	87.3	%	Total property operating expenses			$	245,142,000	93.8	%	$	255,740,000	88.2	%

Rental Expenses																	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	%	Medical office buildings			$	7,537,000	37.6	%	$	7,638,000	39.0	%
Skilled nursing facilities	415,000		11.0	%	231,000		2.6	%	1,204,000		10.7	%	385,000		7.3	%	Skilled nursing facilities			369,000		10.1	%	406,000		9.3	%
Hospitals	375,000		12.7	%	145,000		13.7	%	1,152,000		11.9	%	1,075,000		7.8	%	Hospitals			134,000		4.8	%	105,000		3.8	%
Senior housing	166,000		3.1	%	135,000		2.9	%	501,000		3.2	%	395,000		2.9	%	Senior housing			15,000		0.4	%	21,000		0.6	%
Total rental expenses	$	8,299,000	26.0	%	$	7,653,000	23.4	%	$	24,925,000	26.1	%	$	21,582,000	24.8	%	Total rental expenses			$	8,055,000	26.8	%	$	8,170,000	27.1	%

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 due to the nature of RIDEA facilities where we conduct day-to-day operations. Property operating expenses for our integrated senior health campuses decreased for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily as the result of a decrease in third party management fees due to the significant decline in resident fees and services revenue generated by such facilities. ~~We anticipate that the~~However, as a percentage of resident fees and services revenue and grant income, operating expenses ~~to revenue will fluctuate based on~~for our integrated senior health campuses has significantly increased which lowered the ~~types~~gross margin of ~~property we acquire, own and/or operate in the future.~~such operating segment.

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General and Administrative

General and administrative ~~expenses~~ consisted of the following for the periods then ended:


											Three Months Ended March 31,
	Three Months Ended September 30,					Nine Months Ended September 30,						2021		2020
	2017		2016			2017		2016
Asset management fees — affiliates	$	4,713,000	$	4,427,000		$	14,054,000	$	12,373,000
Bad debt expense	2,313,000		1,160,000			5,220,000		3,308,000
Asset management and property management oversight fees — affiliates										Asset management and property management oversight fees — affiliates		$	5,678,000	$	5,105,000
Professional and legal fees	992,000		783,000			2,077,000		2,564,000		Professional and legal fees		744,000		471,000
Transfer agent services	306,000		375,000			997,000		1,189,000		Transfer agent services		312,000		325,000
Franchise taxes	241,000		(139,000		)	400,000		288,000
Stock compensation expense	195,000		196,000			390,000		589,000
Bank charges	104,000		94,000			301,000		258,000		Bank charges		167,000		114,000
Directors’ and officers’ liability insurance	80,000		78,000			241,000		233,000		Directors’ and officers’ liability insurance		115,000		82,000
Board of directors fees										Board of directors fees		81,000		77,000
Franchise taxes										Franchise taxes		70,000		86,000
Postage and delivery										Postage and delivery		48,000		45,000
Restricted stock compensation	71,000		90,000			171,000		151,000		Restricted stock compensation		27,000		43,000
Board of directors fees	61,000		54,000			182,000		181,000

Stock compensation expense										Stock compensation expense		(14,000)		195,000
Other	194,000		114,000			609,000		245,000		Other		29,000		31,000

Total	$	9,270,000	$	7,232,000		$	24,642,000	$	21,379,000	Total		$	7,257,000	$	6,574,000

The increase in general and administrative expenses for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 as compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2020 was primarily due to ~~the~~an increase in asset management and property management oversight 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~~a result of ~~the~~an increase in our average invested assets ~~in 2017~~through developments and the acquisition of previously leased properties, as ~~compared to 2016 through~~well as capital expenditures, ~~and property acquistions.~~since March 31, 2020.

Business Acquisition ~~Related~~ Expenses

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021 and 2020, we recorded business acquisition ~~related~~ expenses ~~were $71,000~~of $1,248,000 and ~~$532,000, respectively, which~~$234,000, respectively. The increase in such expenses primarily related to $1,245,000 in third-party advisory costs and fees to our ~~one business combination in 2017 as well as additional expenses associated with our prior year property acquisitions accounted~~special committee related to the strategic alternatives review process incurred 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.March 31, 2021.

Depreciation and Amortization

For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, depreciation and amortization was ~~$27,579,000~~$25,723,000 and ~~$71,384,000,~~$25,087,000, respectively, which primarily consisted of depreciation on our operating properties of ~~$20,611,000~~$24,190,000 and ~~$18,050,000,~~$22,742,000, respectively, and amortization onof our identified intangible assets of ~~$6,841,000~~$1,113,000 and ~~$53,045,000,~~$1,994,000, respectively.

For the nine months ended September 30, 2017 and 2016, depreciation and amortization was $88,442,000 and $212,596,000, respectively, which primarily consisted of depreciation on our operating properties of $61,453,000 and $49,719,000, respectively, and amortization on our identified intangible assets of $26,599,000 and $162,090,000, respectively.

The decrease in amortization expense during the three and nine months ended September 30, 2017 as compared to the three 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 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.

Interest Expense

~~For the three and nine months ended September 30, 2017 and 2016, interest~~Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods then ended:


	Three Months Ended March 31,
		2021		2020
Interest expense:
Lines of credit and term loan and derivative financial instruments		$	7,594,000	$	8,433,000
Mortgage loans payable		8,585,000		8,338,000
Amortization of deferred financing costs:
Lines of credit and term loan		1,075,000		760,000
Mortgage loans payable		339,000		295,000
Amortization of debt discount/premium, net		203,000		208,000
(Gain) loss in fair value of derivative financial instruments		(1,821,000)		8,183,000
Loss on debt extinguishment		2,288,000		—
Interest on finance lease liabilities		118,000		169,000
Interest expense on financing obligations and other liabilities		163,000		331,000
Total		$	18,544,000	$	26,717,000

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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 instruments 5,976,000
6,075,000
18,795,000
15,552,000
Amortization of deferred financing costs — lines of credit and term loans 978,000
902,000
2,828,000
2,549,000
Amortization of deferred financing costs — mortgage loans payable 296,000
392,000
1,120,000
577,000
Amortization of debt discount/premium, net 142,000
88,000
858,000
272,000
Loss (gain) in fair value of derivative financial instruments 59,000
(989,000 ) (44,000 ) 54,000
Loss on extinguishment of mortgage loan payable —
—
1,432,000
—
Interest expense on other liabilities 272,000
—
873,000
—
Total $ 14,832,000
$ 12,038,000
$ 45,312,000
$ 32,404,000
The decrease in total interest expense for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was primarily related to a change to a gain in fair value recognized on our derivative financial instruments from a loss in fair value recognized on our derivative financial instruments, respectively, as such instruments approach maturity in January 2022, as well as a decrease in interest rates on our variable rate debt.

Impairment of Real Estate Investments

No impairment charges on real estate investments were recognized for the three months ended March 31, 2021. For the three months ended March 31, 2020, we recognized an impairment charge of $3,711,000 on one skilled nursing facility within Fox Grape SNF Portfolio and $1,391,000 on one integrated senior health campus within Trilogy Investors, LLC, or Trilogy. 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.

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~~the 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 repurchases of our common stock. We estimate that we will require approximately $41,728,000 to pay interest on our outstanding indebtedness for ~~acquisitions~~the remainder of ~~real estate~~2021, based on interest rates in effect as of March 31, 2021, and ~~real estate-related investments.~~

that we will require $30,611,000 to pay principal on our outstanding indebtedness for the remainder of 2021. One of our lines of credit and term loan with an aggregate principal balance of $560,500,000 as of March 31, 2021 are scheduled to mature on January 25, 2022; however, we have the ability and intend to pursue a new credit facility or, alternatively, satisfy certain conditions pursuant to the related credit agreement and pay the required fee in order to exercise our option to extend the maturity date of such credit facility for one year. 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, and Note 14, Related Party Transactions of our 2020 Annual Report on Form 10-K, as filed with the SEC on March 25, 2021, for a summary of our payments to our advisor and its affiliates. Generally, cash needs for such items will be met primarily from operations or borrowings, if needed. Our total capacity to pay operating expenses, capital improvement expenditures, interest, ~~and~~ distributions and repurchases, as well as acquire and/or develop real estate ~~and real estate-related~~ investments, is a function of our current cash position, our borrowing capacity on our lines of credit, as well as any future indebtedness that we may 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 began to take steps in March 2020 to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects, such as a reduction in the daily distribution rate and partial suspension of our share repurchase plan. 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 temporary suspension of all stockholder distributions and the suspension of the Amended and Restated DRIP until such time, if any, as our board determines to authorize the reinstatement of distributions and such plans. 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. On April 22, 2021, our board reinstated distributions by authorizing daily distributions to stockholders of record for the month of June 2021, at an annualized rate of $0.20 per share, to be paid in cash, in July 2021. 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 continue to authorize distributions, if any, or to reinstate the Amended and Restated DRIP or our share repurchase plan.

As of ~~September 30, 2017,~~March 31, 2021, our cash on hand was ~~$35,876,000~~$89,995,000 and we had ~~$316,965,000~~$147,766,000 available on our lines of ~~credit and term loans.~~credit. Such cash on hand included $20,489,000 in Medicare advance payments received by Trilogy, of which we currently own 67.6%, through an economic stimulus program of the CARES Act. We believe that ~~these resources~~such proceeds of cash and available lines of credit 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.

We estimate that we will require approximately $12,069,000 to pay interest on our outstanding indebtedness in the remainder of 2017, based on interest rates in effect as of September 30, 2017. In addition, we estimate that we will require $2,349,000 to pay principal on our outstanding indebtedness in the remainder of 2017. 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,A capital plan 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 investments and engages in negotiations with real estate sellers, developers, brokers,~~each investment ~~managers, lenders and others on our behalf. When we acquire a property, our advisor prepares a capital plan~~is established upon acquisition that contemplates the estimated capital needs of that ~~investment. In addition to operating expenses, capital needs may also include~~investment, 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 ~~loans~~loan 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, 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.partners. The capital plan for each investment ~~will be~~is 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 properties we owned as of September 30, 2017, we estimate that our expenditures for capital improvements and tenant improvements will require up to $18,204,000 for the remaining three months of 2017. As of ~~September 30, 2017,~~March 31, 2021, we had ~~$11,114,000~~$14,210,000 of restricted cash in loan impounds and reserve accounts ~~for capital expenditures, some of which may be used~~ to fund a portion of such capital expenditures. Based on the budget for

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the properties we own as of March 31, 2021, we estimate that our ~~estimated~~discretionary expenditures for capital ~~improvements~~ and tenant ~~improvements. We cannot provide assurance, however, that we will not exceed these estimated expenditure and distribution levels or be able~~improvements could require up to ~~obtain additional sources~~$68,612,000 for the remaining nine months 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 increased capital expenditures and leasing costs compared to historical levels due to competitive market conditions for new and renewed leases, the effect would be a reduction of net cash provided by operating activities. If such a reduction of net cash provided by operating activities is realized, we may have a cash flow deficit in subsequent periods. Our estimate of net cash available is based on various assumptions which are difficult to predict, including the levels 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.2021.

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 activities 88,540,000
92,398,000
Net cash used in investing activities (90,521,000 ) (311,913,000 )
Net cash provided by financing activities 8,602,000
207,781,000
Effect of foreign currency translation on cash and cash equivalents 132,000
(72,000 )
Cash and cash equivalents — end of period $ 35,876,000
$ 37,147,000

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	Three Months Ended March 31,
	2021		2020
Cash, cash equivalents and restricted cash — beginning of period	$	152,190,000	$	89,880,000
Net cash (used in) provided by operating activities	(5,255,000)		25,883,000
Net cash used in investing activities	(106,841,000)		(39,218,000)
Net cash provided by financing activities	89,605,000		5,103,000
Effect of foreign currency translation on cash, cash equivalents and restricted cash	7,000		(134,000)
Cash, cash equivalents and restricted cash — end of period	$	129,706,000	$	81,514,000

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~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, cash flows (used in) provided by operating activities primarily related to the cash flows provided by our property operations and $8,229,000 of grant income recognized in 2021, offset by the payment of general and administrative expenses and business acquisition expenses. See ~~Results~~the “Results of ~~Operations~~Operations” section above for a further discussion. ~~We anticipate~~In general, cash flows from operating activities ~~to increase as we acquire additional real estate~~will be affected by the timing of cash receipts and ~~real estate-related investments.~~payments.

Investing Activities

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, cash flows used in investing activities primarily related to ~~our 2017 acquisitions, including our~~ acquisitions of six previously leased real estate investments in the amount of ~~$102,241,000~~$78,542,000 and developments and capital expenditures of ~~$25,804,000,~~$29,196,000, partially offset by ~~principal repayments on real estate notes receivable~~$1,248,000 of ~~$26,752,000 and~~ proceeds from ~~real estate dispositions~~the disposition of ~~$15,993,000.~~one skilled nursing facility. For the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2020, cash flows used in investing activities primarily related ~~primarily~~ to developments and capital expenditures of $37,217,000 and our ~~13 property acquisitions~~acquisition of a land parcel 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~~$1,478,000. In general, cash flows used in investing activities will ~~continue~~be 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~~three months ended ~~September 30, 2017,~~March 31, 2021, cash flows provided by financing activities primarily related to new borrowings under mortgage loans payable inof $104,092,000 that were utilized to finance the ~~amount~~acquisition and development of ~~$230,452,000,~~real estate investments. Such cash provided by financing activities was partially offset by ~~the settlement~~payments on financing obligations of $8,481,000, scheduled payments on mortgage loans payable ~~in the amount~~ of ~~$100,775,000,~~$3,480,000 and net payments on our lines of credit ~~and term loans~~ in the amount of ~~$56,283,000, distributions to~~$1,400,000. In addition, for the three months ended March 31, 2021, we refinanced 10 mortgage loans payable with an aggregate principal balance of $101,734,000, which is reflected in borrowings under mortgage loans payable and early payoff of mortgage loans payable in our ~~common stockholders~~condensed consolidated statements of ~~$41,526,000 and share repurchases of $24,022,000.~~cash flows. For the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2020, cash flows provided by financing activities primarily related to net borrowings under our lines of credit ~~and term loan~~ in the amount of ~~$259,484,000,~~$18,500,000 and borrowings under mortgage loans payable of $8,239,000, partially offset by distributions to our common stockholders of ~~$38,343,000~~$16,032,000 and ~~share repurchases~~scheduled payments on mortgage loans payable of ~~$14,833,000.~~$3,137,000. The decrease in distributions paid in 2021 compared to 2020 was primarily related to actions taken by our board to protect our capital and maximize our liquidity in response to the impact of the COVID-19 pandemic, such as the temporary suspension of all stockholder distributions. 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 as we continue to develop properties and if we acquire additional real estate and real estate-related investments.

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Distributions

~~Our~~Prior 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 ~~December~~March 31, ~~2017.~~2020. The distributions were ~~or will be~~ calculated based on 365 days in the calendar year and ~~are~~were 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 our DRIP Offerings, only from legally available funds.

In response to the COVID-19 pandemic and its effects to our business and operations, at the end of the first quarter of 2020 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 reduced 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 rate of $0.30 per share, a decrease from the annualized distribution 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 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 ~~Secondary~~temporary 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 ~~Offering,~~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 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.

On April 22, 2021, our board authorized a daily distribution to our stockholders of record as of the close of business on each day of the period commencing on June 1, 2021 and ending June 30, 2021. The daily distributions will be calculated based on 365 days in the calendar year and will be equal to $0.000547945 per share of our common stock, which is equal to an annualized distribution rate of $0.20 per share. The distributions will be aggregated and paid in cash on a monthly basis, in July 2021, only from legally available funds.

The amount of the distributions paid to our stockholders iswas determined quarterly or monthly, as applicable, by our board and iswas 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 net offering 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.

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We did not pay any distributions for the three months ended March 31, 2021. The distributions paid for the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2020, along with the amount of distributions reinvested pursuant to ~~the Secondary~~our DRIP ~~Offering,~~Offerings, and the sources of our distributions as compared to cash flows from operations were as follows:


	Three Months Ended March 31, 2020
Distributions paid in cash		$	16,032,000
Distributions reinvested		13,141,000
		$	29,173,000
Sources of distributions:
Cash flows from operations		$	25,883,000	88.7	%
Proceeds from borrowings		3,290,000		11.3

		$	29,173,000	100	%

Nine Months Ended September 30,
2017 2016
Distributions paid in cash $ 41,526,000
$ 38,343,000

Distributions reinvested 47,453,000
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 borrowings 439,000
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.

~~Any~~As of March 31, 2021, 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 ~~initial~~net offering proceeds ~~could reduce~~and borrowings have reduced the amount of capital we ultimately ~~invest~~invested in assets and negatively ~~impact~~impacted 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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	Nine Months Ended September 30,
	2017				2016					Three Months Ended March 31, 2020
Distributions paid in cash	$	41,526,000			$	38,343,000			Distributions paid in cash		$	16,032,000
Distributions reinvested	47,453,000				48,692,000				Distributions reinvested		13,141,000
	$	88,979,000			$	87,035,000					$	29,173,000
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		$	16,229,000	55.6	%
Proceeds from borrowings	10,804,000		12.1		39,389,000		45.3		Proceeds from borrowings		12,944,000		44.4
	$	88,979,000	100	%	$	87,035,000	100	%
											$	29,173,000	100	%

The payment of distributions from sources other than FFO may reduce the amount of proceeds available for investment and operations or may 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)~~loss to FFO, see ~~Funds~~the “Funds from Operations and Modified Funds from ~~Operations~~Operations” 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 exceed~~approximate 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,~~March 31, 2021, our aggregate borrowings were ~~37.2%~~47.4% of the combined market value of all of our real estate and real estate-related investments.

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, 2017~~May 17, 2021 and ~~September 30, 2017,~~March 31, 2021, 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~~Loan

For a discussion of our lines of credit and term ~~loans,~~loan, see Note 8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements.

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REIT Requirements

In order to maintain our qualification as a REIT for federal income tax purposes, we are required to ~~make distributions~~distribute to our stockholders a minimum of ~~at least~~ 90.0% of our annual taxable income, excluding net capital gains. Existing Internal Revenue Service guidance includes a safe harbor pursuant to which publicly offered REITs can satisfy the distribution requirement by distributing a combination of cash and stock to stockholders. In general, to qualify under the safe harbor, each stockholder must elect to receive either cash or stock, and the aggregate cash component of the distribution to stockholders must represent at least 20.0% of the total distribution. 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,~~March 31, 2021, we had ~~$638,584,000~~$934,637,000 ($~~615,346,000, including~~912,883,000, 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,~~March 31, 2021, we had ~~$593,035,000~~$842,234,000 outstanding and ~~$316,965,000~~$147,766,000 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,~~Loan, to our accompanying condensed consolidated financial statements.

We are required by the terms of certain loan documents to meet ~~certain~~various 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,~~March 31, 2021, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term ~~loans.~~loan. 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,~~March 31, 2021, 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%~~3.54% per annum.

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;~~loan; (ii) interest payments on our mortgage loans payable, lines of credit and term ~~loans and fixed interest rate swaps and interest rate cap; and~~loan; (iii) ground and other lease ~~obligations, capital~~obligations; (iv) financing obligations; and (v) finance leases ~~and other liabilities~~ as of ~~September 30, 2017:~~March 31, 2021:

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 debt 4,676,000
   37,690,000
34,902,000
234,248,000
311,516,000
Principal payments — variable-rate debt 14,000
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 obligations 5,282,000
   45,231,000
47,927,000
225,725,000
324,165,000
Capital leases 1,937,000
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
	2021		2022-2023		2024-2025		Thereafter		Total
Principal payments — fixed-rate debt	$	10,743,000	$	93,586,000	$	85,223,000	$	552,172,000	$	741,724,000
Interest payments — fixed-rate debt	19,350,000		46,963,000		40,089,000		243,979,000		350,381,000
Principal payments — variable-rate debt	19,868,000		918,517,000		96,762,000		—		1,035,147,000
Interest payments — variable-rate debt (based on rates in effect as of March 31, 2021)	22,378,000		24,748,000		830,000		—		47,956,000
Ground and other lease obligations	12,647,000		33,661,000		31,284,000		132,307,000		209,899,000
Financing obligations	14,037,000		4,422,000		1,415,000		974,000		20,848,000
Finance leases	120,000		105,000		65,000		—		290,000
Total	$	99,143,000	$	1,122,002,000	$	255,668,000	$	929,432,000	$	2,406,245,000

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2021, 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~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, 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 tenant 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~~summary of related party transactions, see Note 14, Related Party Transactions, to our accompanying condensed consolidated financial ~~statements.~~statements, and Note 14, Related Party Transactions of our 2020 Annual Report on Form 10-K, as filed with the SEC on March 25, 2021.

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 ~~property~~certain 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 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 initial 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 initial offering stage and acquisitions are completed with the sustainability of the operating performance of other real estate companies

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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 initial 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~~Practice 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): expensed acquisition fees and ~~expenses;~~costs; 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 and 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 properties 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 expenses in the future from operating revenues and cash flows, nor from the sale 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.

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, we 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.

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 the three months ended March 31, 2021, we recognized government grants as grant income 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. 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 months ended March 31, 2021, FFO would have been approximately $4,458,000, excluding government grants recognized. For the three months ended March 31, 2021, MFFO would have been approximately $4,707,000, excluding government grants recognized. For the three months ended March 31, 2020, we did not recognize any government grants.

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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 properties 27,579,000
71,384,000
88,442,000
212,596,000
Depreciation and amortization — unconsolidated properties 270,000
267,000
795,000
665,000
Impairment of real estate investments —
—
4,883,000
—
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests 176,000
13,921,000
6,051,000
39,245,000
Less:
Loss (gain) on dispositions of real estate investments 9,000
—
(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 diluted 198,733,528
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 March 31,
		2021		2020
Net loss		$	(16,273,000)	$	(7,783,000)
Add:
Depreciation and amortization related to real estate — consolidated properties		25,723,000		25,087,000
Depreciation and amortization related to real estate — unconsolidated entities		806,000		744,000
Loss on disposition of real estate investment		335,000		—
Impairment of real estate investments		—		5,102,000
Net loss (income) attributable to noncontrolling interests		4,426,000		(2,127,000)
Less:
Depreciation, amortization, impairment and loss on disposition — noncontrolling interests		(4,765,000)		(4,794,000)
FFO attributable to controlling interest		$	10,252,000	$	16,229,000

Business acquisition expenses(1)		$	1,248,000	$	234,000
Amortization of above- and below-market leases(2)		36,000		19,000
Amortization of closing costs(3)		47,000		40,000
Change in deferred rent(4)		(334,000)		(28,000)
Loss on debt extinguishment(5)		2,288,000		—
(Gain) loss in fair value of derivative financial instruments(6)		(1,821,000)		8,183,000
Foreign currency (gain) loss(7)		(415,000)		3,065,000

Adjustments for unconsolidated entities(8)		171,000		316,000
Adjustments for noncontrolling interests(8)		(971,000)		(510,000)
MFFO attributable to controlling interest		$	10,501,000	$	27,548,000
Weighted average common shares outstanding — basic and diluted		193,856,872		194,844,516
Net loss per common share — basic and diluted		$	(0.08)	$	(0.04)
FFO attributable to controlling interest per common share — basic and diluted		$	0.05	$	0.08
MFFO attributable to controlling interest per common share — basic and diluted		$	0.05	$	0.14

___________

~~(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 business acquisition expenses that have been deducted as expenses in the determination of GAAP net income or loss, 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. Business acquisition 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.

(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 management’s analysis of operating performance.

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(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.

~~(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.~~

(5)The loss associated with the early extinguishment of debt primarily relates to the write-off of unamortized deferred financing fees and other fees. 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, business acquisition ~~related~~ expenses, depreciation and amortization, interest expense, gain or loss on ~~dispositions,~~disposition, 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 is~~as an indication of our liquidity, or indicative of ~~funds~~cash 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 business 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 ~~management~~operations 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.

~~The~~For the three months ended March 31, 2021, we recognized government grant income, which 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 NOI. For the three months ended March 31, 2021, NOI would have been approximately $29,852,000, excluding government grants recognized. For the three months ended March 31, 2020, we did not recognize any government grants.

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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 March 31,
		2021		2020
Net loss		$	(16,273,000)	$	(7,783,000)
General and administrative		7,257,000		6,574,000
Business acquisition expenses		1,248,000		234,000
Depreciation and amortization		25,723,000		25,087,000
Interest expense		18,544,000		26,717,000
Loss on disposition of real estate investment		335,000		—
Impairment of real estate investments		—		5,102,000
Loss from unconsolidated entities		1,771,000		904,000
Foreign currency (gain) loss		(415,000)		3,065,000
Other income		(272,000)		(555,000)
Income tax expense (benefit)		163,000		(3,211,000)
Net operating income		$	38,081,000	$	56,134,000

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 administrative 9,270,000
7,232,000
24,642,000
21,379,000
Acquisition related expenses 71,000
15,936,000
532,000
24,184,000
Depreciation and amortization 27,579,000
71,384,000
88,442,000
212,596,000
Interest expense 14,832,000
12,038,000
45,312,000
32,404,000
Loss (gain) on dispositions of real estate investments 9,000
—
(3,370,000 ) —
Impairment of real estate investments —
—
4,883,000
—
Loss from unconsolidated entities 1,494,000
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 ~~2016~~2020 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.~~25, 2021.

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~~develop properties 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 we~~We 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).~~loss. As of ~~September 30, 2017,~~March 31, 2021, our interest rate cap and interest rate swaps are recorded in other assets, net or 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 $(6,055,000), respectively. We do not enter into derivative transactions for speculative purposes.

In July 2017, the Financial Conduct Authority, or FCA, that regulates 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. In March 2021, the FCA confirmed its intention to cease publishing one-week and two-month LIBOR after December 31, 2021 and all remaining LIBOR after June 30, 2023. At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR.

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 transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted if LIBOR is 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,

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the impact on our contracts is likely to vary by contract. If LIBOR is discontinued, interest rates on our current or future indebtedness may be adversely affected. It is not possible to predict whether LIBOR will continue to be viewed as an acceptable market “benchmark” prior to June 30, 2023, and 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 March 31, 2021, 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
	2021			2022			2023			2024			2025			Thereafter			Total			Fair Value
Assets
Debt security held-to-maturity	$	—		$	—		$	—		$	—		$	93,433,000		$	—		$	93,433,000		$	93,973,000
Weighted average interest rate on maturing fixed-rate debt security	—		%	—		%	—		%	—		%	4.24		%	—		%	4.24		%	—
Liabilities
Fixed-rate debt — principal payments	$	10,743,000		$	63,255,000		$	30,331,000		$	67,208,000		$	18,015,000		$	552,172,000		$	741,724,000		$	702,462,000
Weighted average interest rate on maturing fixed-rate debt	3.52		%	4.10		%	4.03		%	3.63		%	3.54		%	3.37		%	3.49		%	—
Variable-rate debt — principal payments	$	19,868,000		$	560,500,000		$	358,017,000		$	92,083,000		$	4,679,000		$	—		$	1,035,147,000		$	1,036,956,000
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of March 31, 2021)	2.50		%	2.66		%	2.91		%	3.76		%	2.62		%	—		%	2.85		%	—

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 debt 3.63 % 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,~~March 31, 2021, the net carrying value of our ~~real estate notes receivable and~~ debt security investment ~~net~~ was ~~$100,133,000.~~$76,685,000. 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.March 31, 2021.

Mortgage Loans Payable, Net and Lines of Credit and Term ~~Loans~~Loan

Mortgage loans payable were ~~$638,584,000~~$934,637,000 ($~~615,346,000, including~~912,883,000, net of discount/premium and deferred financing ~~costs, net)~~costs) as of ~~September 30, 2017.~~March 31, 2021. As of ~~September 30, 2017,~~March 31, 2021, we had 4662 fixed-rate mortgage loans payable and ~~four~~11 variable-rate mortgage loans payable with effective interest rates ranging from ~~2.45%~~2.21% to ~~7.17%~~5.25% per annum and a weighted average effective interest rate of ~~4.00%~~3.46%. In

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addition, as of ~~September 30, 2017,~~March 31, 2021, we had ~~$593,035,000~~$842,234,000 outstanding under our lines of credit and term ~~loans~~loan, at a ~~weighted-average~~weighted average interest rate of ~~3.68%~~2.73% per annum.

As of ~~September 30, 2017,~~March 31, 2021, 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%~~3.54% per annum. An increase in the variable interest rate on our variable-rate mortgage loans payable and lines of credit and term ~~loans~~loan constitutes a market risk. As of ~~September 30, 2017,~~March 31, 2021, 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 and~~loan; an increase in the variable interest rate thereon would have no effect on our overall annual interest expense. As of ~~September 30, 2017,~~March 31, 2021, 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~~loan by ~~$4,342,000,~~$2,814,000, or ~~8.51%~~4.31% of total annualized interest expense on our mortgage loans payable and lines of credit and term ~~loans.~~loan. See Note 7, Mortgage Loans Payable, Net and Note 8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements.

~~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, 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 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.

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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~~Chief Executive Officer and ~~chief financial officer,~~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, 2017~~March 31, 2021 was conducted under the supervision and with the participation of our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~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~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that our disclosure controls and procedures, as of ~~September 30, 2017,~~March 31, 2021, 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, 2017~~March 31, 2021 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.

There were no material changes from the risk factors previously disclosed in our ~~2016~~2020 Annual Report on Form 10-K, as filed with the SEC on March ~~15, 2017,~~25, 2021, except as noted below.

~~We have not had sufficient cash available from operations~~Risks Related to ~~pay distributions, and therefore, we have paid distributions from the net proceeds of our initial offering, and~~Investments in the future, may pay distributions from borrowings in anticipation of future cash flows or from other sources. Any such distributions may reduce the amount of capital we ultimately invest in assets, may negatively impact the value of our stockholders’ investment and may cause subsequent investors to experience dilution.

We have used the net proceeds from our initial offering, 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 include a return of capital, rather than a return on capital. We have not established any limit on the amount of proceeds from our initial offering 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 qualify as a REIT. As a result, our distribution rate and payment frequency may vary from time to time.

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 December 31, 2017. The daily distributions were or will be calculated based on 365 days in the calendar year and are equal to $0.001643836 per share of our common stock, which is equal to an annualized distribution rate of 6.0%, assuming a purchase price of $10.00 per share. These daily distributions were or will be aggregated and paid in cash or shares of our common stock pursuant to the DRIP portion of our initial offering and the Secondary DRIP Offering monthly in arrears, only from legally available funds.

The distributions paid for the nine months ended September 30, 2017 and 2016, along with the amount of distributions reinvested pursuant to the Secondary DRIP Offering and the sources of our distributions as compared to cash flows from operations were as follows:

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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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 offering proceeds. The payment of distributions from our initial offering proceeds could reduce the amount of capital we ultimately invest in assets and negatively impact the amount of income available for future distributions.

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, 2017 and 2016, along with the amount of distributions reinvested pursuant the Secondary DRIP Offering and the sources of our distributions as compared to FFO were as follows:

Nine Months Ended September 30,
2017 2016
Distributions paid in cash $ 41,526,000
$ 38,343,000

Distributions reinvested 47,453,000
48,692,000

$ 88,979,000
$ 87,035,000

Sources of distributions:
FFO attributable to controlling interest $ 78,175,000
87.9 % $ 47,646,000
54.7 %
Proceeds from borrowings 10,804,000
12.1
39,389,000
45.3
$ 88,979,000
100 % $ 87,035,000
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 reflect the value that stockholders will receive for their investment.~~

On October 4, 2017, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established a revised estimated per share NAV of our common stock of $9.27. We are providing this revised estimated per share NAV to assist broker-dealers in connection with their obligations under National Association of Securities Dealers Conduct Rule 2340, as required by FINRA with respect to customer account statements. The valuation was performed in accordance with the methodology provided in 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 revised 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 the 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 is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated per share NAV, and these differences could be significant.

The revised estimated per share NAV was not audited or reviewed by our independent registered public accounting firm and does not represent the fair value of our assets or liabilities according to GAAP. Accordingly, with respect to the revised estimated per share NAV, we can give no assurance that:

~~a stockholder would be able to resell his or her shares at our revised estimated per share NAV;~~

~~a stockholder would ultimately realize distributions per share equal to our revised 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 revised 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 the board to assist in its determination of the revised estimated per share NAV, would agree with our estimated per share NAV; or

~~the methodology used to estimate our revised per share NAV would be acceptable to FINRA or comply with the Employee Retirement Income Security Act of 1974, or ERISA, reporting requirements.~~

Further, the estimated revised per share NAV is 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 value of our shares may fluctuate over time in response to developments related to individual assets in the portfolio and the management of those assets and in response to the real estate and finance markets. Going forward, we intend to engage an independent valuation firm to assist us with publishing an updated estimated per share NAV on at least an annual basis.

For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the revised estimated per share NAV, see our Current Report on Form 8-K filed with the SEC on October 5, 2017.

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 we~~We have a concentration of properties in ~~any~~ particular geographic ~~area,~~areas; therefore, any adverse situation that disproportionately effects ~~that geographic area~~one of those areas would have a magnified adverse effect on our portfolio. As of ~~November 14, 2017,~~May 17, 2021, properties located in Indiana accounted for approximately ~~35.4%~~39.7% of ~~the~~our total property portfolio’s annualized base rent or annualized ~~net operating income of our total property portfolio.~~NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.

~~Reductions~~Risks Related to Debt Financing

Changes in ~~reimbursement from third-party payers, including Medicare and Medicaid, could~~banks’ inter-bank lending rate reporting practices or the method pursuant to which LIBOR is determined may adversely affect the ~~profitability~~value of ~~our tenants and hinder their ability~~the financial obligations to ~~make rent payments~~be held or issued by us that are linked to ~~us.~~LIBOR.

Sources 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, MedicaidLIBOR and other ~~government sponsored payment programs. Moreover,~~indices which are deemed “benchmarks” are the ~~state~~subject of recent national, international and ~~federal governmental healthcare programs~~other regulatory guidance and proposals for reform. Some of these reforms are ~~subject~~already effective while others are still to reductions by state and federal legislative actions. The American Taxpayer Relief Act of 2012 prevented the reduction in physician reimbursement of Medicare from being implemented in 2013. The Protecting Accessbe implemented. These reforms may cause such “benchmarks” to ~~Medicare Act of 2014 prevented the reduction of 24.4%~~perform differently than in the ~~physician fee schedule~~past, or have other consequences which cannot be predicted. As published by ~~replacing~~ the ~~scheduled reduction with a 0.5% increase~~Federal Reserve Bank of New York, it currently appears that, over time, United States dollar LIBOR may be replaced by SOFR. In March 2021, the FCA confirmed its intention to ~~the physician fee schedule through~~cease publishing one-week and two-month LIBOR after December 31, ~~2014,~~2021 and all remaining LIBOR after June 30, 2023. At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. Market participants are still considering how various types of financial instruments and securitization vehicles should react to a ~~0% increase for January 1, 2015 through March 31, 2015. The potential 21.0% cut in reimbursement that was to be effective April 1, 2015 was removed by the Medicare Access & CHIP Reauthorization Act~~discontinuation of 2015, or MACRA, and replaced with two new methodologies that will focus upon payment based upon quality outcomes. The first model is the Merit-Based Incentive Payment System, or MIPS, which combines the Physician Quality Reporting System, or PQRS, and Meaningful Use program with the Value Based Modifier program to provide for one payment model based upon (i) quality, (ii) resource use, (iii) clinical practice improvement and (iv) advancing care information through the use 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 ~~tenants~~assets and liabilities will ~~continue to experience a shift in payer mix~~transition away from ~~fee-for-service payers, resulting~~LIBOR at the same time, or to the same alternative reference rate, in ~~an increase in~~each case increasing the ~~percentage~~difficulty of ~~revenues attributable to reimbursement based upon value based principles and quality driven managed care programs, and general industry trends~~hedging. The process of transition involves operational risks. It is also possible that ~~include pressures to control healthcare costs. The federal government’s goal is to move approximately 90.0% of its reimbursement~~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 if~~be implemented. Uncertainty as to the ~~tenant does not have a participation agreement with the state insurance exchange payers and a large number~~nature of ~~individuals elect to purchase insurance from the state insurance exchange. Further, the~~such 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 upon~~adversely 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 ~~number~~above changes or any other consequential changes to LIBOR or any other “benchmark” as a result of ~~providers participating~~international, national or other proposals for reform or other initiatives, or any further uncertainty in relation to the ~~area~~timing 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 Act~~manner 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 Act~~implementation 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 some~~assets and liabilities based on or all of our tenants. The financial impact on our tenants could restrict their ability 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.” 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 referlinked 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.“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. 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~~None.

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.

~~Purchase of Equity Securities by the Issuer and Affiliated Purchasers~~

Our share repurchase plan allows for repurchases of shares of our common stock by us when certain criteria are met. Share repurchases will be made at the sole discretion of our board. All share repurchases are 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 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 on the period of time their shares have been held. Funds for the repurchase of shares of our common stock will come exclusively from the cumulative proceeds we receive from the sale of shares of our common stock pursuant to the DRIP portion of our initial offering and the Secondary DRIP Offering.

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) for requests submitted pursuant to a death or a qualifying disability, the repurchase price will be 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, 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

~~___________~~


~~(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.

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, 2017~~March 31, 2021 (and are numbered in accordance with Item 601 of Regulation S-K).



3.1		Articles of Amendment and Restatement of Griffin-American Healthcare REIT III, Inc. dated January 15, 2014 (included as Exhibit 3.1 to Pre-Effective Amendment No. 5 to our Registration Statement on Form S-11 (File No. 333-186073) filed January 16, 2014 and incorporated herein by reference)

3.2		Bylaws of Griffin-American Healthcare REIT III, Inc. (included as Exhibit 3.2 to our Registration Statement on Form S-11 (File No. 333-186073) filed January 17, 2013 and incorporated herein by reference)

4.1		Amended and Restated Distribution Reinvestment Plan of Griffin-American Healthcare REIT III, Inc. (included as Exhibit ~~4.1~~4.7 to our ~~Current Report~~Registration Statement on Form ~~8-K~~S-3 (File No. ~~000-55434)~~333-229427) filed ~~October 7, 2016~~January 30, 2019 and incorporated herein by reference)

~~10.1~~31.1*		First Amendment, Waiver and Commitment Increase Agreement by and among Griffin-American Healthcare REIT III Holdings, LP, Griffin-American Healthcare REIT III, Inc., Subsidiary Guarantors, Existing Lenders, New Lender, Bank of America, N.A. and KeyBank, National Association, dated August 3, 2017 (included as Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-55434) filed August 9, 2017 and incorporated herein by reference)

31.1*	Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

101.INS* 99.1		Amendment to Advisory Agreement by and among Griffin-American Healthcare REIT III, Inc., Griffin-American Healthcare REIT III Holdings, LP and Griffin-American Healthcare REIT III Advisor, LLC dated February 22, 2021 (included as Exhibit 99.1 to our Annual Report on Form 10-K (File No. 000-55434) filed March 25, 2021 and incorporated herein by reference)

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.LAB101.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 Page 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.

Table of Contents

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)

May 17, 2021

By:

/s/ JEFFREYT. HANSON

Date

Jeffrey T. Hanson

Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

May 17, 2021

By:

~~Griffin-American Healthcare REIT III, Inc.~~/s/ BRIAN S. PEAY

~~(Registrant)~~

Date

~~November 14, 2017~~

~~By:~~

~~/s/ JEFFREYT. HANSON~~

~~Date~~

~~Jeffrey T. Hanson~~

~~Chief Executive Officer and Chairman of the Board of Directors~~

~~(Principal Executive Officer)~~

~~November 14, 2017~~

~~By:~~

~~/s/ BRIAN~~ ~~S. PEAY~~

~~Date~~

Brian S. Peay

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)



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



	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



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



						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



	September 30, 2017		December 31, 2016
Prepaid expenses, deposits and other assets	$	21,981,000	$	16,002,000
Investments in unconsolidated entities	18,639,000		20,057,000
Inventory	16,337,000		17,266,000
Deferred rent receivables	15,978,000		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, respectively	5,418,000		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



	Number of Nonvested Shares of Our Restricted Common Stock		Weighted Average Grant Date Fair Value
Balance — December 31, 2016	39,000		$	10.00
Granted	22,500		$	9.01
Vested	(15,500	)	$	9.71
Forfeited	—		$	—
Balance — September 30, 2017	46,000		$	9.61
Expected to vest — September 30, 2017	46,000		$	9.61



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



	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



Acquisition	Revenue		Net Income
2016 Acquisitions	$	12,735,000	$	670,000



	2016 Property Acquisitions
Building and improvements	$	396,665,000
Land	36,345,000
Furniture, fixtures and equipment	644,000
In-place leases	40,059,000
Above-market leases	1,324,000
Certificates of need	18,410,000
Purchase option assets	(56,792,000		)
Total assets acquired	436,655,000
Below-market leases	(1,423,000		)
Total liabilities assumed	(1,423,000		)
Net assets acquired	$	435,232,000



	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	)



	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 campuses	107	$	1,417,074,000	(1	)	102	$	1,356,780,000	(1	)
Medical office buildings	63	659,095,000		92.3	%	60	638,645,000		92.8	%
Senior housing	14	173,391,000		100	%	10	134,860,000		100	%
Senior housing — RIDEA	13	320,035,000		(2	)	13	320,035,000		(2	)
Skilled nursing facilities	7	128,000,000		100	%	6	105,500,000		100	%
Hospitals	2	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	%



	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 debt	4,676,000		37,690,000		34,902,000		234,248,000		311,516,000
Principal payments — variable-rate debt	14,000		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 obligations	5,282,000		45,231,000		47,927,000		225,725,000		324,165,000
Capital leases	1,937,000		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



	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 debt	3.63		%	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		%	—



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