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, 2020



¨	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: 000-55775

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

(Exact name of registrant as specified in its charter)



Maryland		47-2887436
(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	None	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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
		Emerging growth company	x

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. x

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 3, 2017,~~May 8, 2020, there were ~~36,675,850~~74,823,000 shares of Class T common stock and ~~2,028,989~~5,617,866 shares of Class I common stock of Griffin-American Healthcare REIT IV, Inc. outstanding.

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, 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, 2020 and December 31, ~~2016~~2019	3
Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	5
Condensed Consolidated Statements of Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	7
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3634
Item 3. Quantitative and Qualitative Disclosures About Market Risk	5148
Item 4. Controls and Procedures	5149

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	5350
Item 1A. Risk Factors	5350
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5954
Item 3. Defaults Upon Senior Securities	6054
Item 4. Mine Safety Disclosures	6054
Item 5. Other Information	6155
Item 6. Exhibits	6155
Signatures	6356

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019

~~(Unaudited)~~

September 30, 2017 December 31, 2016
ASSETS
Real estate investments, net $ 318,942,000
$ 117,942,000
Cash and cash equivalents 4,397,000
2,237,000
Accounts and other receivables, net 1,359,000
1,299,000
Restricted cash 16,000
—
Real estate deposits 5,021,000
200,000
Identified intangible assets, net 37,635,000
19,673,000
Other assets, net 4,142,000
1,407,000
Total assets $ 371,512,000
$ 142,758,000

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage loans payable, net(1) $ 11,639,000
$ 3,965,000
Line of Credit(1) 26,000,000
33,900,000
Accounts payable and accrued liabilities(1) 17,053,000
5,426,000
Accounts payable due to affiliates(1) 8,065,000
5,531,000
Identified intangible liabilities, net 1,822,000
1,063,000
Security deposits, prepaid rent and other liabilities(1) 786,000
616,000
Total liabilities 65,365,000
50,501,000

Commitments and contingencies (Note 9)

Redeemable noncontrolling interest (Note 10) 2,000
2,000

Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding —
—
Class T common stock, $0.01 par value per share; 900,000,000 shares authorized; 34,346,388 and 11,000,433 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 343,000
110,000
Class I common stock, $0.01 par value per share; 100,000,000 shares authorized; 1,884,007 and 377,006 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 19,000
4,000
Additional paid-in capital 322,549,000
99,492,000
Accumulated deficit (16,766,000 ) (7,351,000 )
Total stockholders’ equity 306,145,000
92,255,000
Total liabilities, redeemable noncontrolling interest and stockholders’ equity $ 371,512,000
$ 142,758,000

~~___________~~



	March 31, 2020			December 31, 2019
ASSETS
Real estate investments, net	$	947,548,000		$	895,060,000
Cash and cash equivalents	20,516,000			15,290,000
Accounts and other receivables, net	3,754,000			4,608,000
Restricted cash	348,000			556,000
Real estate deposits	—			1,915,000
Identified intangible assets, net	78,238,000			74,023,000
Operating lease right-of-use assets, net	14,224,000			14,255,000
Other assets, net	64,103,000			62,620,000
Total assets	$	1,128,731,000		$	1,068,327,000

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans payable, net(1)	$	18,233,000		$	26,070,000
Line of credit and term loans(1)	473,100,000			396,800,000
Accounts payable and accrued liabilities(1)	31,001,000			32,033,000
Accounts payable due to affiliates(1)	1,008,000			1,016,000
Identified intangible liabilities, net	1,509,000			1,601,000
Operating lease liabilities(1)	9,895,000			9,858,000
Security deposits, prepaid rent and other liabilities(1)	13,574,000			9,408,000
Total liabilities	548,320,000			476,786,000

Commitments and contingencies (Note 10)

Redeemable noncontrolling interests (Note 11)	2,580,000			1,462,000

Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding	—			—
Class T common stock, $0.01 par value per share; 900,000,000 shares authorized; 74,891,729 and 74,244,823 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	748,000			742,000
Class I common stock, $0.01 par value per share; 100,000,000 shares authorized; 5,682,901 and 5,655,051 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	57,000			56,000
Additional paid-in capital	726,258,000			719,894,000
Accumulated deficit	(150,398,000		)	(130,613,000		)
Total stockholders’ equity	576,665,000			590,079,000
Noncontrolling interest (Note 12)	1,166,000			—
Total equity	577,831,000			590,079,000
Total liabilities, redeemable noncontrolling interests and equity	$	1,128,731,000		$	1,068,327,000

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019

(Unaudited)

___________

(1)

Such liabilities of Griffin-American Healthcare REIT IV, Inc. as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 represented liabilities of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries. Griffin-American Healthcare REIT IV Holdings, LP is a variable interest entity, or VIE, and a consolidated subsidiary of Griffin-American Healthcare REIT IV, Inc. The creditors of Griffin-American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries do not have recourse against Griffin-American Healthcare REIT IV, Inc., except for the ~~Line of~~2018 Credit Facility, as defined in Note 7, held by Griffin-American Healthcare REIT IV Holdings, LP in the amount of ~~$26,000,000~~$473,100,000 and ~~$33,900,000~~$396,800,000 as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, which is guaranteed by Griffin-American Healthcare REIT IV, Inc.

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

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
Revenue:
Revenues:
Real estate revenue	$	8,488,000		$	312,000		$	18,738,000		$	338,000		$	21,463,000		$	15,147,000
Resident fees and services													16,081,000			10,695,000
Total revenues													37,544,000			25,842,000
Expenses:
Rental expenses	2,095,000			98,000			4,893,000			121,000			5,822,000			3,981,000
Property operating expenses													13,017,000			8,465,000
General and administrative	1,296,000			329,000			2,996,000			725,000			4,448,000			4,190,000
Acquisition related expenses	121,000			1,857,000			334,000			2,227,000			9,000			118,000
Depreciation and amortization	3,442,000			64,000			7,619,000			64,000			12,530,000			16,078,000
Total expenses	6,954,000			2,348,000			15,842,000			3,137,000			35,826,000			32,832,000
Other income (expense):
Interest expense (including amortization of deferred financing costs and debt premium)	(780,000		)	(56,000		)	(1,607,000		)	(56,000		)
Interest income	—			—			1,000			—
Net income (loss)	754,000			(2,092,000		)	1,290,000			(2,855,000		)
Less: net income (loss) attributable to redeemable noncontrolling interest	—			—			—			—
Net income (loss) attributable to controlling interest	$	754,000		$	(2,092,000	)	$	1,290,000		$	(2,855,000	)
Net income (loss) per Class T and Class I common share attributable to controlling interest — basic and diluted	$	0.02		$	(0.62	)	$	0.05		$	(2.12	)
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)													(5,310,000		)	(3,585,000		)
Loss in fair value of derivative financial instruments													(4,605,000		)	(1,978,000		)
Income from unconsolidated entity													255,000			126,000
Other income													9,000			69,000
Loss before income taxes													(7,933,000		)	(12,358,000		)
Income tax expense													—			(3,000		)
Net loss													(7,933,000		)	(12,361,000		)
Less: net loss attributable to noncontrolling interests													167,000			25,000
Net loss attributable to controlling interest													$	(7,766,000	)	$	(12,336,000	)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted													$	(0.10	)	$	(0.16	)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted	32,593,321			3,357,979			23,827,175			1,345,578			80,301,650			75,105,471
Distributions declared per Class T and Class I common share	$	0.15		$	0.15		$	0.45		$	0.25

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

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

(Unaudited)

Class T and Class I Common Stock

Number
of Shares
Amount
Additional
Paid-In Capital

Accumulated
Deficit

Total
Stockholders’
Equity
BALANCE — December 31, 2016 11,377,439
$ 114,000
$ 99,492,000
$ (7,351,000 ) $ 92,255,000
Issuance of common stock 24,264,521
242,000
241,193,000
—
241,435,000
Offering costs — common stock —
—
(23,544,000 ) —
(23,544,000 )
Issuance of common stock under the DRIP 584,318
6,000
5,486,000
—
5,492,000
Issuance of vested and nonvested restricted common stock 22,500
—
45,000
—
45,000
Amortization of nonvested common stock compensation —
—
55,000
—
55,000
Repurchase of common stock (18,383 ) —
(178,000 ) —
(178,000 )
Distributions declared —
—
—
(10,705,000 ) (10,705,000 )
Net income —
—
—
1,290,000
1,290,000
BALANCE — September 30, 2017 36,230,395
$ 362,000
$ 322,549,000
$ (16,766,000 ) $ 306,145,000



	Stockholders’ Equity
	Class T and Class I Common Stock
	Number of Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
BALANCE — December 31, 2019	79,899,874	$	798,000	$	719,894,000		$	(130,613,000	)	$	590,079,000		$	—		$	590,079,000
Offering costs — common stock	—	—		(1,000		)	—			(1,000		)	—			(1,000		)
Issuance of common stock under the DRIP	674,756	7,000		6,430,000			—			6,437,000			—			6,437,000
Amortization of nonvested common stock compensation	—	—		43,000			—			43,000			—			43,000
Contribution from noncontrolling interest	—	—		—			—			—			1,250,000			1,250,000
Fair value adjustment to redeemable noncontrolling interests	—	—		(108,000		)	—			(108,000		)	—			(108,000		)
Distributions declared ($0.15 per share)	—	—		—			(12,019,000		)	(12,019,000		)	—			(12,019,000		)
Net loss	—	—		—			(7,766,000		)	(7,766,000		)	(84,000		)	(7,850,000		)	(1)
BALANCE — March 31, 2020	80,574,630	$	805,000	$	726,258,000		$	(150,398,000	)	$	576,665,000		$	1,166,000		$	577,831,000


	Stockholders’ Equity																		Stockholders’ Equity
	Class T and Class I Common Stock																		Class T and Class I Common Stock
	Number of Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interest			Total Equity			Number of Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Equity
BALANCE — December 31, 2015	20,833	$	—	$	200,000		$	—		$	200,000		$	2,000		$	202,000
BALANCE — December 31, 2018																			69,254,971		$	692,000		$	621,759,000		$	(64,779,000	)	$	557,672,000
Issuance of common stock	5,374,861	54,000		53,449,000			—			53,503,000			—			53,503,000			8,888,046		89,000			88,665,000			—			88,754,000
Offering costs — common stock	—	—		(7,584,000		)	—			(7,584,000		)	—			(7,584,000		)	—		—			(7,569,000		)	—			(7,569,000		)
Issuance of common stock under the DRIP	23,379	—		222,000			—			222,000			—			222,000			608,279		6,000			5,863,000			—			5,869,000
Issuance of vested and nonvested restricted common stock	15,000	—		30,000			—			30,000			—			30,000
Amortization of nonvested common stock compensation	—	—		36,000			—			36,000			—			36,000			—		—			39,000			—			39,000
Reclassification of noncontrolling interest to mezzanine equity	—	—		—			—			—			(2,000		)	(2,000		)
Distributions declared	—	—		—			(598,000		)	(598,000		)	—			(598,000		)
Repurchase of common stock																			(132,683	)	(1,000		)	(1,269,000		)	—			(1,270,000		)
Fair value adjustment to redeemable noncontrolling interests																			—		—			(25,000		)	—			(25,000		)
Distributions declared ($0.15 per share)																			—		—			—			(11,117,000		)	(11,117,000		)
Net loss	—	—		—			(2,855,000		)	(2,855,000		)	—			(2,855,000		)	—		—			—			(12,336,000		)	(12,336,000		)	(1)
BALANCE — September 30, 2016	5,434,073	$	54,000	$	46,353,000		$	(3,453,000	)	$	42,954,000		$	—		$	42,954,000
BALANCE — March 31, 2019																			78,618,613		$	786,000		$	707,463,000		$	(88,232,000	)	$	620,017,000

___________


(1)	Amount excludes$83,000 and $25,000 of net loss attributable to redeemable noncontrolling interests for the three months ended March 31, 2020 and 2019, respectively. See Note 11, 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 IV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

(Unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,290,000		$	(2,855,000	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net loss							$	(7,933,000	)	$	(12,361,000	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	7,619,000			64,000			12,530,000			16,078,000
Other amortization (including deferred financing costs, above/below-market leases, leasehold interests, above-market leasehold interests and debt premium)	251,000			27,000
Other amortization							692,000			630,000
Deferred rent	(1,124,000		)	(33,000		)	(1,142,000		)	379,000
Stock based compensation	100,000			66,000			43,000			39,000
Share discounts	3,000			49,000
Income from unconsolidated entity							(255,000		)	(126,000		)
Distributions of earnings from unconsolidated entity							—			16,000
Bad debt expense	94,000			—			—			655,000
Change in fair value of derivative financial instruments							4,605,000			1,978,000
Changes in operating assets and liabilities:
Accounts and other receivables	(362,000		)	(80,000		)	854,000			(1,335,000		)
Other assets	(305,000		)	(105,000		)	(635,000		)	(408,000		)
Accounts payable and accrued liabilities	1,394,000			449,000			1,552,000			1,107,000
Accounts payable due to affiliates	169,000			33,000			35,000			41,000
Security deposits, prepaid rent and other liabilities	(280,000		)	(6,000		)
Net cash provided by (used in) operating activities	8,849,000			(2,391,000		)
Security deposits, prepaid rent, operating lease and other liabilities							(553,000		)	(470,000		)
Net cash provided by operating activities							9,793,000			6,223,000
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate investments	(215,738,000		)	(55,619,000		)
Acquisitions of real estate investments							(65,531,000		)	(18,653,000		)
Investment in unconsolidated entity							—			(600,000		)
Distributions in excess of earnings from unconsolidated entity							—			346,000
Capital expenditures	(845,000		)	(18,000		)	(2,766,000		)	(1,615,000		)
Restricted cash	(16,000		)	—
Real estate deposits	(4,821,000		)	(1,000,000		)	—			(400,000		)
Pre-acquisition expenses	(698,000		)	—			—			(94,000		)
Net cash used in investing activities	(222,118,000		)	(56,637,000		)	(68,297,000		)	(21,016,000		)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgage loan payable	(189,000		)	(19,000		)
Borrowings under the Line of Credit	192,600,000			12,000,000
Payments on the Line of Credit	(200,500,000		)	—
Payments on mortgage loans payable							(7,869,000		)	(129,000		)
Borrowings under the line of credit and term loans							80,900,000			50,000,000
Payments on the line of credit and term loans							(4,600,000		)	(75,000,000		)
Deferred financing costs							(34,000		)	(24,000		)
Proceeds from issuance of common stock	241,647,000			52,484,000			—			90,477,000
Deferred financing costs	(175,000		)	(1,027,000		)
Contribution from noncontrolling interest							1,250,000			—
Contributions from redeemable noncontrolling interest							1,118,000			151,000
Distributions to redeemable noncontrolling interests							(25,000		)	—
Repurchase of common stock	(178,000		)	—			—			(1,270,000		)
Payment of offering costs	(13,673,000		)	(1,889,000		)	(1,656,000		)	(14,038,000		)
Security deposits	(97,000		)	—			(1,000		)	10,000
Distributions paid	(4,006,000		)	(148,000		)	(5,561,000		)	(4,706,000		)
Net cash provided by financing activities	215,429,000			61,401,000			63,522,000			45,471,000
NET CHANGE IN CASH AND CASH EQUIVALENTS	2,160,000			2,373,000
CASH AND CASH EQUIVALENTS — Beginning of period	2,237,000			202,000
CASH AND CASH EQUIVALENTS — End of period	$	4,397,000		$	2,575,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	1,356,000		$	1,000
Income taxes	$	7,000		$	—
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH							5,018,000			30,678,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period							15,846,000			14,590,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period							$	20,864,000		$	45,268,000

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

(Unaudited)


	Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2020		2019
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:
Cash and cash equivalents					$	15,290,000	$	14,388,000
Restricted cash					556,000		202,000
Cash, cash equivalents and restricted cash					$	15,846,000	$	14,590,000
End of period:
Cash and cash equivalents					$	20,516,000	$	45,046,000
Restricted cash					348,000		222,000
Cash, cash equivalents and restricted cash					$	20,864,000	$	45,268,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest					$	4,586,000	$	2,814,000
Income taxes					$	5,000	$	—
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Investing Activities:
Accrued capital expenditures	$	931,000	$	—	$	1,902,000	$	4,190,000
Accrued pre-acquisition expenses	$	601,000	$	—	$	—	$	193,000
Tenant improvement overage					$	—	$	177,000
The following represents the increase in certain assets and liabilities in connection with our acquisitions of real estate investments:
Other assets	$	213,000	$	144,000	$	196,000	$	—
Mortgage loans payable	$	8,000,000	$	3,968,000
Accounts payable and accrued liabilities	$	803,000	$	75,000	$	201,000	$	187,000
Security deposits and prepaid rent	$	545,000	$	106,000	$	11,000	$	254,000
Financing Activities:
Issuance of common stock under the DRIP	$	5,492,000	$	222,000	$	6,437,000	$	5,869,000
Distributions declared but not paid	$	1,739,000	$	228,000	$	4,107,000	$	4,001,000
Accrued Contingent Advisor Payment	$	7,759,000	$	3,802,000	$	—	$	145,000
Accrued stockholder servicing fee	$	11,496,000	$	1,847,000	$	10,955,000	$	17,691,000
Reclassification of noncontrolling interest to mezzanine equity	$	—	$	2,000
Accrued deferred financing costs	$	22,000	$	72,000
Receivable from transfer agent	$	807,000	$	926,000

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

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT IV, Inc. and its subsidiaries, including Griffin-American Healthcare REIT IV Holdings, LP, except where ~~the context~~ otherwise ~~requires.~~noted.

1. Organization and Description of Business

Griffin-American Healthcare REIT IV, Inc., a Maryland corporation, was incorporated on January 23, 2015 and therefore we consider that our date of inception. We were initially capitalized on February 6, ~~2015~~.2015. We invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings, ~~hospitals,~~ skilled nursing facilities, senior housing and other healthcare-related facilities. We ~~may~~ also ~~originate~~operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and ~~acquire secured loans~~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 ~~real estate-related investments on an infrequent and opportunistic basis.~~Economic Recovery Act of 2008). We generally seek investments that produce current income. We qualified to be taxed as a real estate investment trust, or REIT, under ~~the Internal Revenue Code of 1986, as amended, or~~ the Code for federal income tax purposes beginning with our taxable year ended December 31, 2016, and we intend to continue to qualify to be taxed as a REIT.

On February 16, 2016, we commenced our initial public offering, or our initial offering, in which we were initially offering to the public up to $3,150,000,000 in shares of our Class T common stock, consisting of up to $3,000,000,000 in shares of our Class T common stock ~~at a price~~in the primary portion of ~~$10.00 per share in~~ our ~~primary~~initial offering and up to $150,000,000 in shares of our Class T common stock ~~for $9.50 per share~~ pursuant to our distribution reinvestment plan, as amended, or the DRIP. Effective June 17, 2016, we reallocated certain of the unsold shares of Class T common stock being offered and began offering shares of Class I common stock, such that we ~~are currently~~were offering up to approximately $2,800,000,000 in shares of Class T common stock and $200,000,000 in shares of Class I common stock in the primary portion of our ~~primary~~initial offering, and up to an aggregate of $150,000,000 in shares of our Class T and Class I common stock pursuant to the DRIP, aggregating up to $3,150,000,000. ~~The shares of~~On February 15, 2019, we terminated our Class T common stock in our primary offering are being offered at a price of $10.00 per share. The shares of our Class I common stock in our primary offering were being offered at a price of $9.30 per share prior to March 1, 2017, and are being offered at a price of $9.21 per share for all shares issued effective March 1, 2017. The shares of our Class T and Class I common stock issued pursuant to the DRIP were sold at a price of $9.50 per share prior to January 1, 2017, and are sold at a price of $9.40 per share for all shares issued pursuant to the DRIP effective January 1, 2017. After our board of directors determines an estimated net asset value, or NAV, per share of our common stock, share prices are expected to be adjusted to reflect the estimated NAV per share and, in the case of shares offered pursuant to our primary offering, up-front selling commissions and dealer manager fees other than those funded by Griffin-American Healthcare REIT IV Advisor, LLC, or Griffin-American Healthcare REIT IV Advisor, or our advisor. We reserve the right to reallocate the shares of common stock we are offering between the primaryinitial offering, and ~~the DRIP, and among classes~~as of ~~stock. As of September 30, 2017,~~such date, we ~~had received and accepted subscriptions in our offering for 35,522,410~~sold 75,639,681 aggregate shares of our Class T and Class I common stock, or approximately ~~$353,510,000, excluding~~$754,118,000, and a total of $31,021,000 in distributions were reinvested that resulted in 3,253,535 shares of our common stock being issued pursuant to the ~~DRIP.~~DRIP portion of our initial offering.

On January 18, 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 $100,000,000 of additional shares of our common stock to be issued pursuant to the DRIP, or the 2019 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the United States Securities and Exchange Commission, or the SEC, upon its filing. We commenced offering shares pursuant to the 2019 DRIP Offering on March 1, 2019, following the termination of our initial offering on February 15, 2019. See Note 12, Equity — Distribution Reinvestment Plan, for a further discussion. We collectively refer to the DRIP portion of our initial offering and the 2019 DRIP Offering as our DRIP Offerings. As of March 31, 2020, a total of $28,046,000 in distributions were reinvested that resulted in 2,934,920 shares of our common stock being issued pursuant to the 2019 DRIP Offering.

We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, or our operating partnership. We are externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, 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 16, 2016 and had a one-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February ~~13, 2017~~12, 2020 and expires on February 16, ~~2018.~~2021. Our advisor uses its best efforts, subject to the oversight and review of our board of directors, or our board, to, among other things, research, identify, review and make investments in and dispositions of properties and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by wholly owned subsidiaries of American Healthcare Investors, 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, or our dealer manager, Colony ~~NorthStar~~Capital or Mr. Flaherty; however, we are affiliated with Griffin-American Healthcare REIT IV Advisor, LLC, American Healthcare Investors and AHI Group Holdings.

We currently operate through two reportable business segments — medical office buildings and senior housing. As of September 30, 2017, we had completed 17 real estate acquisitions whereby we owned 29 properties, comprising 30 buildings, or approximately 1,418,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $356,640,000.

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

We currently operate through four reportable business segments: medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities. As of March 31, 2020, we had completed 46 property acquisitions whereby we owned 89 properties, comprising 94 buildings, or approximately 4,863,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $1,087,588,000. As of March 31, 2020, we also owned a 6.0% interest in a joint venture which owns a portfolio of integrated senior health campuses and ancillary businesses.

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 and the wholly owned subsidiaries of our operating partnership, 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 continue to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership, will own substantially all of the interests in properties acquired on our behalf. We ~~are~~are the sole general partner of ourour operating partnership, and as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we owned greater than a 99.99% general partnership interest therein. Our advisor is a limited partner, and as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, 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 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 tothat may 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~~2019 Annual Report on Form 10-K, as filed with the SEC on March ~~1, 2017.~~19, 2020.

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

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

property acquisitions, allowance for credit losses, impairment of long-lived assets and contingencies. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

Revenue Recognition — Resident Fees and Services Revenue

~~Table~~Disaggregation of ~~Contents~~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:

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

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



	Three Months Ended March 31,
	2020						2019
	Point in Time		Over Time		Total		Point in Time		Over Time		Total
Senior housing — RIDEA	$	422,000	$	15,659,000	$	16,081,000	$	182,000	$	10,513,000	$	10,695,000

~~Allowance for Uncollectible~~ The following table disaggregates our resident fees and services revenue by payor class:



	Three Months Ended March 31,
	2020		2019
Private and other payors	$	14,373,000	$	9,087,000
Medicaid	1,708,000		1,608,000
Total resident fees and services	$	16,081,000	$	10,695,000

Accounts Receivable, Net — Resident Fees and Services

The beginning and ending balances of accounts receivable, net— resident fees and services are as follows:



	Medicaid			Private and Other Payors		Total
Beginning balance — January 1, 2020	$	3,154,000		$	650,000	$	3,804,000
Ending balance — March 31, 2020	2,572,000			852,000		3,424,000
(Decrease)/increase	$	(582,000	)	$	202,000	$	(380,000	)

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

On January 1, 2020, we adopted Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 326, Financial Instruments Credit Losses, or ASC Topic 326. We adopted ASC Topic 326 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2020.

Resident receivables are carried net of an allowance for ~~uncollectible amounts.~~credit losses. An allowance is maintained for estimated losses resulting from the inability of ~~certain tenants~~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. Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the ~~tenant’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 recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations.

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we had ~~$94,000~~$1,033,000 and ~~$0,~~$902,000, respectively, in ~~allowance for uncollectible accounts,~~allowances, which was determined necessary to reduce receivables toby our ~~estimate of the amount recoverable.~~expected future credit losses. For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, we ~~did not write off any~~increased allowances by $213,000 and $1,187,000, respectively, and reduced allowances for collections or adjustments by $43,000 and $10,000, respectively. For the three months ended March 31, 2020 and 2019, $39,000 and $13,000, respectively, of our receivables ~~directly to bad debt expense. For the three and nine months ended September 30, 2017 and 2016, we did not write~~were written off ~~any receivables~~ against the ~~allowance for uncollectible accounts.~~

As of September 30, 2017 and December 31, 2016, we did not have any allowance for uncollectible accounts for deferred rent receivables. For the three and nine months ended September 30, 2017, $0 and $2,000, respectively, of our deferred rent 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 of our deferred rent receivables directly 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 eight 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 five property acquisitions, which we accounted for as business combinations. See Note 14, Business Combinations, for a further discussion.

~~Real Estate Deposits~~

Real estate deposits include refundable and non-refundable funds held by escrow agents and others to be applied towards the acquisition of real estate investments, and such future investments are subject to substantial conditions to closing. As of September 30, 2017, we had $5,000,000 of non-refundable real estate deposits held in escrow to be applied towards the acquisition of a senior housing portfolio from unaffiliated third parties. The acquisition of such senior housing portfolio was completed on November 1, 2017 and the real estate deposits held in escrow were applied towards the purchase price. See Note 18, Subsequent Events — Property Acquisition, for a further discussion.

~~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. Currently, our primary source of revenue is generated through leasing arrangements, which are excluded from ASC Topic 606; however, we expect that the adoption of ASC Topic 606 on January 1, 2018 will impact the recognition of common area maintenance from our current leasing arrangements and certain elements of resident fees (including revenues that are ancillary to the contractual rights of residents) for any healthcare-related facilities we may acquire and operate in the future 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 Code authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). We will not apply the principles of ASC Topic 606 to our common area maintenance revenues and certain elements of resident fees to the extent they qualified as lease revenues untilallowances.

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

~~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.Recently Issued Accounting Pronouncement

In ~~January 2016,~~March 2020, the FASB issued ~~ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~,Accounting Standards Update, 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 certain2020-04, Facilitation of the ~~amendments in~~ Effects of Reference Rate Reform on Financial Reporting, orASU ~~2016-01,~~2020-04, which provides optional expedients and exceptions for ~~financial statements~~applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, 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,reference LIBOR 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 continueanother reference rate expected 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 ofdiscontinued. ASU ~~2016-02. ASU 2016-02~~2020-04 is effective for fiscal years and interim periods beginning after March 12, 2020 through 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.31, 2022. We are ~~still~~currently evaluating ~~the transition method including the practical expedient offered in ASU 2016-02. We are also evaluating the complete impact of the adoption of ASU 2016-02 on January 1, 2019~~this guidance to ~~our consolidated financial statements and disclosures.~~

~~In June 2016,~~determine 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.~~disclosures.

3. Real Estate Investments, Net

~~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~~Our real estate investments, net consisted of the ~~current~~following as of March 31, 2020 and ~~deferred income tax effects~~December 31, 2019:



	March 31, 2020			December 31, 2019
Building and improvements	$	887,498,000		$	836,091,000
Land	110,998,000			103,371,000
Furniture, fixtures and equipment	7,857,000			6,656,000
	1,006,353,000			946,118,000
Less: accumulated depreciation	(58,805,000		)	(51,058,000		)
Total	$	947,548,000		$	895,060,000

Depreciation expense for the three months ended March 31, 2020 and 2019 was $7,839,000 and $6,960,000, respectively. In addition to the property acquisitions discussed below, for the three months ended March 31, 2020, we incurred capital expenditures of ~~intra-entity transfers of assets other than inventory. ASU 2016-16 is effective~~$1,151,000 for ~~fiscal years~~our medical office buildings, $532,000 for our skilled nursing facilities and ~~interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period.~~$405,000 for our senior housing — RIDEA facilities. We ~~do not expect the adoption of ASU 2016-16 on January 1, 2018 to have a material impact on our consolidated financial statements.~~

~~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 an impact~~incur any capital expenditures for our senior housing facilities for the three months ended March 31, 2020.

Acquisitions in 2020

For the three months ended March 31, 2020, using cash on hand and debt financing, we completed the acquisition of seven buildings from unaffiliated third parties. The following is a summary of our ~~consolidated financial statements.~~property acquisitions for the three months ended March 31, 2020:



Acquisition	Location	Type	Date Acquired	Contract Purchase Price		Line of Credit(1)		Total Acquisition Fee(2)
Catalina West Haven ALF(3)	West Haven, UT	Senior Housing — RIDEA	01/01/20	$	12,799,000	$	12,700,000	$	278,000
Louisiana Senior Housing Portfolio(4)	Gonzales, Monroe, New Iberia, Shreveport and Slidell, LA	Senior Housing — RIDEA	01/03/20	34,000,000		32,700,000		737,000
Catalina Madera ALF(3)	Madera, CA	Senior Housing — RIDEA	01/31/20	17,900,000		17,300,000		389,000
Total				$	64,699,000	$	62,700,000	$	1,404,000

___________


(1)	Represents a borrowing under the 2018 Credit Facility, as defined in Note 7, Line of Credit and Term Loans, at the time of acquisition.


(2)	Our advisor was paid, as compensation for services rendered in connection with the investigation, selection and acquisition of our properties, a base acquisition fee, as defined in Note 13, Related Party Transactions — Acquisition and Development Stage — Acquisition Fee, of 2.25% of the contract purchase price paid by us.


(3)	On January 1, 2020 and January 31, 2020, we completed the acquisitions of Catalina West Haven ALF and Catalina Madera ALF, respectively, pursuant to a joint venture with an affiliate of Avalon Health Care, Inc., or Avalon, an unaffiliated third party. Our ownership of the joint venture is approximately 90.0%.

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


(4)	On January 3, 2020, we completed the acquisition of Louisiana Senior Housing Portfolio pursuant to a joint venture with an affiliate of Senior Solutions Management Group, or SSMG, an unaffiliated third party. Our ownership of the joint venture is approximately 90.0%.

~~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~~We accounted for our property acquisitions completed for the three months ended March 31, 2020 as ~~modifications. Modification accounting is only applied if~~asset acquisitions. We incurred and capitalized base acquisition fees and direct acquisition related expenses of $2,510,000. The following table summarizes the ~~value, the vesting conditions or the classification~~purchase price of the ~~award (or equity or liability) changes as a result~~assets acquired at the time of ~~the change~~acquisition from our property acquisitions 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~~2020 based on ~~January 1, 2018 to have a material impact on our consolidated financial statements.~~their relative fair values:



	2020 Acquisitions
Building and improvements	$	49,758,000
Land	7,627,000
In-place leases	8,970,000
Furniture, fixtures and equipment	854,000
Total assets acquired	$	67,209,000

~~3. Real Estate Investments,~~4. Identified Intangible Assets, Net

~~Our real estate investments,~~Identified intangible assets, net consisted of the following as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016:~~2019:

September 30,
2017

December 31,
2016
Building and improvements $ 285,481,000
$ 106,442,000
Land 39,386,000
12,322,000
324,867,000
118,764,000
Less: accumulated depreciation (5,925,000 ) (822,000 )
$ 318,942,000
$ 117,942,000



	March 31, 2020		December 31, 2019
Amortized intangible assets:
In-place leases, net of accumulated amortization of $21,851,000 and $18,273,000 as of March 31, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 8.5 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively)	$	74,975,000	$	70,650,000
Above-market leases, net of accumulated amortization of $719,000 and $609,000 as of March 31, 2020 and December 31, 2019, respectively (with a weighted average remaining life of 9.4 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively)	2,915,000		3,025,000
Unamortized intangible assets:
Certificates of need	348,000		348,000
Total	$	78,238,000	$	74,023,000

~~Depreciation~~Amortization expense on identified intangible assets for ~~the three and nine months ended September 30, 2017 was $2,305,000 and $5,110,000, respectively. Depreciation expense for the three and nine months ended September 30, 2016 was $40,000.~~

~~For~~ the three months ended ~~September 30, 2017, we incurred capital expenditures~~March 31, 2020 and 2019 was $4,756,000 and $9,142,000, respectively, which included $110,000 and $47,000, respectively, of ~~$324,000~~amortization recorded against real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations.

The aggregate weighted average remaining life of the identified intangible assets was 8.5 years and 9.5 years as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020, estimated amortization expense on ~~our medical office buildings and $700,000 on our senior housing facilities. In addition to~~ the ~~acquisitions discussed below,~~identified intangible assets for the nine months ~~ended September 30, 2017, we incurred capital expenditures of $1,076,000 on our medical office buildings~~ending December 31, 2020 and ~~$700,000 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%each of the ~~contract purchase price of our property acquisitions, 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~~next four years ending December 31 and nine months ended September 30, 2017 and 2016, such fees and expenses paid did not exceed 6.0% of the contract purchase price of our property acquisitions, except with respect to our acquisitions of Auburn MOB, Pottsville MOB and Lafayette Assisted Living Portfolio. Our directors, including a majority of our independent directors, not otherwise interested in the transactions, approved the reimbursement of fees and expenses to our advisor or its affiliates for the acquisitions of Auburn MOB, Pottsville MOB and Lafayette Assisted Living Portfolio in excess of the 6.0% limit and determined that such fees and expenses were commercially fair and reasonable to us.thereafter was as follows:



Year	Amount
2020	$	13,992,000
2021	12,006,000
2022	8,674,000
2023	7,410,000
2024	6,162,000
Thereafter	29,646,000
Total	$	77,890,000

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

~~Acquisitions in 2017~~5. Other Assets, Net

~~For~~Other assets, net consisted of the ~~nine months ended September 30, 2017, using net proceeds from our offering~~following as of March 31, 2020 and debt financing, we completed eight property acquisitions comprising 18 buildings from unaffiliated third parties. The aggregate contract purchase price of these properties was $217,820,000 and we incurred $9,802,000 in total acquisition fees to our advisor in connection with these property acquisitions. The following is a summary of our property acquisitions for the nine months ended September 30, 2017:December 31, 2019:

Acquisition(1) Location Type Date Acquired Contract Purchase Price Mortgage Loan Payable(2) Line of Credit(3) Total Acquisition Fee(4)
Battle Creek MOB Battle Creek, MI Medical Office 03/10/17 $ 7,300,000
$ —
$ —
$ 328,000
Reno MOB Reno, NV Medical Office 03/13/17 66,250,000
—
60,000,000
2,982,000
Athens MOB Portfolio Athens, GA Medical Office 05/18/17 16,800,000
—
7,800,000
756,000
SW Illinois Senior Housing Portfolio Columbia, Millstadt, Red Bud and Waterloo, IL Senior Housing 05/22/17 31,800,000
—
31,700,000
1,431,000
Lawrenceville MOB Lawrenceville, GA Medical Office 06/12/17 11,275,000
8,000,000
3,000,000
507,000
Northern California Senior Housing Portfolio Belmont, Fairfield, Menlo Park and Sacramento, CA Senior Housing 06/28/17 45,800,000
—
21,600,000
2,061,000
Roseburg MOB Roseburg, OR Medical Office 06/29/17 23,200,000
—
23,000,000
1,044,000
Fairfield County MOB Portfolio Stratford and Trumbull, CT Medical Office 09/29/17 15,395,000
—
15,500,000
693,000
Total $ 217,820,000
$ 8,000,000
$ 162,600,000
$ 9,802,000



	March 31, 2020		December 31, 2019
Investment in unconsolidated entity	$	47,271,000	$	47,016,000
Deferred rent receivables	9,160,000		8,018,000
Deferred financing costs, net of accumulated amortization of $1,986,000 and $1,517,000 as of March 31, 2020 and December 31, 2019, respectively(1)	3,134,000		3,583,000
Prepaid expenses and deposits	2,684,000		2,380,000
Lease commissions, net of accumulated amortization of $219,000 and $174,000 as of March 31, 2020 and December 31, 2019, respectively	1,854,000		1,623,000
Total	$	64,103,000	$	62,620,000

___________


(1)	~~We own 100%~~Deferred financing costs only include costs related to our line of ~~our properties acquired in 2017.~~


~~(2)~~	~~Represents the principal balance of the mortgage loan payable assumed by us at the time of acquisition.~~


~~(3)~~	~~Represents a borrowing under the Line of Credit, as defined in~~credit and term loans. See Note 7, Line of Credit ~~at the time of acquisition.~~

~~(4)~~

~~Our advisor was paid, as compensation for services rendered in connection with the investigation, selection~~ and acquisition of our properties, a base acquisition fee of 2.25% of the aggregate contract purchase price upon the closing of the acquisition. In addition, the total acquisition fee includes a Contingent Advisor Payment, as defined in Note 12, Related Party Transactions, in the amount of 2.25% of the aggregate contract purchase price of the property acquired, which shall be paid by us to our advisor, subject to the satisfaction of certain conditions. See Note 12, Related Party Transactions — Acquisition and Development Stage — Acquisition Fee,Term Loans, for a further discussion.

Amortization expense on deferred financing costs of our line of credit and term loans for the three months ended March 31, 2020 and 2019 was $469,000 and $560,000, respectively, which is recorded to interest expense in our accompanying condensed consolidated statements of operations. Amortization expense on lease commissions for the three months ended March 31, 2020 and 2019 was $45,000 and $23,000, respectively.

As of March 31, 2020 and December 31, 2019, the unamortized basis difference of our joint venture investment in an unconsolidated entity of $17,133,000 and $17,248,000, respectively, is primarily attributable to the difference between the amount for which we purchased our interest in the entity, including transaction costs, and the historical carrying value of the net assets of the entity. This difference is being amortized over the remaining useful life of the related assets and included in income or loss from unconsolidated entity in our accompanying condensed consolidated statements of operations.

6. Mortgage Loans Payable, Net

As of March 31, 2020 and December 31, 2019, mortgage loans payable were $19,229,000 ($18,233,000, net of discount/premium and deferred financing costs) and $27,099,000 ($26,070,000, net of discount/premium and deferred financing costs), respectively. As of March 31, 2020, we had three fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2025 to February 1, 2051 and a weighted average effective interest rate of 3.94%. As of December 31, 2019, we had four fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2020 to February 1, 2051 and a weighted average effective interest rate of 4.18%.

In January 2020, we paid off a mortgage loan payable with a principal balance of $7,738,000, which had an original maturity date of April 1, 2020. We did not incur any prepayment penalties or fees in connection with such payoff. The following table reflects the changes in the carrying amount of mortgage loans payable, net for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31,
	2020			2019
Beginning balance	$	26,070,000		$	16,892,000
Additions:
Amortization of deferred financing costs	20,000			20,000
Amortization of discount/premium on mortgage loans payable	12,000			6,000
Deductions:
Scheduled principal payments on mortgage loans payable	(7,869,000		)	(129,000		)
Ending balance	$	18,233,000		$	16,789,000

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

We accounted for the eight property acquisitions we completed for the nine months ended September 30, 2017 as asset acquisitions. We incurred base acquisition fees and direct acquisition related expenses of $6,999,000, which were capitalized in accordance with our early adoption of ASU 2017-01. In addition, we incurred Contingent Advisor Payments of $4,901,000 to our advisor for these property acquisitions. The following table summarizes the purchase price of the assets acquired and liabilities assumed at the time of acquisition from our eight property acquisitions in 2017 based on their relative fair values:

2017
Acquisitions
Building and improvements $ 177,270,000
Land 27,064,000
In-place leases 20,518,000
Above-market leases 127,000
Total assets acquired 224,979,000
Mortgage loan payable (8,000,000 )
Below-market leases (571,000 )
Above-market leasehold interests (395,000 )
Total liabilities assumed (8,966,000 )
Net assets acquired $ 216,013,000

~~4. Identified Intangible Assets, Net~~

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

September 30,
2017

December 31,
2016
In-place leases, net of accumulated amortization of $2,936,000 and $430,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 9.3 years and 8.1 years as of September 30, 2017 and December 31, 2016, respectively) $ 30,517,000
$ 12,504,000
Leasehold interests, net of accumulated amortization of $95,000 and $22,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 70.8 years and 71.5 years as of September 30, 2017 and December 31, 2016, respectively) 6,317,000
6,390,000
Above-market leases, net of accumulated amortization of $135,000 and $31,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 5.8 years and 6.3 years as of September 30, 2017 and December 31, 2016, respectively) 801,000
779,000
$ 37,635,000
$ 19,673,000

Amortization expense on identified intangible assets for the three and nine months ended September 30, 2017 was $1,196,000 and $2,683,000, respectively, which included $38,000 and $104,000, respectively, of amortization recorded against real estate revenue for above-market leases and $24,000 and $73,000, respectively, of amortization recorded to rental expenses for leasehold interests in our accompanying condensed consolidated statements of operations. Amortization expense on identified intangible assets for the three and nine months ended September 30, 2016 was $24,000, which related to in-place leases.

~~Table of Contents~~

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

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

~~The aggregate weighted average remaining life of the identified intangible assets was 19.6 years and 28.6 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~~March 31, ~~2017 and for each of the next four years ending December 31 and thereafter was as follows:~~

Year Amount
2017 $ 1,310,000
2018 4,863,000
2019 4,400,000
2020 3,862,000
2021 3,466,000
Thereafter 19,734,000
$ 37,635,000

~~5. Other Assets, Net~~

~~Other assets, net consisted of the following as of September 30, 2017 and December 31, 2016:~~

September 30,
2017

December 31,
2016
Prepaid expenses and deposits $ 1,968,000
$ 257,000
Deferred rent receivables 1,330,000
207,000
Deferred financing costs, net of accumulated amortization of $379,000 and $112,000 as of September 30, 2017 and December 31, 2016, respectively(1) 710,000
943,000
Lease commissions, net of accumulated amortization of $3,000 and $0 as of September 30, 2017 and December 31, 2016, respectively 134,000
—
$ 4,142,000
$ 1,407,000

~~___________~~


~~(1)~~	~~In accordance with ASU 2015-03,~~ ~~Simplifying the Presentation of Debt Issuance Costs,~~ ~~or ASU 2015-03, and ASU 2015-15,~~ ~~Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,~~ ~~or ASU 2015-15, deferred financing costs only include costs related to the Line of Credit, as defined in Note 7, Line of Credit.~~

Amortization expense on deferred financing costs of the Line of Credit for the three and nine months ended September 30, 2017 was $90,000 and $267,000, respectively. Amortization expense on deferred financing costs of the Line of Credit for the three and nine months ended September 30, 2016 was $27,000. Amortization expense on deferred financing costs of the Line of Credit is recorded to interest expense in our accompanying condensed consolidated statements of operations. Amortization expense on lease commissions for the three and nine months ended September 30, 2017 was $3,000. For the three and nine months ended September 30, 2016, we did not incur any amortization expense on lease commissions.

~~6. Mortgage Loans Payable, Net~~

Mortgage loans payable were $11,718,000 ($11,639,000, including premium and deferred financing costs, net) and $3,908,000 ($3,965,000, including premium and deferred financing costs, net) as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, we had two fixed-rate mortgage loans with interest rates ranging from 4.77% to 5.25% per annum, maturity dates ranging from April 1, 2020, to August 1, 2029 and a weighted average effective interest rate of 4.92%. As of December 31, 2016, we had one fixed-rate mortgage loan with an interest rate of 5.25% per annum and a maturity date of August 1, 2029.

~~Table of Contents~~

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

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

~~The changes in the carrying amount of mortgage loans payable, net consisted of the following for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended September 30,
2017 2016
Beginning balance $ 3,965,000
$ —
Additions:
Assumptions of mortgage loans payable 8,000,000
3,968,000
Amortization of deferred financing costs(1) 23,000
—
Deductions:
Deferred financing costs(1) (151,000 ) (102,000 )
Scheduled principal payments on mortgage loan payable (189,000 ) (19,000 )
Amortization of premium on mortgage loan payable (9,000 ) —
Ending balance $ 11,639,000
$ 3,847,000

~~___________~~


~~(1)~~	~~In accordance with ASU 2015-03 and ASU 2015-15, deferred financing costs only include costs related to our mortgage loans payable.~~

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


Year	Amount		Amount
2017	$	84,000
2018	386,000
2019	407,000
2020	8,035,000		$	448,000
2021	314,000		622,000
2022			651,000
2023			680,000
2024			711,000
Thereafter	2,492,000		16,117,000
	$	11,718,000
Total			$	19,229,000

7. Line of Credit and Term Loans

On ~~August 25, 2016,~~November 20, 2018, we, through our operating partnership as borrower, and certain of our subsidiaries, or the subsidiary guarantors, and us, collectively as guarantors, entered into a credit agreement, or the 2018 Credit Agreement, with Bank of America, N.A., or Bank of America, as administrative agent, swing line lender and letters of credit issuer; ~~and~~ KeyBank, National Association, or KeyBank, as syndication agent and letters of credit ~~issuer,~~issuer; Citizens Bank, National Association, as syndication agent, joint lead arranger and joint bookrunner; Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger and joint bookrunner; KeyBanc Capital Markets, as joint lead arranger and joint bookrunner; and the lenders named therein, to obtain a ~~revolving line of~~ credit facility with an initial aggregate maximum principal amount of ~~$100,000,000,~~$400,000,000, or the ~~Line~~2018 Credit Facility. The 2018 Credit Facility initially consisted of ~~Credit, subject to certain terms and conditions.~~

~~On August 25, 2016, we also entered into separate~~a senior unsecured revolving ~~notes, or~~credit facility in the ~~Revolving Notes, with each of Bank of America and KeyBank, whereby we promised to pay the principal~~initial aggregate amount of ~~each revolving~~$150,000,000 and senior unsecured term loan ~~and accrued interest to~~facilities in the ~~respective lender or its registered assigns, in accordance with the terms and conditions~~initial aggregate amount of the Credit Agreement. The proceeds of loans made under the Line of Credit may be used for general working capital (including acquisitions), capital expenditures and other general corporate purposes not inconsistent with obligations under the Credit Agreement.$250,000,000. We may obtain up to $20,000,000 in the form of standby letters of credit and up to ~~$25,000,000~~$50,000,000 in the form of swing line loans. On November 1, 2019, we entered into an amendment to the 2018 Credit Agreement, or the 2019 Amendment, with Bank of America, KeyBank and a syndicate of other banks, as lenders, which increased the term loan commitment by $45,000,000 and increased the revolving credit facility by $85,000,000. As a result of the 2019 Amendment, the aggregate borrowing capacity under the 2018 Credit Facility was $530,000,000. Except as modified by the 2019 Amendment, the material terms of the 2018 Credit Agreement, as amended, remain in full force and effect.

The ~~Line~~maximum principal amount of the 2018 Credit Facility may be increased by up to $120,000,000, for a total principal amount of $650,000,000, subject to: (i) the terms of the 2018 Credit Agreement, as amended; and (ii) at least five business days prior written notice to Bank of America. The 2018 Credit Facility matures on ~~August 25, 2019,~~November 19, 2021 and may be extended for one 12-month period during the term of the 2018 Credit Agreement, as amended, subject to satisfaction of certain conditions, including payment of an extension fee.

The maximum principal amount of the Credit Agreement may be increased by up to $100,000,000, for a total principal amount of $200,000,000, subject to: (i) the terms of the Credit Agreement; and (ii) at least five business days’ prior written notice to Bank of America. On October 31, 2017, we increased the aggregate maximum principal amount of the Line of Credit to $200,000,000. See Note 18, Subsequent Events — Amendment to the Credit Agreement with Bank of America and KeyBank, for a further discussion.

~~Table of Contents~~

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

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

At our option, the ~~Line of~~2018 Credit Facility bears interest at per annum rates equal to (a)(i) the Eurodollar Rate, ~~(as~~as defined in the 2018 Credit ~~Agreement)~~Agreement, as amended, plus (ii) a margin ranging from ~~1.75%~~1.70% to ~~2.25%~~2.20% based on our Consolidated Leverage Ratio, ~~(as~~as defined in the 2018 Credit ~~Agreement),~~Agreement, as amended, or (b)(i) the greater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate, ~~(as~~as defined in the 2018 Credit ~~Agreement)~~Agreement, as amended, plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from ~~0.55%~~0.70% to ~~1.05%~~1.20% based on our Consolidated Leverage Ratio. Accrued interest on the ~~Line of~~2018 Credit Facility is payable monthly. The loans may be repaid in whole or in part without prepayment premium or penalty, subject to certain conditions.

We are required to pay a fee on the unused portion of the lenders’ commitments under the 2018 Credit Agreement, as amended, at a per annum rate equal to 0.20% if the average daily used amount is greater than ~~50.0%~~50.00% of the commitments and 0.25% if the average daily used amount is less than or equal to ~~50.0%~~50.00% of the commitments, which fee shall be measured and payable on a quarterly basis.

The Credit Agreement 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. The Credit Agreement also imposes certain financial covenants based on the following criteria, which are specifically defined in the Credit Agreement: (a) Consolidated Leverage Ratio; (b) Consolidated Secured Leverage Ratio; (c) Consolidated Tangible Net Worth; (d) Consolidated Fixed Charge Coverage Ratio; (e) Unencumbered Indebtedness Yield; (f) Consolidated Unencumbered Leverage Ratio; (g) Consolidated Unencumbered Interest Coverage Ratio; (h) Secured Recourse Indebtedness; and (i) Consolidated Unsecured Indebtedness.

The Credit Agreement permits us to add additional subsidiaries as guarantors. In the event of default, Bank of America has the right to terminate its obligations under the Credit Agreement, including the funding of future loans, and to accelerate the payment on any unpaid principal amount of all outstanding loans and interest thereon. Additionally, in connection with the Credit Agreement, we also entered into a Pledge Agreement on August 25, 2016, pursuant to which we pledged the capital stock of our subsidiaries which own the real property to be included in the Unencumbered Property Pool, as such term is defined in the Credit Agreement. The pledged collateral will be released upon achieving a consolidated total asset value of at least $750,000,000.

As of ~~September 30, 2017~~both March 31, 2020 and December 31, ~~2016,~~2019, our aggregate borrowing capacity under the ~~Line of~~2018 Credit Facility was ~~$100,000,000.~~$530,000,000. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, borrowings outstanding totaled ~~$26,000,000~~$473,100,000 and ~~$33,900,000,~~$396,800,000, respectively, and ~~$74,000,000 and $66,100,000, respectively, remained available under the Line of Credit. As of September 30, 2017 and December 31, 2016,~~ the weighted average interest rate on such borrowings outstanding was ~~3.72%~~2.72% and ~~4.30%~~3.50%, respectively, per ~~annum, respectively.~~

~~8. Identified Intangible Liabilities, Net~~

~~Identified intangible liabilities, net consisted~~annum. In April 2020, we borrowed all of the ~~following~~remaining availability on the 2018 Credit Facility as a precautionary measure to strengthen our liquidity and preserve financial flexibility in response to the coronavirus, or COVID-19, pandemic. See Note 10, Commitments and Contingencies, for a further discussion of ~~September 30, 2017~~the impact of the COVID-19 pandemic on our financial performance and ~~December 31, 2016:~~

September 30,
2017

December 31,
2016
Below-market leases, net of accumulated amortization of $263,000 and $60,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 6.6 years and 5.4 years as of September 30, 2017 and December 31, 2016, respectively) $ 1,431,000
$ 1,063,000
Above-market leasehold interests, net of accumulated amortization of $4,000 and $0 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 52.4 years and 0 years as of September 30, 2017 and December 31, 2016, respectively) 391,000
—
$ 1,822,000
$ 1,063,000

Amortization expense on identified intangible liabilities for the three and nine months ended September 30, 2017 was $70,000 and $207,000, respectively, which included $68,000 and $203,000, respectively, of amortization recorded to real estate revenue for below-market leases and $2,000 and $4,000, respectively, of amortization recorded against rental expenses for above-market leasehold interests in our accompanying condensed consolidated statements ofbusiness operations. ~~We did not incur any amortization expense on identified intangible liabilities for the three and nine months ended September 30, 2016.~~

1815

Table of Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

8. Derivative Financial Instruments

We record derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability measured at fair value. The following table lists the derivative financial instruments held by us as of March 31, 2020 and December 31, 2019, which are included in 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, 2020			December 31, 2019
Swap	$	139,500,000	one month LIBOR	2.49%	11/19/21	$	(5,012,000	)	$	(2,441,000	)
Swap	58,800,000		one month LIBOR	2.49%	11/19/21	(2,112,000		)	(1,029,000		)
Swap	36,700,000		one month LIBOR	2.49%	11/19/21	(1,318,000		)	(642,000		)
Swap	15,000,000		one month LIBOR	2.53%	11/19/21	(548,000		)	(273,000		)
	$	250,000,000				$	(8,990,000	)	$	(4,385,000	)

As of both March 31, 2020 and December 31, 2019, none of our derivative financial instruments were designated as hedges. For the three months ended March 31, 2020 and 2019, we recorded $4,605,000 and $1,978,000, respectively, as an increase to interest expense in our accompanying condensed consolidated statements of operations related to the change in the fair value of our derivative financial instruments.

See Note 14, Fair Value Measurements, for a further discussion of the fair value of our derivative financial instruments.

9. Identified Intangible Liabilities, Net

As of March 31, 2020 and December 31, 2019, identified intangible liabilities, net consisted of below-market leases of $1,509,000 and $1,601,000, respectively, net of accumulated amortization of $473,000 and $702,000, respectively. Amortization expense on below-market leases for the three months ended March 31, 2020 and 2019 was $92,000 and $102,000, respectively, which was recorded to real estate revenue in our accompanying condensed consolidated statements of operations.

The ~~aggregate~~ weighted average remaining life of ~~the identified intangible liabilities~~below-market leases was ~~16.4~~11.5 years and ~~5.4~~11.3 years as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. As of ~~September 30, 2017,~~March 31, 2020, estimated amortization expense on ~~identified intangible liabilities~~below-market leases for the ~~three~~nine months ending December 31, ~~2017~~2020 and for each of the next four years ending December 31 and thereafter was as follows:


Year	Amount		Amount
2017	$	85,000
2018	338,000
2019	310,000
2020	147,000		$	207,000
2021	125,000		243,000
2022			217,000
2023			207,000
2024			161,000
Thereafter	817,000		474,000
	$	1,822,000
Total			$	1,509,000

9.10. 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

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environmental liability with respect to our properties that would have a material effect on our consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.

Other

Our other commitments and contingencies include the usual obligations of real estate owners and operators in the normal course of business, which include calls/puts to sell/acquire properties. In our view, these matters are not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic is dramatically impacting the United States and has resulted in an aggressive worldwide effort to contain the spread of the virus. These efforts have significantly and adversely disrupted economic markets and impacted commercial activity worldwide, including markets in which we own and/or operate properties, and the prolonged economic impact is uncertain. Considerable uncertainty still surrounds the COVID-19 pandemic and its effects on the population, as well as the effectiveness of any responses taken on a national and local level by government authorities and businesses. In addition, the rapidly evolving nature of the COVID-19 pandemic makes it difficult to ascertain the long-term impact it will have on real estate markets and our portfolio of investments. We are continuously monitoring the impact of the COVID-19 pandemic on our business, residents, tenants, operating partners, managers, portfolio of investments and on the United States and global economies. While the results of our current analyses did not result in any material adjustments to our condensed consolidated financial statements as of and during the three months ended March 31, 2020, the prolonged duration and impact of the COVID-19 pandemic could materially disrupt our business operations and impact our financial performance.

~~10.~~11. Redeemable Noncontrolling ~~Interest~~Interests

As of ~~September 30, 2017~~both March 31, 2020 and December 31, ~~2016,~~2019, our advisor owned all of the 208 limited partnership units outstanding in our operating partnership. As of both March 31, 2020 and December 31, 2019, we owned greater than a 99.99% general partnership interest in our operating partnership, and our advisor owned less than a 0.01% limited partnership interest in our operating partnership. Our advisor is entitled to special redemption rights of its limited partnership units. The noncontrolling interest of our advisor in our operating partnership, which 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 ~~11, Equity — Noncontrolling Interest of Limited Partner in Operating Partnership, for a further discussion. In addition, see Note 12,~~13, Related Party Transactions — Liquidity Stage — Subordinated Participation Interest — Subordinated Distribution Upon Listing, and Note ~~12,~~13, Related Party Transactions — Subordinated Distribution Upon Termination, for a further discussion of the redemption features of the limited partnership units.

In connection with our acquisitions of Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF and Pinnacle Warrenton ALF, we own approximately 98.0% of the joint ventures with an affiliate of Meridian Senior Living, LLC, or Meridian. In connection with our acquisitions of Catalina West Haven ALF and Catalina Madera ALF, we own approximately 90.0% of the joint venture with Avalon. The noncontrolling interests held by Meridian and Avalon have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets.

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 three months ended March 31, 2020 and 2019:



	March 31,
	2020			2019
Beginning balance	$	1,462,000		$	1,371,000
Additions	1,118,000			151,000
Distributions	(25,000		)	—
Fair value adjustment to redemption value	108,000			25,000
Net loss attributable to redeemable noncontrolling interests	(83,000		)	(25,000		)
Ending balance	$	2,580,000		$	1,522,000

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We record the carrying amount of redeemable noncontrolling interest at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and distributions; or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interest consisted of the following for the nine months ended September 30, 2017 and 2016:

Nine Months Ended September 30,
2017 2016
Beginning balance $ 2,000
$ —
Reclassification from equity —
2,000
Net income (loss) attributable to redeemable noncontrolling interest —
—
Ending balance $ 2,000
$ 2,000

~~11.~~12. 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, 2020 and December 31, ~~2016,~~2019, no shares of our 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. We commenced our public offering of shares of our common stock on February 16, 2016, and as of such date we were offering to the public up to $3,150,000,000 in shares of our Class T common stock, consisting of up to $3,000,000,000 in shares of our Class T common stock at a price of $10.00 per share, in our primary offering and up to $150,000,000 in shares of our Class T common stock for $9.50 per share pursuant to the DRIP. Effective June 17, 2016, we reallocated certain of the unsold shares of our Class T common stock being offered and began offering shares of our Class I common stock, such that we are currently offering up to approximately $2,800,000,000 in shares of Class T common stock and $200,000,000 in shares of Class I common stock in our primary offering, and up to an aggregate of $150,000,000 in shares of our Class T and Class I common stock pursuant to the DRIP. Subsequent to the reallocation, of the 1,000,000,000 shares of common stock authorized,whereby 900,000,000 shares are classified as Class T common stock and 100,000,000 shares are classified as Class I common stock. ~~We reserve the right to reallocate the shares of common stock we are offering between the primary offering and the DRIP, and among classes of stock.~~

The shares of our Class T common stock in the primary offering are being offered at a price of $10.00 per share. The shares of our Class I common stock in the primary offering were being offered at a price of $9.30 per share prior to March 1, 2017, and are being offered at a price of $9.21 per share for all shares issued effective March 1, 2017. The shares of our Class T and Class I common stock issued pursuant to the DRIP were sold at a price of $9.50 per share prior to January 1, 2017, and are sold at a price of $9.40 per share for all shares issued pursuant to the DRIP effective January 1, 2017. After our board of directors determines an estimated NAV per share of our common stock, share prices are expected to be adjusted to reflect the estimated NAV per share and, in the case of shares offered pursuant to our primary offering, up-front selling commissions and dealer manager fees other than those funded by our advisor.

Each share of our common stock, regardless of class, will be entitled to one vote per share on matters presented to the common stockholders for approval; provided, however, that stockholders of one share class shall have exclusive voting rights on any amendment to our charter that would alter only the contract rights of that share class, and no stockholders of another share class shall be entitled to vote thereon.

On February 6, 2015, our advisor acquired shares of our Class T common stock for total cash consideration of ~~$200,000~~$200,000 and was admitted as our initial stockholder. We used the proceeds from the sale of shares of our Class T common stock to our advisor to make an initial capital contribution to our operating partnership. As of ~~September 30, 2017~~both March 31, 2020 and December 31 ~~2016,~~2019, our advisor owned 20,833 shares of our Class T common stock. On February 15, 2019, we terminated our initial offering. We continue to offer shares of our common stock pursuant to the 2019 DRIP Offering. See the “Distribution Reinvestment Plan” section below for a further discussion.

Through ~~September 30, 2017,~~March 31, 2020, we had issued ~~35,522,410~~75,639,681 aggregate shares of our Class T and Class I common stock in connection with the primary portion of our initial offering and ~~668,035~~6,188,455 aggregate shares of our Class T and Class I common stock pursuant to ~~the DRIP.~~our DRIP Offerings. We also granted an aggregate of ~~37,500~~82,500 shares of our restricted Class T common stock to our independent directors and repurchased ~~18,383~~1,356,839 shares of our common stock under our share repurchase plan through ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we had ~~36,230,395~~80,574,630 and ~~11,377,439~~79,899,874 aggregate shares of our Class T and Class I common stock, respectively, issued and outstanding.

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

~~As of September 30, 2017, we had a receivable of $807,000 for offering proceeds, net of selling commissions and dealer manager fees, from our transfer agent, which was received in October 2017.~~

Distribution Reinvestment Plan

We ~~have~~had registered and reserved $150,000,000 in shares of our common stock for sale pursuant to the DRIP in our initial offering. The DRIP allows stockholders to purchase additional Class T shares and Class I shares of our common stock through the reinvestment of distributions during our initial offering. Prior to January 1, 2017, we issued both Class T shares and Class I shares pursuant to the DRIP at a price of $9.50 per share. Effective January 1, 2017, shares of both Class T shares and Class I shares issued pursuant to the DRIP are issued at a price of $9.40 per share until our board of directors determines an estimated NAV per share of our common stock. After our board of directors determines an estimated NAV per share of our common stock, participants in the DRIP will receive Class T shares and Class I shares, as applicable, at the most recently published estimated NAV per share of our common stock. Pursuant to the DRIP, distributions with respect to Class T shares are reinvested in Class T shares and distributions with respect to Class I shares are reinvested in Class I shares. On February 15, 2019, we terminated our initial offering. We continue to offer up to $100,000,000 in shares of our common stock pursuant to the 2019 DRIP Offering.

Since April 6, 2018, our board has approved and established an estimated per share net asset value, or NAV, on at least an annual basis. Commencing with the distribution payment to stockholders paid in the month following such board approval, shares of our common stock issued pursuant the DRIP were or will be issued at the current estimated per share NAV until such time as our board determines an updated estimated per share NAV. The following is a summary of our historical and current estimated per share NAV of our Class T and Class I common stock:



Approval Date by our Board	Established Per Share NAV (Unaudited)
04/06/18	$	9.65
04/04/19	$	9.54
04/04/20	$	9.54

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For the three ~~and nine~~ months ended ~~September 30, 2017, $2,618,000~~March 31, 2020 and ~~$5,492,000,~~2019, $6,437,000 and $5,869,000, respectively, in distributions were reinvested and ~~278,520~~674,756 and ~~584,318~~608,279 shares of our common stock, respectively, were issued pursuant to ~~the DRIP. For the three and nine months ended September 30, 2016, $203,000 and $222,000, respectively, in distributions were reinvested and 21,376 and 23,379 shares of~~ our ~~common stock, respectively, were issued pursuant to the DRIP.~~DRIP Offerings. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, a total of ~~$6,288,000~~$59,067,000 and ~~$796,000,~~$52,630,000, respectively, in distributions were reinvested that resulted in ~~668,035~~6,188,455 and ~~83,717~~5,513,699 shares of our common stock, respectively, being issued pursuant to ~~the DRIP.~~our DRIP Offerings.

Share Repurchase Plan

~~In February 2016, our board of directors approved a share repurchase plan. The~~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 of directors.~~board. Subject to the availability of the funds for share repurchases, 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, that shares subject to a repurchase requested upon the death of a stockholder will not be subject to this cap. 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.~~our DRIP Offerings.

All repurchases ~~will be~~of our shares of common stock 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. Further, all share repurchases ~~will be~~are repurchased following a one-year holding period at a price between 92.5% to 100% of each stockholder’s repurchase amount depending on the period of time their shares have been held. During our initial offering and with respect to shares repurchased for the quarter ending March 31, 2019, the repurchase amount for shares repurchased under our share repurchase plan ~~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 per share offering price in our initial offering. ~~If we are no longer engaged in an offering,~~Commencing with shares repurchased for the quarter ending June 30, 2019, the repurchase amount for shares repurchased under our share repurchase plan ~~will be~~is the lesser of (i) the amount per share the stockholder paid for their shares of our common stock, or (ii) the most recent estimated value of one share of the applicable class of common stock as determined by our ~~board~~board. See the “Distribution Reinvestment Plan” section above for a summary of ~~directors.~~our historical and current estimated per share NAV. However, if shares of our common stock are repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price will be no less than 100% of the price paid to acquire the shares of our common stock from us. Furthermore, our share repurchase plan provides that if there are insufficient funds to honor all repurchase requests, pending requests will be honored among all requests for repurchase in any given repurchase period, as follows: first, pro rata as to repurchases sought upon a stockholder’s death; next, pro rata as to repurchases sought by stockholders with a qualifying disability; and, finally, pro rata as to other repurchase requests.

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, we ~~received share~~did not repurchase requests and repurchased 11,209 and 18,383 shares of our common stock, respectively, for an aggregate of $109,000 and $178,000, respectively, at an average repurchase price of $9.69 and $9.68 per share, respectively. No share repurchases were requested or made forany shares. For the three ~~and nine~~ months ended ~~September 30, 2016.~~

~~As of September 30, 2017,~~March 31, 2019, we ~~received share repurchase requests and~~ repurchased ~~18,383~~132,683 shares of our common stock, for an aggregate of ~~$178,000~~$1,270,000, at an average repurchase price of ~~$9.68~~$9.58 per share. As of both March 31, 2020 and December 31, 2019, we repurchased 1,356,839 shares of our common stock for an aggregate of $12,656,000, at an average repurchase price of $9.33 per share. In April 2020, we repurchased 506,560 shares of our common stock, under our share repurchase plan, for an aggregate of $4,643,000, at an average repurchase price of $9.17 per share. All shares were repurchased using the cumulative proceeds we received from the sale of shares of our common stock pursuant to ~~the DRIP. As of December 31, 2016, no share repurchases were requested or made.~~our DRIP Offerings.

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2015 Incentive Plan

~~In February 2016, we~~We adopted the 2015 Incentive Plan, or our incentive plan, pursuant to which our board, ~~of directors~~ or a committee of our independent directors, may make grants of options, restricted shares of 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 4,000,000 shares.

~~Through September 30, 2017,~~ For the three months ended March 31, 2020 and 2019, we ~~granted an aggregate of 22,500~~did not issue any shares of our restricted Class T 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 directors, of which 20.0% immediately 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 15,000 shares of our restricted Class T common stock to our independent directors in consideration for their past services rendered. These shares of restricted Class T 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~~pursuant to our incentive plan and none of the previously issued shares of our restricted common stock ~~will have full voting rights and rights to distributions.~~

From the applicable service inception dates to the applicable grant dates, we recognized compensation expense related to the shares of our restricted Class T common stock based on the reporting date fair value, which was estimated at $10.00 per share, the price paid to acquire one share of Class T common stock in our offering. Beginning on the applicable grant dates, compensation cost related to the shares of our restricted Class T common stock is measured based on the applicable grant date fair value, which was estimated at $10.00 per share, the price paid to acquire one share of Class T common stock in our offering. Stock compensation expense is recognized from the applicable service inception date to the applicable vesting date for each vesting tranche (i.e., on a tranche-by-tranche basis) using the accelerated attribution method.

~~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.were vested. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, we recognized compensation expense of $61,000 and $14,000, respectively, and for the nine months ended September 30, 2017 and 2016,~~2019, we recognized stock compensation expense of ~~$100,000~~$43,000 and ~~$66,000,~~$39,000 respectively, which is included in general and administrative in our accompanying condensed consolidated statements of operations.

As of September 30, 2017 and December 31, 2016, there was $195,000 and $70,000, respectively, of total unrecognized compensation expense, net of estimated forfeitures, related to nonvested shares of our restricted Class T common stock. As of September 30, 2017, this expense is expected to be recognized over a remaining weighted average period of 2.00 years.

As of September 30, 2017 and December 31, 2016, the weighted average grant date fair value of the nonvested shares of our restricted Class T common stock was $270,000 and $120,000, respectively. A summary of the status of the nonvested shares of our restricted Class T 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 12,000
$ 10.00
Granted 22,500
$ 10.00
Vested (7,500 ) $ 10.00
Forfeited —
$ —
Balance — September 30, 2017 27,000
$ 10.00
Expected to vest — September 30, 2017 27,000
$ 10.00

Offering Costs

Selling Commissions

~~Generally,~~Through the termination of our initial offering on February 15, 2019, we ~~pay~~generally paid our dealer manager selling commissions of up to 3.0% of the gross offering proceeds from the sale of Class T shares of our common stock pursuant to the primary portion of our ~~primary~~initial offering. To the extent that selling commissions are less than 3.0% of the gross offering proceeds for any Class T shares sold, such reduction in selling commissions will be accompanied by a corresponding reduction in the applicable per share purchase price for purchases of such shares. No selling commissions ~~are~~

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

were payable on Class I shares or shares of our common stock sold pursuant to our DRIP Offerings. Following the ~~DRIP. Our dealer manager may re-allow all or a portion~~termination of ~~these fees to participating broker-dealers.~~our initial offering, we no longer incur additional selling commissions. For the three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, we incurred ~~$2,059,000 and $1,012,000, respectively, in selling commissions to our dealer manager. For the nine months ended September 30, 2017 and 2016, we incurred $6,763,000 and $1,392,000, respectively,~~$2,242,000 in selling commissions to our dealer manager. Such commissions were charged to stockholders’ equity as such amounts were paid to our dealer manager from the gross proceeds of our initial offering.

Dealer Manager Fee

~~With~~Through the termination of our initial offering on February 15, 2019, with respect to shares of our Class T common stock, our dealer manager generally ~~receives~~received a dealer manager fee of up to 3.0% of the gross offering proceeds from the sale of Class T shares of our common stock pursuant to our ~~primary~~initial offering, of which 1.0% of the gross offering proceeds iswas funded by us and up to an amount equal to 2.0% of the gross offering proceeds iswas funded by our advisor. With respect to shares of our Class I common stock, prior to March 1, 2017, our dealer manager generally received a dealer manager fee up to 3.0% of the gross offering proceeds from the sale of Class I shares of our common stock pursuant to the primary portion of our ~~primary~~initial offering, of which 1.0% of the gross offering proceeds was funded by us and an amount equal to 2.0% of the gross offering proceeds was funded by our advisor. Effective March 1, 2017 and through the termination of our initial offering on February 15, 2019, our dealer manager generally ~~receives~~received a dealer manager fee up to an amount equal to 1.5% of the gross offering proceeds from the sale of Class I shares pursuant tothe primary portion of our ~~primary~~initial offering, all of which iswas funded by our advisor. Our dealer manager may enter into participating dealer agreements with participating dealers that provide for a reduction or waiver of dealer manager fees. To the extent that the dealer manager fee is less than 3.0% of the gross offering proceeds for any Class T shares sold and less than 1.5% of the gross offering proceeds for any Class I shares sold, such reduction will be applied first to the portion of the dealer manager fee funded by our advisor. To the extent that any reduction in dealer manager fee exceeds the portion of the dealer manager fee funded by our advisor, such excess reduction will be accompanied by a corresponding reduction in the applicable per share purchase price for purchases of such shares. No dealer manager fee iswas payable on shares of our common stock sold pursuant to our DRIP Offerings.

Following the ~~DRIP. Our~~termination of our initial offering, we no longer incur additional dealer manager ~~may re-allow all or a portion of these fees to participating broker-dealers.~~

fees. For the three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, we incurred ~~$689,000 and $370,000, respectively, in dealer manager fees to our dealer manager. For the nine months ended September 30, 2017 and 2016, we incurred $2,311,000 and $521,000, respectively,~~$759,000 in dealer manager fees to our dealer manager. Such fees were charged to stockholders’ equity as such amounts were paid to our dealer manager or its affiliates from the gross proceeds of our initial offering. See Note ~~12,~~13, Related Party Transactions — Offering Stage — Dealer Manager Fee, for a further discussion of the dealer manager fee funded by our advisor.

Stockholder Servicing Fee

We pay our dealer manager a quarterly stockholder servicing fee with respect to our Class T shares sold as additional compensation to the dealer manager and participating broker-dealers. No stockholder servicing fee ~~shall be~~is paid with respect to Class I shares or shares of our common stock sold pursuant to ~~the DRIP.~~our DRIP Offerings. The stockholder servicing fee accrues daily in an amount equal to 1/365th of 1.0% of the purchase price per share of our Class T shares sold in the primary portion of our ~~primary~~initial offering and, in the aggregate will not exceed an amount equal to 4.0% of the gross proceeds from the sale of Class T shares in the primary portion of our ~~primary~~initial offering. We will cease paying the stockholder servicing fee with respect to our Class T shares sold in the primary portion of our initial offering upon the occurrence of certain defined events. Our dealer manager may re-allow to participating broker-dealers all or a portion of the stockholder servicing fee for services that such participating broker-dealers perform in connection with the shares of our Class T common stock. By agreement with participating broker-dealers, such stockholder servicing fee may be reduced or limited.

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

Following the termination of our initial offering on February 15, 2019, we no longer incur additional stockholder servicing fees. For the three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, we incurred $2,430,000 and $1,349,000, respectively, in stockholder servicing fees to our dealer manager. For the nine months ended September 30, 2017 and 2016, we incurred $8,568,000 and $1,856,000, respectively,$2,717,000 in stockholder servicing fees to our dealer manager. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we accrued ~~$11,496,000~~$10,955,000 and ~~$3,973,000,~~$12,610,000, respectively, in connection with the stockholder servicing fee payable, which is included in accounts payable and accrued liabilities with a corresponding offset to stockholders’ equity in our accompanying condensed consolidated balance sheets.

Noncontrolling Interest

In connection with our acquisition of ~~Limited Partner in Operating Partnership~~

~~On February 6, 2015,~~Louisiana Senior Housing Portfolio, we consolidated and owned approximately 90.0% of our ~~advisor made an initial capital contribution~~joint venture with SSMG as of ~~$2,000 to our operating partnership in exchange for Class T partnership units. Upon the effectiveness~~March 31, 2020. As such, 10.0% of the ~~Advisory Agreement on February 16, 2016, Griffin-American Healthcare REIT IV Advisor became~~net earnings of the joint venture were allocated to noncontrolling interests in our ~~advisor. As our advisor, Griffin-American Healthcare REIT IV Advisor~~accompanying condensed consolidated statements of operations for the three months ended March 31, 2020, and the carrying amount of such noncontrolling interest is ~~entitled to redemption rights of its limited partnership units. Therefore, as of February 16, 2016, such limited partnership units no longer~~

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

~~meet the criteria for classification within the~~presented in total equity ~~section of~~in our accompanying condensed consolidated balance sheets ~~and~~ as ~~such, were reclassified outside~~ of ~~permanent~~March 31, 2020. We did not have any noncontrolling interest in total equity ~~as a mezzanine item, in our accompanying condensed consolidated balance sheets. See Note 10, Redeemable Noncontrolling Interest,~~ for ~~a further discussion. As of September 30, 2017 and December~~the three months ended March 31, ~~2016, our advisor owned all of our 208 Class T partnership units outstanding.~~2019.

~~12.~~13. Related Party Transactions

Fees and Expenses Paid to Affiliates

All of our executive officers and one of 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. Our board, including a majority of our independent directors, has reviewed the material transactions between our affiliates and us during the three months ended March 31, 2020. Set forth below is a description of the transactions with affiliates. We believe that we have executed all of the transactions set forth below on terms that are fair and reasonable to us and on terms no less favorable to us than those available from unaffiliated third parties. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, we incurred ~~$2,856,000~~$4,284,000 and ~~$2,331,000, respectively, and for the nine months ended September 30, 2017 and 2016, we incurred $12,633,000 and $5,500,000,~~$4,417,000, respectively, in fees and expenses to our affiliates as detailed below.

Offering Stage

Dealer Manager Fee

~~With~~Through the termination of our initial offering on February 15, 2019, with respect to shares of our Class T common stock, our dealer manager generally ~~receives~~received a dealer manager fee of up to 3.0% of the gross offering proceeds from the sale of Class T shares of our common stock pursuant to the primary portion of our ~~primary~~initial offering, of which 1.0% of the gross offering proceeds iswas funded by us and up to an amount equal to 2.0% of the gross offering proceeds iswas funded by our advisor. With respect to shares of our Class I common stock, prior to March 1, 2017, our dealer manager generally received a dealer manager fee up to 3.0% of the gross offering proceeds from the sale of Class I shares of our common stock pursuant to the primary portion of our ~~primary~~initial offering, of which 1.0% of the gross offering proceeds was funded by us and an amount equal to 2.0% of the gross offering proceeds was funded by our advisor. Effective March 1, 2017 and through the termination of our initial offering on February 15, 2019, our dealer manager generally ~~receives~~received a dealer manager fee up to an amount equal to 1.5% of the gross offering proceeds from the sale of Class I shares pursuant to the primary portion of our ~~primary~~initial offering, all of which iswas funded by our advisor. Our dealer manager may enter into participating dealer agreements with participating dealers that provide for a reduction or waiver of dealer manager fees. To the extent that the dealer manager fee is less than 3.0% of the gross offering proceeds for any Class T shares sold and less than 1.5% of the gross offering proceeds for any Class I shares sold, such reduction will be applied first to the portion of the dealer manager fee funded by our advisor. To the extent that any reduction in dealer manager fee exceeds the portion of the dealer manager fee funded by our advisor, such excess reduction will be accompanied by a corresponding reduction in the applicable per share purchase price for purchases of such shares. No dealer manager fee iswas payable on shares of our common stock sold pursuant to ~~the DRIP.~~our DRIP Offerings. Our advisor ~~intends to recoup~~recouped the portion of the dealer manager fee it ~~funds~~funded through the receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees.

Following the termination of our initial offering, we no longer incur additional dealer manager fees. For the three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, we incurred $1,414,000 and $741,000, respectively, payable to our advisor as part of the Contingent Advisor Payment in connection with the dealer manager fee that our advisor had incurred. For the nine months ended September 30, 2017 and 2016, we incurred $4,751,000 and $1,043,000, respectively,$1,687,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the dealer manager fee that our advisor had incurred. Such fee was charged to ~~stockholders'~~stockholders’ equity as incurred with a corresponding offset to accounts payable due to affiliates in our accompanying condensed consolidated balance sheets. See Note ~~11,~~12, Equity — Offering Costs — Dealer Manager Fee, for a further discussion of the dealer manager fee funded by us.

Other Organizational and Offering Expenses

~~Our~~Through the termination of our initial offering on February 15, 2019, we incurred other organizational and offering expenses in connection with the primary portion of our initial offering (other than selling commissions, the dealer manager fee and the stockholder servicing fee) ~~are~~were funded by our advisor. Our advisor ~~intends to recoup~~recouped such expenses it ~~funds~~funded through the receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees. We anticipate that our other organizational and offering expenses will not exceed 1.0% of the gross offering proceeds for shares of our common stock sold pursuant to our primary offering. No other organizational and offering expenses will be paid with respect to shares of our common stock sold pursuant to the DRIP.

For the three months ended September 30, 2017 and 2016, we incurred $259,000 and $344,000, respectively, payable to our advisor as part of the Contingent Advisor Payment in connection with the other organizational and offering expenses that

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receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees. No other organizational and offering expenses were paid with respect to shares of our ~~advisor had incurred.~~common stock sold pursuant to our DRIP Offerings.

Following the termination of our initial offering, we no longer incur additional other organizational and offering expenses. For the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2019, we incurred ~~$1,151,000 and $2,759,000, respectively,~~$112,000 payable to our advisor as part of the Contingent Advisor Payment in connection with the other organizational and offering expenses that our advisor had incurred. Such expenses were charged to ~~stockholders'~~stockholders’ equity as incurred with a corresponding offset to accounts payable due to affiliates in our accompanying condensed consolidated balance sheets.

Acquisition and Development Stage

Acquisition Fee

We pay our advisor or its affiliates an acquisition fee of up to 4.50% of the contract purchase price, including any contingent or earn-out payments that may be paid, of each property we acquire or, with respect to any real estate-related investment we originate or acquire, up to 4.25% of the origination or acquisition price, including any contingent or earn-out payments that may be paid. The 4.50% or 4.25% acquisition fees consist of a 2.25% or 2.00% base acquisition fee, or the base acquisition fee, for real estate and real estate-related acquisitions, respectively, and an additional 2.25% contingent advisor payment, or the Contingent Advisor ~~Payment.~~Payment, as applicable. The Contingent Advisor Payment ~~allows~~allowed our advisor to recoup the portion of the dealer manager fee and other organizational and offering expenses funded by our advisor. Therefore, the amount of the Contingent Advisor Payment paid upon the closing of an acquisition ~~shall~~did not exceed the then outstanding amounts paid by our advisor for dealer manager fees and other organizational and offering expenses at the time of such closing. For these purposes, the amounts paid by our advisor and considered as “outstanding” ~~are~~were reduced by the amount of the Contingent Advisor Payment previously paid. Notwithstanding the foregoing, the initial $7,500,000 of amounts paid by our advisor to fund the dealer manager fee and other organizational and offering expenses, or the Contingent Advisor Payment Holdback, ~~shall be~~was retained by us until ~~the later of~~February 2019, the termination of our ~~last public~~initial offering orand the third anniversary of the commencement date of our initial ~~public~~ offering, at which time such amount ~~shall be~~was paid to our advisor or its affiliates. In connection with any subsequent public offering of shares of our common stock, the Contingent Advisor Payment Holdback may increase, based upon the maximum offering amount in such subsequent public offering and the amount sold in prior offerings.advisor. Our advisor or its affiliates ~~will be~~are entitled to receive these acquisition fees for properties and real estate-related investments acquired with funds raised in our initial offering, including acquisitions completed after the termination of the Advisory Agreement (including imputed leverage of 50.0% on funds raised in our initial offering), or funded with net proceeds from the sale of a property or real estate-related investment, subject to certain conditions. Our advisor may waive or defer all or a portion of the acquisition fee at any time and from time to time, in our advisor’s sole discretion.

The base acquisition fee in connection with the acquisition of ~~properties~~real estate investments accounted for as business combinations is expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations. The base acquisition fee in connection with the acquisition of properties accounted for as asset acquisitions or the acquisition of real estate-related investments is capitalized as part of the associated investment in our accompanying condensed consolidated balance sheets. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, we paid base acquisition fees of ~~$347,000~~$1,406,000 and ~~$1,220,000, respectively, to our advisor. For the nine months ended September 30, 2017 and 2016, we paid base acquisition fees of $4,901,000 and $1,343,000,~~$398,000, respectively, to our advisor. As of ~~September 30, 2017~~both March 31, 2020 and December 31, 2016, we recorded $7,759,000 and $5,404,000, respectively, as part of the Contingent Advisor Payment, which is included in accounts payable due to affiliates with a corresponding offset to stockholders’ equity in our accompanying condensed consolidated balance sheets. As of September 30, 2017,2019, we have paid ~~$3,548,000~~$20,982,000 in Contingent Advisor Payments to our advisor and do not have any amounts outstanding due to our advisor. For a further discussion of amounts paid in connection with the Contingent Advisor Payment, see ~~Dealer~~“Dealer Manager ~~Fee~~Fee” and ~~Other~~“Other Organizational and Offering Expenses,” above. ~~In addition, see Note 3, Real Estate Investments, Net, for a further discussion.~~

Development Fee

In the event our advisor or its affiliates provide development-related services, we pay our advisor or its affiliates 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~~March 31, 2020 and ~~2016,~~2019, we ~~did not incur any~~incurred development fees of $0 and $13,000, respectively, to our advisor, ~~or its affiliates.~~which was expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations.

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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

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the contract purchase price of the property 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~~March 31, 2020 and ~~2016,~~2019, such fees and expenses paid did not exceed 6.0% of the contract purchase price of our property acquisitions, except with respect to our acquisitions of ~~Auburn~~Pinnacle Warrenton ALF, Glendale MOB, ~~Pottsville~~Missouri SNF Portfolio and Flemington MOB Portfolio, which excess fees and ~~Lafayette Assisted Living Portfolio. For a further discussion, see Note 3, Real Estate Investments, Net.~~expenses were approved by our directors as set forth above.

Reimbursements of acquisition expenses in connection with the acquisition of ~~properties~~real estate investments accounted for as business combinations are expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations. 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 investment in our accompanying condensed consolidated balance sheets. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, we incurred $0$1,000 and ~~$2,000,~~$0, respectively, in acquisition expenses to our advisor or its affiliates. ~~We did not incur any acquisition expenses to our advisor or its affiliates for the three and nine months ended September 30, 2016.~~

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 0.80% of average invested assets. For such purposes, average invested assets means the average of the aggregate book value of our assets invested in real estate ~~properties~~investments 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.

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, we incurred ~~$700,000~~$2,411,000 and ~~$1,505,000,~~$1,889,000, respectively, in asset management fees to our ~~advisor. We did not incur any asset management fees to our~~ advisor, or its affiliates for the three and nine months ended September 30, 2016 as a result of our advisor waiving $29,000 and $31,000, respectively, in asset management fees. Our advisor agreed to waive certain asset management fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement until such time as the amount of such waived asset management fees was equal to the amount of distributions payable to our stockholders for the period beginning on May 1, 2016 and ending on the date of the acquisition of our first property or real estate-related investment, as such terms are defined in the Advisory Agreement. We purchased our first property in June 2016. As such, the asset management fees of $31,000 that would have been incurred through September 2016 were waived by our advisor and an additional $49,000 in asset management fees was waived during the remainder for 2016. 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. Asset management feeswhich are included in general and administrative in our accompanying condensed consolidated statements of operations.

Property Management Fee

American Healthcare Investors or its designated personnel may provide property management services with respect to our properties or may sub-contract these duties to any third party and provide oversight of such third-party property manager. We pay American Healthcare Investors a monthly management fee equal to a percentage of the gross monthly cash receipts of such property as follows: (i) a property management oversight fee of 1.0% of the gross monthly cash receipts of any stand-alone, single-tenant, net leased property, except for such properties operated utilizing a RIDEA structure, for which we pay a property management oversight fee of 1.5% of the gross monthly cash receipts with respect to such 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 American Healthcare Investors or its designated personnel provide oversight of a third party that performs the duties of a property manager with respect to such property; or (iii) a fair and reasonable property management fee that is approved by a majority of our directors, including a majority of our independent directors, that is not less favorable to us than terms available from unaffiliated third parties for any property that is not a stand-alone, single-tenant, net leased property and for which American Healthcare Investors or its designated personnel directly serve as the property manager without sub-contracting such duties to a third party.

Property management fees are included in property operating expenses and rental expenses in our accompanying condensed consolidated statements of operations. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, we incurred property management fees of ~~$103,000~~$349,000 and ~~$5,000, respectively, to American Healthcare Investors. For the nine months ended September 30, 2017 and 2016, we incurred property management fees of $249,000 and $5,000,~~$260,000, respectively, to American Healthcare Investors.

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Lease Fees

We ~~may~~ 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.

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Lease fees are capitalized as lease commissions, which are included in other assets, net in our accompanying condensed consolidated balance sheets, and amortized over the term of the lease. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, we incurred lease fees of ~~$12,000. For the three~~$51,000 and ~~nine months ended September 30, 2016, we did not incur any lease fees to our advisor or its affiliates.~~$10,000, respectively.

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, we pay our advisor or its affiliates a construction management fee of up to 5.0% of the cost of such improvements. 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, as applicable. For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, we ~~did not incur any~~incurred construction management fees ~~to our advisor or its affiliates.~~of $23,000 and $7,000, respectively.

Operating Expenses

We reimburse our advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations. However, we ~~will not~~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~~The following table reflects our operating expenses as a percentage of average invested assets and as a percentage of net income ~~were 1.4% and 40.9%, respectively,~~ for the 12 month periods then ended:



	12 months ended March 31,
	2020		2019
Operating expenses as a percentage of average invested assets	1.2	%	1.3	%
Operating expenses as a percentage of net income	37.8	%	33.3	%

For the 12 months ended ~~September 30, 2017; however, we~~March 31, 2020 and 2019, our operating expenses did not exceed the aforementioned ~~limitation~~limitations as 2.0% of our average invested assets was greater than 25.0% of our net income.

For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, our advisor incurred operating expenses on our behalf of ~~$21,000,~~$43,000 and ~~for the nine months ended September 30, 2017 and 2016, our advisor incurred operating expenses on our behalf of $62,000 and $350,000,~~$41,000, respectively. Operating expenses are generally included in general and administrative in our accompanying condensed consolidated statements of operations.

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, ~~of directors,~~ 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~~March 31, 2020 and ~~2016,~~2019, our advisor and its affiliates were not compensated for any additional services.

Liquidity Stage

Disposition Fees

For services relating to the sale of one or more properties, we pay our advisor or its affiliates a disposition fee 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, ~~of directors,~~ 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~~March 31, 2020 and ~~2016,~~2019, we did not incur any disposition fees to our advisor or its affiliates.

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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 6.0% 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~~March 31, 2020 and ~~2016,~~2019, we did not pay 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~~equal to ~~stockholders as of the date of listing, would have provided them~~ an annual 6.0% 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 received 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~~March 31, 2020 and ~~2016,~~2019, we did not pay 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 6.0% 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.

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we ~~had~~did not ~~recorded~~have any ~~charges to earnings~~liability related to the subordinated distribution upon termination.

Stock Purchase Plans

On ~~February 29, 2016,~~December 31, 2017, our Chief Executive Officer and Chairman of the Board of Directors, Jeffrey T. Hanson, our President and Chief Operating Officer, Danny Prosky, and our Executive Vice President and General Counsel, Mathieu B. Streiff, each executed stock purchase plans, or the ~~2016~~2018 Stock Purchase Plans, whereby they each irrevocably agreed to invest 100% of their net after-tax base salary and cash bonus compensation earned as employees of American Healthcare Investors directly into our company by purchasing shares of our Class TI common stock. In addition, on ~~February 29, 2016, three~~December 31, 2017, four Executive Vice Presidents of American Healthcare Investors, ~~during 2016,~~ including our Executive Vice President of Acquisitions, Stefan K.L. Oh, each executed similar 2016 Stock Purchase Plans whereby they each irrevocably agreed to invest a portion of their net after-tax base salary or a portion of their net after-tax base salary and cash bonus compensation, ranging from 10.0% to 15.0%, earned as employees of American Healthcare Investors directly into our ~~company by purchasing shares of our Class T common stock. The 2016 Stock Purchase Plans terminated on December 31, 2016.~~

Purchases of shares of our Class T common stock pursuant to the 2016 Stock Purchase Plans commenced after the initial release from escrow of the minimum offering amount, beginning with the officers’ regularly scheduled payroll payment on April 13, 2016. The shares of Class T common stock were purchased at a price of $9.60 per share, reflecting the purchase price of the Class T shares in our offering, exclusive of selling commissions and the portion of the dealer manager fee funded by us.

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On December 30, 2016, Messrs. Hanson, Prosky and Streiff each executed stock purchase plans for the purchase of shares of our Class I common stock, or the 2017 Stock Purchase Plans, on terms similar to their 2016 Stock Purchase Plans. In addition, on December 30, 2016, Mr. Oh,Chief Financial Officer, Brian S. Peay, as well as Wendie Newman and Christopher M. Belford, both of whom ~~were appointed as~~are our Vice Presidents of Asset Management, ~~as of June 2017,~~ each executed similar ~~2017~~2018 Stock Purchase Plans whereby they each irrevocably agreed to invest a portion of their net after-tax base salary or a portion of their net after-tax base salary and cash bonus compensation, ranging from 5.0% to 15.0%, earned on or after January 1, 2018 as employees of American Healthcare Investors directly into ~~our company by purchasing~~ shares of our Class I common stock. The ~~2017~~2018 Stock Purchase Plans ~~terminate~~terminated on December 31, ~~2017 or earlier upon the occurrence of certain events, such as any earlier termination of our public offering of securities, unless otherwise renewed or extended.~~

Purchases of shares of our Class I common stock pursuant to the 2017 Stock Purchase Plans commenced beginning with the officers’ regularly scheduled payroll payment on January 23, 2017. The shares of Class I common stock are purchased pursuant to the 2017 Stock Purchase Plans at a price of $9.21 per share, reflecting the purchase price of the Class I shares in our offering. No selling commissions, dealer manager fees (including the portion of such dealer manager fees funded by our advisor) or stockholder servicing fees will be paid with respect to such sales of our Class I common stock.

For the three and nine months ended September 30, 2017 and 2016, our officers invested the following amounts and we issued the following shares of our Class T and Class I common stock pursuant to the applicable stock purchase plan:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Officer’s Name Title Amount Shares Amount Shares Amount Shares Amount Shares
Jeffrey T. Hanson Chief Executive Officer and Chairman of the Board of Directors $ 70,000
7,553
$ 64,000
6,653
$ 193,000
20,910
$ 115,000
11,936
Danny Prosky President and Chief Operating Officer 72,000
7,825
72,000
7,463
199,000
21,571
133,000
13,810
Mathieu B. Streiff Executive Vice President and General Counsel 67,000
7,293
69,000
7,194
194,000
21,065
127,000
13,259
Stefan K.L. Oh Executive Vice President of Acquisitions 8,000
857
8,000
875
24,000
2,558
15,000
1,605
Christopher M. Belford Vice President of Asset Management 6,000
653
6,000
642
59,000
6,361
11,000
1,194
Wendie Newman Vice President of Asset Management 2,000
221
—
—
6,000
607
—
—
$ 225,000
24,402
$ 219,000
22,827
$ 675,000
73,072
$ 401,000
41,804

~~Accounts Payable Due to Affiliates~~

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

Fee
September 30,
2017

December 31,
2016
Contingent Advisor Payment $ 7,759,000
$ 5,404,000
Asset management fees 237,000
83,000
Property management fees 37,000
24,000
Operating expenses 22,000
20,000
Lease commissions 10,000
—
$ 8,065,000
$ 5,531,000

~~13. Fair Value Measurements~~

~~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,~~ ~~Fair Value Measurements and Disclosures~~.2018.

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Purchases of shares of our Class I common stock pursuant to the 2018 Stock Purchase Plans commenced beginning with the first regularly scheduled payroll payment on January 22, 2018, and concluded with the regularly scheduled payroll payment on January 7, 2019. The shares of Class I common stock were purchased pursuant to the 2018 Stock Purchase Plans at a per share purchase price equal to the per share purchase price of our Class I common stock, which was $9.65 per share effective as of April 11, 2018. No selling commissions, dealer manager fees (including the portion of such dealer manager fees funded by our advisor) or stockholder servicing fees were paid with respect to such sales of our Class I common stock pursuant to the 2018 Stock Purchase Plans.

For the three months ended March 31, 2019, our officers invested the following amounts and we issued the following shares of our Class I common stock pursuant to the 2018 Stock Purchase Plans:



		Three Months Ended March 31, 2019
Officer’s Name	Title	Amount		Shares
Jeffrey T. Hanson	Chief Executive Officer and Chairman of the Board of Directors	$	10,000	995
Danny Prosky	President and Chief Operating Officer	11,000		1,103
Mathieu B. Streiff	Executive Vice President and General Counsel	10,000		999
Brian S. Peay	Chief Financial Officer	1,000		88
Stefan K.L. Oh	Executive Vice President of Acquisitions	1,000		127
Christopher M. Belford	Vice President of Asset Management	1,000		102
Wendie Newman	Vice President of Asset Management	1,000		34
Total		$	35,000	3,448

Accounts Payable Due to Affiliates

The following amounts were outstanding to our affiliates as of March 31, 2020 and December 31, 2019:



Fee	March 31, 2020		December 31, 2019
Asset management fees	$	812,000	$	768,000
Property management fees	138,000		145,000
Construction management fees	42,000		65,000
Operating expenses	15,000		12,000
Lease commissions	1,000		21,000
Acquisition and development fees	—		5,000
Total	$	1,008,000	$	1,016,000

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

14. 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 March 31, 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
Liabilities:
Derivative financial instruments	$	—	$	8,990,000	$	—	$	8,990,000

The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, aggregated by the level in the fair value hierarchy within which those measurements fall:



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Liabilities:
Derivative financial instruments	$	—	$	4,385,000	$	—	$	4,385,000

There were no transfers into or out of fair value measurement levels during the three months ended March 31, 2020 and 2019.

Derivative Financial Instruments

We use interest rate swaps 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.

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 March 31, 2020, 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.

Financial Instruments Disclosed at Fair Value

Our accompanying condensed consolidated balance sheets include the following financial instruments: 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 the ~~Line of Credit.~~2018 Credit Facility.

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 values 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~~accounts

Table of ~~the fair value hierarchy. The fair value of accounts~~ Contents

GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

payable due to affiliates is not determinable due to the related party nature of the accounts payable. ~~The~~These financial assets and liabilities are measured at fair value ~~of the other financial instruments is~~on a recurring basis based on quoted prices in active markets for identical assets and liabilities, and therefore are classified inas Level ~~2 of~~1 in the fair value hierarchy.

The fair value of our mortgage loans payable and the ~~Line of~~2018 Credit Facility is estimated using a discounted cash flow analysis using borrowing rates available to us for debt instruments with similar terms and maturities. As of September 30, 2017 and December 31, 2016, the fair value of our mortgage loans payable was $11,950,000 and $4,131,000, respectively, compared to the carrying value of $11,639,000 and $3,965,000, respectively. As of September 30, 2017 and December 31, 2016, the fair value of the Line of Credit was $25,998,000 and $33,899,000, respectively, compared to the carrying value of $25,290,000 and $32,957,000, respectively. We have determined that our mortgage loans payable and the ~~Line of~~2018 Credit Facility are classified in Level 2 within the fair value ~~hierarchy.~~hierarchy as reliance is placed on inputs other than quoted prices that are observable, such as interest rates and yield curves. The carrying amounts and estimated fair values of such financial instruments as of March 31, 2020 and December 31, 2019 were as follows:



	March 31, 2020				December 31, 2019
	Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value
Financial Liabilities:
Mortgage loans payable	$	18,233,000	$	20,807,000	$	26,070,000	$	26,677,000
Line of credit and term loans	$	469,966,000	$	462,391,000	$	393,217,000	$	396,891,000

___________


(1)	Carrying amount is net of any discount/premium and deferred financing costs.

15. 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 wholly owned taxable REIT subsidiaries, or TRS, pursuant to the Code. 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.

The components of income tax expense for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,
	2020			2019
Federal deferred	$	(271,000	)	$	(277,000	)
State deferred	(93,000		)	(73,000		)
State current	—			3,000
Valuation allowance	364,000			350,000
Total income tax expense	$	—		$	3,000

Current Income Tax

Federal and state income taxes are generally a function of the level of income recognized by our TRS.

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 that may be realized in future periods depending on sufficient taxable income.

We recognize the financial statement effects of an uncertain tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. As of both March 31, 2020 and December 31, 2019, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable. As of both March 31, 2020 and December 31, 2019, our valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income. We will continue to monitor

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

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.

~~14. Business Combinations~~16. Leases

Lessor

We have operating leases with tenants that expire at various dates through 2040. For the three months ended March 31, 2020 and 2019, we recognized $21,463,000 and $15,147,000 of real estate revenue, respectively, related to operating lease payments, of which $4,455,000 and $3,025,000, respectively, was for variable lease payments. As of March 31, 2020, 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, 2020 and for each of the next four years ending December 31 and thereafter for the properties that we wholly own:



Year	Amount
2020	$	47,455,000
2021	62,215,000
2022	59,332,000
2023	54,702,000
2024	49,239,000
Thereafter	305,422,000
Total	$	578,365,000

Lessee

We have ground lease obligations that generally require fixed annual rental payments and may also include escalation clauses and renewal options. These leases expire at various dates through 2107, excluding extension options. Certain of our lease agreements include rental payments that are adjusted periodically based on Consumer Price Index, and may 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 asset acquisitions.~~ taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

For the ~~nine~~three months ended ~~September 30, 2016, using net proceeds from our offering~~March 31, 2020 and ~~debt financing, we completed five property acquisitions comprising five buildings, which~~2019, operating lease costs were ~~accounted for as business combinations. The aggregate contract purchase price for these property acquisitions was $59,670,000, plus closing costs~~$209,000 and ~~base acquisition fees of $2,005,000,~~$127,000, respectively, which are included in ~~acquisition related~~rental expenses in our accompanying condensed consolidated statements of operations. ~~In addition, we incurred Contingent Advisor Payments of $1,342,000~~Such costs include short-term leases and variable lease costs, which are immaterial. Additional information related to our ~~advisor for these property acquisitions. See See Note 12, Related Party Transactions, for a further discussion of the Contingent Advisor Payment.~~

~~Results of operations for these property acquisitions during the nine months ended September 30, 2016 are reflected in our accompanying condensed consolidated statements of operations~~operating leases 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:periods presented below was as follows:



	March 31, 2020			December 31, 2019
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	4,489,000
Weighted average remaining lease term (in years)	80.2			80.4
Weighted average discount rate	5.74		%	5.74		%

Acquisition Revenue Net Income
Auburn MOB $ 239,000
$ 74,000
Pottsville MOB $ 42,000
$ 33,000
Charlottesville MOB $ 47,000
$ 37,000
Rochester Hills MOB $ 6,000
$ 4,000
Cullman MOB III $ 4,000
$ 4,000



	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash outflows related to operating leases	$	104,000	$	51,000

3029

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

~~The~~As of March 31, 2020, the following table ~~summarizes~~sets forth the ~~acquisition date fair values~~undiscounted cash flows of our ~~five property acquisitions in 2016:~~

Auburn MOB Pottsville MOB Charlottesville MOB Rochester Hills MOB Cullman MOB III
Building and improvements $ 4,600,000
$ 7,050,000
$ 13,330,000
$ 5,640,000
$ 13,989,000
Land 406,000
1,493,000
4,768,000
1,702,000
—
In-place leases 386,000
740,000
2,030,000
1,073,000
1,249,000
Leasehold interests —
—
—
—
1,412,000
Total assets acquired 5,392,000
9,283,000
20,128,000
8,415,000
16,650,000
Mortgage loan payable —
—
—
3,968,000
—
Below-market leases —
133,000
—
115,000
—
Total liabilities assumed —
133,000
—
4,083,000
—
Net assets acquired $ 5,392,000
$ 9,150,000
$ 20,128,000
$ 4,332,000
$ 16,650,000

~~Assuming the property acquisitions in 2016 discussed above had occurred on January 23, 2015 (Date of Inception),~~scheduled obligations for future minimum payments for the ~~three and~~ nine months ended ~~September 30, 2016, unaudited pro forma revenue, net income, net income attributable~~December 31, 2020 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to ~~controlling interest and net income per Class T and Class I common share attributable to controlling interest — basic and diluted would have been as follows:~~

operating lease liabilities on our accompanying condensed consolidated balance sheet:

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2016

Revenue $ 1,632,000
$ 4,849,000
Net income $ 45,000
$ 536,000
Net income attributable to controlling interest $ 45,000
$ 536,000
Net income per Class T and Class I common share attributable to controlling interest — basic and diluted $ —
$ 0.07

The unaudited pro forma adjustments assume that the offering proceeds, at a price of $10.00 per share, net of offering costs, were raised as of January 23, 2015 (Date of Inception). In addition, acquisition related expenses associated with our five property acquisitions have been excluded from the pro forma results in 2016. The pro forma results are not necessarily indicative of the operating results that would have been obtained had the acquisitions occurred at the beginning of the periods presented, nor are they necessarily indicative of future operating results.



Year	Amount
2020	$	415,000
2021	523,000
2022	526,000
2023	530,000
2024	534,000
Thereafter	47,103,000
Total operating lease payments	49,631,000
Less: interest	39,736,000
Present value of operating lease liabilities	$	9,895,000

~~15.~~17. 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 2016 and senior housing facility in December 2016, we established a new reportable segment at each such time. As of ~~September 30, 2017,~~March 31, 2020, we evaluated our business and made resource allocations based on ~~two~~four reportable business segments — medical office buildings, senior housing, senior housing — RIDEA and ~~senior housing.~~skilled nursing facilities. 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). Our senior housing facilities and skilled nursing facilities are primarily single-tenant properties for which we lease the facilities to unaffiliated tenants under ~~“triple-net”~~triple-net and generally ~~“master”~~master leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. Our senior housing — RIDEA properties include senior housing facilities that are owned and operated utilizing a RIDEA structure.

We evaluate performance based upon segment net operating income. We define segment net operating income as total revenues, less rental expenses and property operating expenses, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, interest expense, income or loss from unconsolidated entity, other income and ~~interest~~ income tax expense for each segment. We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement. However, we believe that segment net operating income serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis.

Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance. Non-segment assets primarily consist of corporate assets including our investment in unconsolidated entity, cash and cash equivalents, other receivables, real estate deposits and other assets not attributable to individual properties.

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

Summary information for the reportable segments during the three months ended March 31, 2020 and 2019 was as follows:



	Medical Office Buildings		Senior Housing — RIDEA		Skilled Nursing Facilities		Senior Housing		Three Months Ended March 31, 2020
Revenues:
Real estate revenue	$	16,271,000	$	—	$	3,012,000	$	2,180,000	$	21,463,000
Resident fees and services	—		16,081,000		—		—		16,081,000
Total revenues	16,271,000		16,081,000		3,012,000		2,180,000		37,544,000
Expenses:
Rental expenses	5,390,000		—		152,000		280,000		5,822,000
Property operating expenses	—		13,017,000		—		—		13,017,000
Segment net operating income	$	10,881,000	$	3,064,000	$	2,860,000	$	1,900,000	$	18,705,000
Expenses:
General and administrative									$	4,448,000
Acquisition related expenses									9,000
Depreciation and amortization									12,530,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)									(5,310,000		)
Loss in fair value derivative financial instruments									(4,605,000		)
Income from unconsolidated entity									255,000
Other income									9,000
Net loss									$	(7,933,000	)

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

~~Interest expense, depreciation~~



	Medical Office Buildings		Senior Housing — RIDEA		Skilled Nursing Facilities		Senior Housing		Three Months Ended March 31, 2019
Revenues:
Real estate revenue	$	11,495,000	$	—	$	2,810,000	$	842,000	$	15,147,000
Resident fees and services	—		10,695,000		—		—		10,695,000
Total revenues	11,495,000		10,695,000		2,810,000		842,000		25,842,000
Expenses:
Rental expenses	3,570,000		—		120,000		291,000		3,981,000
Property operating expenses	—		8,465,000		—		—		8,465,000
Segment net operating income	$	7,925,000	$	2,230,000	$	2,690,000	$	551,000	$	13,396,000
Expenses:
General and administrative									$	4,190,000
Acquisition related expenses									118,000
Depreciation and amortization									16,078,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)									(3,585,000		)
Loss in fair value derivative financial instruments									(1,978,000		)
Income from unconsolidated entity									126,000
Other income									69,000
Loss before income taxes									(12,358,000		)
Income tax expense									(3,000		)
Net loss									$	(12,361,000	)

Assets by reportable segment as of March 31, 2020 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 and other assets not attributable to individual properties.~~

~~Summary information for the reportable segments during the three and nine months ended September 30, 2017 and 2016 was~~December 31, 2019 were as follows:

Medical Office Buildings
Senior Housing
Three Months Ended
September 30, 2017
Revenue:

Real estate revenue
$ 6,330,000

$ 2,158,000

$ 8,488,000
Expenses:

Rental expenses
1,857,000

238,000

2,095,000
Segment net operating income
$ 4,473,000

$ 1,920,000

$ 6,393,000
Expenses:

General and administrative

$ 1,296,000
Acquisition related expenses

121,000
Depreciation and amortization

3,442,000
Other income (expense):

Interest expense (including amortization of deferred financing costs and debt premium)

(780,000 )
Net income

$ 754,000

Medical Office Buildings
Senior Housing
Three Months Ended
September 30, 2016
Revenue:

Real estate revenue
$ 312,000

$ —

$ 312,000
Expenses:

Rental expenses
98,000

—

98,000
Segment net operating income
$ 214,000

$ —

$ 214,000
Expenses:
General and administrative

$ 329,000
Acquisition related expenses

1,857,000
Depreciation and amortization 64,000
Other income (expense):
Interest expense (including amortization of deferred financing costs) (56,000 )
Net loss

$ (2,092,000 )



	March 31, 2020		December 31, 2019
Medical office buildings	$	595,824,000	$	600,048,000
Senior housing — RIDEA	257,276,000		149,055,000
Skilled nursing facilities	120,634,000		121,749,000
Senior housing	103,071,000		142,982,000
Other	51,926,000		54,493,000
Total assets	$	1,128,731,000	$	1,068,327,000

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GRIFFIN-AMERICAN HEALTHCARE REIT IV, INC.

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

Medical Office Buildings Senior Housing
Nine Months Ended
September 30, 2017
Revenue:
Real estate revenue $ 15,456,000
$ 3,282,000
$ 18,738,000
Expenses:
Rental expenses 4,543,000
350,000
4,893,000
Segment net operating income $ 10,913,000
$ 2,932,000
$ 13,845,000
Expenses:
General and administrative $ 2,996,000
Acquisition related expenses 334,000
Depreciation and amortization 7,619,000
Other income (expense):
Interest expense (including amortization of deferred financing costs and debt premium) (1,607,000 )
Interest income 1,000
Net income $ 1,290,000

Medical Office Buildings Senior Housing
Nine Months Ended
September 30, 2016
Revenue:
Real estate revenue $ 338,000
$ —
$ 338,000
Expenses:
Rental expenses 121,000
—
121,000
Segment net operating income $ 217,000
$ —
$ 217,000
Expenses:
General and administrative $ 725,000
Acquisition related expenses 2,227,000
Depreciation and amortization 64,000
Other income (expense):
Interest expense (including amortization of deferred financing costs) (56,000 )
Net loss $ (2,855,000 )

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

September 30,
2017

December 31,
2016
Medical office buildings $ 263,970,000
$ 123,223,000
Senior housing 98,836,000
16,758,000
Other 8,706,000
2,777,000
Total assets $ 371,512,000
$ 142,758,000

~~16.~~18. Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk are primarily cash and cash equivalents, accounts and other receivables, restricted cash and real estate deposits. 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, 2020 and December 31, ~~2016,~~2019, we had cash and cash equivalents in excess of FDIC insured limits. We believe

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

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

this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants is limited. In general, 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, three states~~March 31, 2020, one state in the United States accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income. Our properties located in Missouri accounted for approximately 11.5% of our total property ~~portfolio. Our properties located in Nevada, Alabama and California accounted for approximately 17.2%, 15.3% and 12.6%, respectively, of the~~portfolio’s annualized base rent ~~of our total property portfolio.~~or annualized net operating income. Accordingly, there is a geographic concentration of risk subject to fluctuations in ~~each~~such state’s economy.

Based on leases in effect as of March 31, 2020, our four reportable business segments, medical office buildings, senior housing — RIDEA, skilled nursing facilities and senior housing accounted for 62.6%, 14.0%, 13.7% and 9.7%, respectively, of our total property portfolio’s annualized base rent or annualized net operating income.

As of ~~September 30, 2017,~~March 31, 2020, we had ~~two tenants~~one tenant that accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized net operating income, as follows:

Tenant

Annualized
Base Rent(1)

Percentage of

Annualized

Base Rent

Acquisition

Reportable

Segment

GLA
(Sq Ft)

Lease Expiration
Date

RC Tier Properties, LLC

7,782,000

10.4%

Missouri SNF Portfolio

Skilled Nursing

385,000

9/30/2033

Tenant Annualized
Base Rent(1)
Percentage of
Annualized Base Rent
Acquisition Reportable Segment GLA
(Sq Ft) Lease Expiration
Date
Colonial Oaks Master Tenant, LLC $ 4,108,000
15.1% Lafayette Assisted Living Portfolio and Northern California Senior Housing Portfolio Senior Housing 215,000
06/30/32
Prime Healthcare Services – Reno $ 3,817,000
14.0% Reno MOB Medical Office 146,000
Multiple

___________


(1)	Annualized base rent is based on contractual base rent from ~~the~~ leases in effect as of ~~September 30, 2017.~~March 31, 2020, inclusive of our senior housing — RIDEA facilities. The loss of ~~these tenants~~this tenant or ~~their~~its inability to pay rent could have a material adverse effect on our business and results of operations.

~~17.~~19. 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 ~~$4,000~~$7,000 and ~~$2,000~~$6,000 for the three months ended ~~September 30, 2017~~March 31, 2020 and 2016, respectively. Net income (loss) applicable to common stock is calculated as net income (loss) attributable to controlling interest less distributions allocated to participating securities of $8,000 and $3,000 for the nine months ended September 30, 2017 and 2016,2019, respectively. 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. As of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, there were ~~27,000~~43,500 and ~~12,000~~37,500 nonvested shares, respectively, of our restricted ~~Class T~~ common stock outstanding, but such shares were excluded from the computation of diluted earnings ~~(loss)~~ per share because such shares were anti-dilutive during these periods. As of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, there were 208 ~~units of~~ redeemable limited partnership units of our operating partnership outstanding, but such units were excluded from the computation of diluted earnings per share because such units were anti-dilutive during these periods.

~~18. Subsequent Events~~

~~Status of Our Offering~~

As of November 3, 2017, we had received and accepted subscriptions in our offering for 37,774,078 aggregate shares of our Class T and Class I common stock, or $375,913,000, excluding shares of our common stock issued pursuant to the DRIP.

~~Amendment to the Credit Agreement with Bank of America and KeyBank~~

On October 31, 2017, we entered into an amendment to the Credit Agreement, or the Amendment, with Bank of America, as administrative agent, and the subsidiary guarantors and lenders named therein. The material terms of the Amendment provide for: (i) a $50,000,000 increase in the Line of Credit from an aggregate principal amount of $100,000,000 to $150,000,000; (ii) a term loan with an aggregate maximum principal amount of $50,000,000, or the Term Loan Credit Facility, that matures on August 25, 2019, and may be extended for one 12-month period during the term of the Credit Agreement subject to satisfaction of certain conditions, including payment of an extension fee; (iii) our right, upon at least five business days’ prior written notice to Bank of America, to increase the Line of Credit or Term Loan Credit Facility, provided that the aggregate principal amount of all such increases and additions shall not exceed $300,000,000; (iv) a revision to the definition of Threshold Amount, as defined in the Credit Agreement, to reflect an increase in such amount for any Recourse

~~Table of Contents~~

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

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

Indebtedness, as defined in the Credit Agreement, to $20,000,000, and an increase in such amount for any Non-Recourse Indebtedness, as defined in the Credit Agreement, to $50,000,000; (v) the revision of certain Unencumbered Property Pool Criteria, as defined and set forth in the Credit Agreement; and (vii) an increase in the maximum Consolidated Secured Leverage Ratio, as defined in the Credit Agreement, to be equal to or less than 40.0%. The aggregate borrowing capacity under the credit facilities was $200,000,000 as of October 31, 2017.

~~Property Acquisition~~

Subsequent to September 30, 2017, we completed one property acquisition comprising ten buildings from unaffiliated third parties and established a new reportable segment, senior housing — RIDEA, at such time. The following is a summary of our property acquisition subsequent to September 30, 2017:

Acquisition(1) Location Type Date Acquired Contract Purchase Price Line of Credit(2) Total Acquisition Fee(3)
Central Florida Senior Housing Portfolio Bradenton, Brooksville, Lake Placid, Lakeland, Pinellas Park, Sanford, Spring Hill and Winter Haven, FL Senior Housing — RIDEA 11/01/17 $ 109,500,000
$ 112,000,000
$ 4,882,000

~~___________~~


~~(1)~~	On November 1, 2017, we completed the acquisition of Central Florida Senior Housing Portfolio, pursuant to a joint venture with an affiliate of Meridian Senior Living, LLC, an unaffiliated third party. Our effective ownership of the joint venture is approximately 98.0%.


~~(2)~~	~~Represents borrowings under the Line of Credit, as amended, at the time of acquisition.~~

~~(3)~~

Our advisor was paid, as compensation for services rendered in connection with the investigation, selection and acquisition of Central Florida Senior Housing Portfolio, a base acquisition fee upon the closing of the acquisition of 2.25% of the portion of the aggregate contract purchase price paid by us. In addition, the total acquisition fee includes a Contingent Advisor Payment in the amount of 2.25% of the portion of the aggregate contract purchase price paid by us, which shall be paid by us to our advisor, subject to the satisfaction of certain conditions. See Note 12, Related Party Transactions — Acquisition and Development Stage — Acquisition Fee, for a further discussion.

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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~~2019 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or the SEC, on March ~~1, 2017.~~19, 2020. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, 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, 2020 and ~~2016.~~2019.

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Our statements contained in this report that are not historical facts are forward-looking. Actual results may differ materially from those included in the forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations, are generally identifiable by use of the words “expect,” “project,” “may,” “will,” “should,” “could,” “would,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” ~~“potential”~~“potential,” “seek” and any other comparable and derivative terms or the ~~negative of such terms and other comparable terminology.~~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 ~~and future investments~~ 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 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 and guidelines applicable to REITs; the success of our ~~best efforts initial public offering; the availability of properties to acquire;~~investment strategy; the availability of financing; and our ongoing relationship with American Healthcare Investors, LLC, or American Healthcare Investors, and Griffin Capital Company, LLC, or Griffin Capital, ~~(formerly known as Griffin Capital Corporation),~~or collectively, our co-sponsors, and their affiliates. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date on which such statements were made, and undue reliance should not be placed on such statements. We undertake no obligation to update any such statements that may become untrue because of subsequent events. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview and Background

Griffin-American Healthcare REIT IV, Inc., a Maryland corporation, was incorporated on January 23, 2015 and therefore we consider that our date of inception. We were initially capitalized on February 6, 2015. We invest in a diversified portfolio of real estate properties, focusing primarily on medical office buildings, ~~hospitals,~~ skilled nursing facilities, senior housing and other healthcare-related facilities. We ~~may~~ also ~~originate~~operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and ~~acquire secured loans~~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 ~~real estate-related investments on an infrequent and opportunistic basis.~~Economic Recovery Act of 2008). We generally seek investments that produce current income. We qualified to be taxed as a REIT under ~~the Internal Revenue Code of 1986, as amended, or~~ the Code for federal income tax purposes beginning with our taxable year ended December 31, 2016, and we intend to continue to qualify to be taxed as a REIT.

On February 16, 2016, we commenced our initial public offering, or our initial offering, in which we were initially offering to the public up to $3,150,000,000 in shares of our Class T common stock, consisting of up to $3,000,000,000 in shares of our Class T common stock ~~at a price~~in the primary portion of ~~$10.00 per share in~~ our ~~primary~~initial offering and up to $150,000,000 in shares of our Class T common stock ~~for $9.50 per share~~ pursuant to our distribution reinvestment plan, as amended, or the DRIP. Effective June 17, 2016, we reallocated certain of the unsold shares of Class T common stock being offered and began offering shares of Class I common stock, such that we ~~are currently~~were offering up to approximately $2,800,000,000 in shares of Class T common stock and $200,000,000 in shares of Class I common stock in the primary portion of our ~~primary~~initial offering, and up to an aggregate of $150,000,000 in shares of our Class T and Class I common stock pursuant to the DRIP, aggregating up to $3,150,000,000. ~~The shares of~~On February 15, 2019, we terminated our Class T common stock in our primary offering are being offered at a price of $10.00 per share. The shares of our Class I common stock in our primary offering were being offered at a price of $9.30 per share prior to March 1, 2017, and are being offered at a price of $9.21 per share for all shares issued effective March 1, 2017. The shares of our Class T and Class I common stock issued pursuant to the DRIP were sold at a price of $9.50 per share prior to January 1, 2017, and are sold at a price of $9.40 per share for all shares issued pursuant to the DRIP effective January 1, 2017. After our board of directors determines an estimated net asset value, or NAV, per share of our common stock, share prices are expected to be adjusted to reflect the estimated NAV per share and, in the case of shares offered pursuant to our primary offering, up-front selling commissions and dealer manager fees other than those funded by Griffin-American Healthcare REIT IV Advisor, LLC, or Griffin-American Healthcare REIT IV Advisor, or our advisor. We reserve the right to reallocate the shares of common stock we are offering between the primaryinitial offering, and ~~the DRIP, and among classes~~as of ~~stock. As of September 30, 2017,~~such date, we ~~had received and accepted subscriptions in our offering for 35,522,410~~sold 75,639,681 aggregate shares of our Class T and Class I common stock, or approximately ~~$353,510,000,~~$754,118,000, and a total of $31,021,000 in distributions were reinvested that resulted in 3,253,535 shares of our common stock being issued pursuant to the DRIP portion of our initial offering.

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~~excluding~~On January 18, 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 $100,000,000 of additional shares of our common stock to be issued pursuant to the ~~DRIP.~~DRIP, or the 2019 DRIP Offering. The Registration Statement on Form S-3 was automatically effective with the SEC upon its filing. We commenced offering shares pursuant to the 2019 DRIP Offering on March 1, 2019, following the termination of our initial offering on February 15, 2019. We collectively refer to the DRIP portion of our initial offering and the 2019 DRIP Offering as our DRIP Offerings. As of March 31, 2020, a total of $28,046,000 in distributions were reinvested that resulted in 2,934,920 shares of our common stock being issued pursuant to the 2019 DRIP Offering.

On April 2, 2020, our board of directors, or our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, and after considering the uncertainties presented by the COVID-19 pandemic, unanimously approved and established an estimated per share net asset value, or NAV, of our common stock of $9.54. We provide this estimated per share NAV to assist broker-dealers in connection with their obligations under Financial Industry Regulatory Authority, or FINRA, Rule 2231 with respect to customer account statements. The 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, calculated as of December 31, 2019. This valuation was performed in accordance with the methodology provided in Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, or the Practice Guideline, issued by the Institute for Portfolio Alternatives, or the IPA, in April 2013, in addition to guidance from the SEC. The valuation was calculated as of December 31, 2019, prior to the reported emergence of COVID-19 in the United States. The impact of the COVID-19 pandemic on the value of our assets may be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted at this time, including new information which may emerge concerning the severity of the COVID-19 pandemic, the success of actions taken to contain or treat COVID-19, and reactions by consumers, companies, governmental entities and capital markets. Therefore, although we intend to publish an updated estimated per share NAV on at least an annual basis, we may be required to reevaluate the estimated per share NAV sooner if the COVID-19 pandemic has a material adverse impact on our residents, tenants, operating partners, managers or portfolio of investments or us. The estimated per share NAV of our common stock of $9.54 is within the range of estimated values, but lower than the mid-point of $9.75 provided by the independent third party valuation firm that conducted a valuation analysis of our assets, and is the same estimated per share NAV previously determined by the board on April 4, 2019 and calculated as of December 31, 2018. See our Current Report on Form 8-K filed with the SEC on April 3, 2020, for more information on the methodologies and assumptions used to determine, and the limitations and risks of, our estimated per share NAV.

We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, or our operating partnership. We are externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, 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 16, 2016 and had a one-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February ~~13, 2017~~12, 2020 and expires on February 16, ~~2018.~~2021. Our advisor uses its best efforts, subject to the oversight and review of our board, ~~of directors,~~ to, among other things, research, identify, review and make investments in and dispositions of properties and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by wholly owned subsidiaries of American Healthcare Investors and 25.0% owned by a wholly owned subsidiary of Griffin ~~Capital, or collectively, our co-sponsors.~~Capital. American Healthcare Investors is 47.1% owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Colony ~~NorthStar,~~Capital, Inc. (NYSE: ~~CLNS)~~CLNY), or Colony ~~NorthStar (formerly known as NorthStar Asset Management Group Inc. prior to its merger with Colony~~ Capital, ~~Inc. and NorthStar Realty Finance Corp. on January 10, 2017),~~ and 7.8% owned by James F. Flaherty III, a former partner of Colony ~~NorthStar.~~Capital. We are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, or our dealer manager, Colony ~~NorthStar~~Capital or Mr. Flaherty; however, we are affiliated with Griffin-American Healthcare REIT IV Advisor, LLC, American Healthcare Investors and AHI Group Holdings.

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We currently operate through ~~two~~four reportable business ~~segments —~~segments: medical office buildings, senior housing, senior housing — RIDEA and ~~senior housing.~~skilled nursing facilities. As of ~~September 30, 2017,~~March 31, 2020, we had completed ~~17 real estate~~46 property acquisitions whereby we owned 2989 properties, comprising 3094 buildings, or approximately ~~1,418,000~~4,863,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of ~~$356,640,000.~~$1,087,588,000. As of ~~September 30, 2017, our~~March 31, 2020, we also owned a 6.0% interest in a joint venture which owns a portfolio capitalization rate was approximately 6.9%, which estimate was based upon total property portfolio net operating income from each property’s forward looking pro forma projections 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~~integrated senior health campuses and ~~expenses paid.~~ancillary businesses.

Critical Accounting Policies

The complete listing of our Critical Accounting Policies was previously disclosed in our ~~2016~~2019 Annual Report on Form 10-K, as filed with the SEC on March ~~1, 2017,~~19, 2020, and there have been no material changes to our Critical Accounting Policies as disclosed therein, except as ~~noted below.~~

~~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~~included within 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, 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 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017.

~~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. As a result of our early adoption of ASU 2017-01 on January 1, 2017, we accounted for the eight property acquisitions we completed for the nine months ended September 30, 2017 as asset acquisitions rather than business combinations.

~~Table of Contents~~

Recently Issued ~~or Adopted~~ Accounting ~~Pronouncements~~Pronouncement

For a discussion of recently issued ~~or adopted~~ accounting ~~pronouncements,~~pronouncement, see Note 2, Summary of Significant Accounting Policies — Recently Issued ~~or Adopted~~ Accounting ~~Pronouncements,~~Pronouncement, to our accompanying condensed consolidated financial statements.

Acquisitions in ~~2017~~2020

For a discussion of our property acquisitions in ~~2017,~~2020, see Note 3, Real Estate Investments, Net, ~~and Note 18, Subsequent Events — Property Acquisition,~~ 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 national economic conditions affecting real estate generally, including the ongoing COVID-19 pandemic, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the ~~acquisition,~~ management and operation of our properties other than those listed in Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously disclosed in our ~~2016~~2019 Annual Report on Form 10-K, as filed with the SEC on March ~~1, 2017.~~19, 2020.

~~Real Estate Revenue~~Due to the ongoing COVID-19 pandemic in the United States and globally, our residents, tenants, managers and operating partners may be materially impacted. The situation presents a meaningful challenge for us as an owner and operator of healthcare facilities, as the impact of the virus has resulted in a massive strain throughout the healthcare system. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and skilled nursing facilities, and we continue to work diligently to implement appropriate protocols at such facilities in line with the Centers for Disease Control and Prevention and Centers for Medicare and Medicaid Services guidelines to limit the exposure and spread of COVID-19. However, we have experienced a decline in our occupancies at our senior housing — RIDEA facilities due in large part to decreased move-ins of prospective residents because of shelter in place and other quarantine restrictions. Our operators have also experienced increased costs to procure personal protective equipment and other supplies for which there are shortages and to maintain staffing levels to care for the aged population during this crisis. Managers of our RIDEA properties are evaluating their options for financial assistance utilizing programs within the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by the federal government on March 27, 2020, as well as other state and local government programs. Some of our tenants within our non-RIDEA properties are also seeking financial assistance from the CARES Act through programs such as the Payroll Protection Program and deferral of payroll tax payments. However, there is no assurance that our managers and tenants will receive approval under such financial assistance programs and the ultimate impact of such relief from the CARES Act and other enacted and future legislation and regulation is uncertain. The COVID-19 pandemic has also negatively impacted the businesses of our medical office tenants, including physician practices and other medical service providers of non-essential and elective services, and their ability to pay rent on a timely basis.

We are closely monitoring COVID-19 developments and continuously assessing the implications to our business, residents, tenants, operating partners, managers and our portfolio of investments. While we have yet to experience a material impact to our operations as a result of the COVID-19 pandemic, we anticipate that this may change as the virus continues to spread. The ~~amount~~impact of ~~revenue generated by our properties depends principally~~the COVID-19 pandemic on our ~~ability~~future results could be significant and will largely depend on future developments, including the duration of the crisis and the success of efforts to ~~maintain~~contain it, which are highly uncertain and cannot be predicted at this time. While the ~~occupancy rates~~impacts of ~~leased space~~COVID-19 have had an adverse effect on our business, financial condition and results of operations, we are unable to ~~lease available space and space available from lease terminations at~~predict the ~~then existing rental rates. Negative trends in one~~full extent or ~~more~~nature of these ~~factors could adversely affect our revenue in~~impacts at this time. See the ~~future.~~“Liquidity and Capital Resources” section below and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q for a further discussion.

~~Offering Proceeds~~

If we fail to raise significant additional proceeds in our offering, we will not have enough proceeds to invest in a diversified real estate portfolio. Our real estate portfolio would be concentrated in a small number

Table of properties, resulting in increased exposure to local and regional economic downturns and the poor performance of one or more of our properties and, therefore, expose our stockholders to increased risk. In addition, many of our expenses are fixed regardless of the size of our real estate portfolio. Therefore, depending on the amount of proceeds we raise from our offering, we would expend a larger portion of our income on operating expenses. This would reduce our profitability and, in turn, the amount of net income available for distribution to our stockholders.Contents

Scheduled Lease Expirations

AsExcluding our senior housing — RIDEA facilities, as of ~~September 30, 2017,~~March 31, 2020, our properties were ~~95.7%~~95.6% leased and during the remainder of ~~2017, 1.7%~~2020, 2.6% of the leased GLA is scheduled to expire. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next 12 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, 2020, our remaining weighted average lease term was ~~8.5 years.~~8.8 years, excluding our senior housing — RIDEA facilities.

For the three months ended March 31, 2020, our senior housing — RIDEA facilities were 81.7% leased. Substantially all of our leases with residents at such properties are for a term of one year or less.

Results of Operations

Comparison of the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019

~~We were incorporated on January 23, 2015, but we did not commence material operations until~~Our operating results are primarily comprised of income derived from our portfolio of properties and expenses in connection with the ~~commencement~~acquisition and operation of our offering on February 16, 2016. We purchased our first property in June 2016. Accordingly, our results of operations for the three and nine months ended September 30, 2017 and 2016 are not comparable.such properties. In general, we expect ~~all~~ amounts related to our portfolio of operating properties to increase in the future based on a full year of operations ~~as well as increased activity as we acquire additional real estate or real estate-related investments. Our results~~ of ~~operations are not indicative of those expected in future periods.~~newly acquired properties.

~~As of September 30, 2017, we operated through two reportable business segments — medical office buildings and senior housing.~~ 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 ~~2016 and~~2016; senior housing facility in December ~~2016,~~2016; senior housing — RIDEA facility in November 2017; and skilled nursing facility in March 2018, we ~~established~~added a new ~~reportable~~reporting segment at each such time. As of March 31, 2020, we operated through four reportable business segments, with activities related to investing in medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities.

Changes in our consolidated operating results are primarily due to owning 94 buildings as of March 31, 2020, as compared to owning 71 buildings as of March 31, 2019. In addition, there are changes in our operating results by reporting segment due to transitioning the operations of two senior housing facilities within Lafayette Assisted Living Portfolio to a RIDEA structure in February 2019 and five senior housing facilities within Northern California Senior Housing Portfolio to a RIDEA structure in March 2020. As of March 31, 2020 and 2019, we owned the following types of properties:



	March 31,
	2020					2019
	Number of Buildings	Aggregate Contract Purchase Price		Leased %		Number of Buildings	Aggregate Contract Purchase Price		Leased %
Medical office buildings	43	$	603,639,000	93.1	%	30	$	434,039,000	92.5	%
Senior housing — RIDEA	26	264,349,000		(1	)	14	153,850,000		(1	)
Senior housing	14	101,800,000		100	%	16	133,600,000		100	%
Skilled nursing facilities	11	117,800,000		100	%	11	117,800,000		100	%
Total/weighted average(2)	94	$	1,087,588,000	95.6	%	71	$	839,289,000	95.8	%

___________


(1)	For the three months ended March 31, 2020 and 2019, the leased percentage for the resident units of our senior housing — RIDEA facilities was 81.7% and 82.2%, respectively, based on daily average occupancy of licensed beds/units.


(2)	Leased percentage excludes our senior housing — RIDEA facilities.

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Revenues

~~Except where otherwise noted,~~Our primary sources of revenue include rent and resident fees and services from our ~~results~~properties. The amount of ~~operations are primarily due~~revenue generated by our properties depends principally on our ability to ~~owning 30 buildings as~~maintain the occupancy rates of ~~September 30, 2017, as compared~~currently leased space and to ~~owning five buildings as of September 30, 2016. As of September 30, 2017 and 2016, we owned~~lease available space at the ~~following types of properties:~~

September 30,
2017 2016

Number of
Buildings

Aggregate Contract
Purchase Price
Leased %
Number of
Buildings

Aggregate Contract
Purchase Price
Leased %
Medical office buildings 18
$ 262,290,000
94.0 % 5
$ 59,670,000
100 %
Senior housing 12
94,350,000
100 % —
—
— %
Total/weighted average 30
$ 356,640,000
95.7 % 5
$ 59,670,000
100 %

~~Real Estate~~then existing market rates. Revenue

For the three months ended September 30, 2017 and 2016, real estate revenue was $8,488,000 and $312,000, respectively, and was primarily comprised of base rent of $6,295,000 and $191,000, respectively, and expense recoveries of $1,579,000 and $88,000, respectively.

For the nine months ended September 30, 2017 and 2016, real estate revenue was $18,738,000 and $338,000, respectively, and was primarily comprised of base rent of $13,894,000 and $194,000, respectively, and expense recoveries of $3,586,000 and $111,000, respectively. Real estate revenue by 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		2020		2019
Real Estate Revenue
Medical office buildings	$	6,330,000	$	312,000	$	15,456,000	$	338,000	$	16,271,000	$	11,495,000
Skilled nursing facilities									3,012,000		2,810,000
Senior housing	2,158,000		—		3,282,000		—		2,180,000		842,000
Total	$	8,488,000	$	312,000	$	18,738,000	$	338,000
Total real estate revenue									21,463,000		15,147,000
Resident Fees and Services
Senior housing — RIDEA									16,081,000		10,695,000
Total resident fees and services									16,081,000		10,695,000
Total revenues									$	37,544,000	$	25,842,000

~~Rental Expenses~~

For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, rental expenses were $2,095,000~~2019, real estate revenue primarily comprised of base rent of $15,860,000 and ~~$98,000,~~$12,428,000, respectively, and expense recoveries of $4,422,000 and $3,002,000, respectively.

For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, rental expenses were $4,893,000~~2019, resident fees and ~~$121,000, respectively. Rental expenses~~services consisted of ~~the following~~rental fees related to resident leases and extended health care fees. The increase in resident fees and services for the ~~periods then ended:~~

three months ended March 31, 2020, compared to the corresponding prior period, is primarily due to the acquisition of seven senior housing — RIDEA facilities subsequent to March 31, 2019 and the transition of five senior housing facilities within Northern California Senior Housing Portfolio to a RIDEA structure in March 2020.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Real estate taxes $ 651,000
$ 24,000
$ 1,278,000
$ 39,000
Utilities 552,000
29,000
1,267,000
36,000
Building maintenance 467,000
28,000
1,327,000
28,000
Property management fees — third party 127,000
6,000
320,000
6,000
Property management fees — affiliates 103,000
5,000
249,000
5,000
Administration 91,000
—
212,000
—
Insurance 23,000
—
56,000
—
Amortization of leasehold interests 22,000
—
69,000
—
Other 59,000
6,000
115,000
7,000
Total $ 2,095,000
$ 98,000
$ 4,893,000
$ 121,000
Rental Expenses and Property Operating Expenses

~~Table of Contents~~

Rental expenses and rental expenses as a percentage of ~~total~~real estate revenue, as well as property operating expenses and property operating expenses as a percentage of resident fees and services, by 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				2020				2019
Rental Expenses
Medical office buildings	$	1,857,000	29.3	%	$	98,000	31.4	%	$	4,543,000	29.4	%	$	121,000	35.8	%	$	5,390,000	33.1	%	$	3,570,000	31.1	%
Senior housing	238,000		11.0	%	—		—	%	350,000		10.7	%	—		—	%	280,000		12.8	%	291,000		34.6	%
Total/weighted average	$	2,095,000	24.7	%	$	98,000	31.4	%	$	4,893,000	26.1	%	$	121,000	35.8	%
Skilled nursing facilities																	152,000		5.0	%	120,000		4.3	%
Total rental expenses																	$	5,822,000	27.1	%	$	3,981,000	26.3	%
Property Operating Expenses
Senior housing — RIDEA																	$	13,017,000	80.9	%	$	8,465,000	79.1	%
Total property operating expenses																	$	13,017,000	80.9	%	$	8,465,000	79.1	%

~~Multi-tenant medical office buildings~~For the three months ended March 31, 2020 and 2019, property operating expenses primarily consisted of administration and benefits expense of $7,152,000 and $4,677,000, respectively. Senior housing — RIDEA facilities typically have a higher percentage of ~~rental~~direct operating expenses to revenue than medical office buildings, senior housing ~~facilities. We anticipate that~~facilities and skilled nursing facilities due to the ~~percentage~~nature of ~~rental expenses to revenue will fluctuate based on the types~~RIDEA facilities where we conduct day-to-day operations.

Table of ~~property we acquire in the future.~~Contents

General and Administrative

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2020		2019
Asset management fees — affiliates	$	700,000	$	—	$	1,505,000	$	—	$	2,411,000	$	1,889,000
Professional and legal fees	310,000		141,000		646,000		260,000		1,528,000		1,219,000
Restricted stock compensation	61,000		14,000		100,000		66,000
Transfer agent services	57,000		40,000		141,000		42,000		134,000		126,000
Bank charges									129,000		58,000
Board of directors fees	53,000		58,000		163,000		141,000		68,000		69,000
Directors’ and officers’ liability insurance	53,000		59,000		161,000		147,000		65,000		57,000
Restricted stock compensation									43,000		39,000
Franchise taxes	31,000		—		121,000		—		40,000		50,000
Bad debt expense	25,000		—		94,000		—		—		655,000
Other	6,000		17,000		65,000		69,000		30,000		28,000
Total	$	1,296,000	$	329,000	$	2,996,000	$	725,000	$	4,448,000	$	4,190,000

The increase in general and administrative expenses for the three ~~and nine~~ months ended ~~September 30, 2017 as~~March 31, 2020, compared to the ~~three and nine months ended September 30, 2016 was~~corresponding prior year period, is primarily due to the purchase of additional properties in ~~2016~~2019 and ~~2017~~2020 and thus, incurring higher asset management fees to our advisor or its affiliates and higher professional and legal fees. We did not incur any asset management fees for the three and nine months ended September 30, 2016 as a result of our advisor waiving $31,000 in asset management fees through September 2016. See Note 12, Related Party Transactions — Operational Stage — Asset Management Fee, for a further discussion of the waiver. In addition, we incurred higher transfer agent service fees for the three and nine months ended September 30, 2017 as compared to the three and nine months ended September 30, 2016 due to an increase in the number of investors in connection with the increased equity raise pursuant to our offering throughout 2016 and 2017. We expect general and administrative expenses to continue to increase in 2017 as we acquire additional properties.

~~Acquisition Related Expenses~~

For the three and nine months ended September 30, 2017, acquisition related expenses were $121,000 and $334,000, respectively, and were related primarily to expenses incurred in pursuit of properties that did not result in an acquisition.

For the three and nine months ended September 30, 2016, acquisition related expenses of $1,857,000 and $2,227,000, respectively, were related primarily to expenses associated with our four and five property acquisitions, respectively, including base acquisition fees of $1,220,000 and $1,343,000, respectively, incurred to our advisor.

Depreciation and Amortization

For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, depreciation and amortization was ~~$3,442,000~~$12,530,000 and ~~$7,619,000,~~$16,078,000, respectively, and consisted primarily of depreciation on our operating properties of ~~$2,305,000~~$7,839,000 and ~~$5,110,000,~~$6,960,000, respectively, and amortization on our identified intangible assets of ~~$1,134,000~~$4,646,000 and ~~$2,506,000,~~$9,095,000, respectively. ~~For~~Included during the three ~~and nine~~ months ended ~~September 30, 2016, depreciation~~March 31, 2019 is $6,226,000 of amortization expense and ~~amortization was $64,000 and consisted primarily~~$1,013,000 of depreciation ~~on our operating properties~~expense related to the write-off of ~~$40,000~~lease commissions and ~~amortization on our identified intangible assets~~tenant improvements, respectively, in connection with the termination of ~~$24,000.~~

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a management services agreement with an operator in February 2019.

Interest Expense

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



	Three Months Ended March 31,
	2020		2019
Interest expense:
Line of credit and term loans and derivative financial instruments	$	4,618,000	$	2,806,000
Mortgage loans payable	191,000		193,000
Amortization of deferred financing costs:
Line of credit and term loans	469,000		560,000
Mortgage loans payable	20,000		20,000
Loss in fair value of derivative financial instruments	4,605,000		1,978,000
Amortization of debt discount/premium	12,000		6,000
Total	$	9,915,000	$	5,563,000

The increase in interest expense in 2020 as compared to 2019 was ~~$780,000 and $1,607,000, respectively, and~~primarily related ~~primarily~~ to ~~interest expense~~the increase in debt balances on our ~~revolving~~ line of credit ~~with Bank of America, N.A., or Bank of America,~~ and ~~KeyBank, National Association, or KeyBank, or the Line of Credit, of $531,000 and $1,059,000, respectively,~~term loans, as well as interest expense and loss in fair value recognized on our mortgage loans payable of $146,000 and $267,000, respectively, and amortization of deferred financing costs of $90,000 and $267,000, respectively, on the Line of Credit. For the three and nine months ended September 30, 2016, interest expense was $56,000 and related primarily to the unused fee of $26,000 and amortization of deferred financing costs of $27,000 on the Line of Credit.derivative financial instruments we entered into in February 2019. See Note 6, Mortgage Loans Payable, Net, ~~and~~ Note 7, Line of Credit and Term Loans and Note 8, Derivative Financial Instruments, to our accompanying condensed consolidated financial statements, for a further discussion.

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Liquidity and Capital Resources

Our sources of funds ~~will~~ primarily ~~be the net proceeds~~consist of ~~our offering,~~ operating cash flows and borrowings. In the normal course of business, our principal demands for funds are for payment of operating expenses, capital improvement expenditures, interest on our indebtedness, distributions to our stockholders and repurchases of our common stock. We estimate that we will require approximately $11,565,000 to pay interest on our outstanding indebtedness for the remainder of 2020, based on interest rates in effect as of March 31, 2020, and that we will require $448,000 to pay principal on our outstanding indebtedness for the remainder of 2020. We also require resources to make certain payments to our advisor and its affiliates. See Note 13, Related Party Transactions, to our accompanying condensed consolidated financial statements for a further discussion of our payments to our advisor and its affiliates. Generally, cash needs for such items will be met from operations and borrowings. Our total capacity to pay operating expenses, capital improvement expenditures, interest, distributions and repurchases is a function of our current cash position, our borrowing capacity on our line of credit, as well as any future indebtedness that we may incur. As of March 31, 2020, our cash on hand was $20,516,000 and we had $56,900,000 available on our line of credit and term loans.

Due to the impact the COVID-19 pandemic has had on the United States and globally, and the uncertainty of the severity and duration of the COVID-19 pandemic and its effects, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects by decreasing our distributions to stockholders and partially suspending our share repurchase plan. Consequently, our board approved a daily distribution rate for April and May 2020 equal to $0.001095890 per share of our Class T and Class I common stock, which is equal to an annualized distribution rate of $0.40 per share, a decrease from the annualized rate of $0.60 per share previously paid by us. See the “Distributions” section below for a further discussion. In addition, effective with respect to share repurchase requests submitted for repurchase during the second quarter 2020, on March 31, 2020 our board suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders. Our board shall determine if and when it is in the best interest of our company and stockholders to reinstate our share repurchase plan for additional stockholders. Furthermore, subsequent to March 31, 2020, we borrowed all of the remaining availability on our line of credit as a precautionary measure to strengthen our liquidity and preserve financial flexibility. We believe that ~~these resources~~such proceeds of cash from our line of credit will be sufficient to satisfy our cash requirements for the foreseeable future, and we do not anticipate a need to raise funds from other sources within the next 12 months.

~~We are dependent~~A capital plan for each investment is established upon the net proceeds to be received from our offering to conduct our proposed activities. Our ability to raise funds through our offering is dependent on general economic conditions, general market conditions for REITs and our operating performance. We expect a relative increase in liquidity as additional subscriptions for shares of our common stock are received and a relative decrease in liquidity as net offering proceeds are expended in connection with the acquisition ~~management and operation of our investments in real estate and real estate-related investments.~~

Our principal demands for funds are for acquisitions of real estate and real estate-related investments, payment of operating expenses and interest on our current and future indebtedness and payment of distributions to our stockholders. We estimate that we will require approximately $388,000 to pay interest on our outstanding indebtedness in the remainder of 2017, based on interest rates in effect as of September 30, 2017, and that we will require $84,000 to pay principal on our outstanding indebtedness in the remainder of 2017. In addition, we require resources to make certain payments to our advisor and our dealer manager, which during our offering will include payments to our dealer manager and its affiliates for selling commissions, the dealer manager fee and the stockholder servicing fee. See Note 11, Equity — Offering Costs, and Note 12, Related Party Transactions, to our accompanying condensed consolidated financial statements, for a further discussion of our payments to our advisor and our dealer manager.

Generally, cash needs for items other than acquisitions of real estate and real estate-related investments will be met from operations, borrowings and the net proceeds of our offering, including the proceeds raised through the DRIP. However, there may be a delay between the sale of our shares of common stock and our investments in real estate and real estate-related investments, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our investments.

Our advisor evaluates potential investments and engages in negotiations with real estate sellers, developers, brokers, investment managers, lenders and others on our behalf. Investors should be aware that after a purchase contract for a property is executed that contains specific terms, the property will not be purchased until the successful completion of due diligence, which includes review of the title insurance commitment, market evaluation, review of leases, review of financing options and an environmental analysis. In some instances, the proposed acquisition will require the negotiation of final binding agreements, which may include financing documents. Until we invest the proceeds of our offering in real estate and real estate-related investments, we may invest in short-term, highly liquid or other authorized investments. Such short-term investments will not earn significant returns, and we cannot predict how long it will take to fully invest the proceeds in real estate and real estate related-investments. The number of properties we may acquire and other investments we will make will depend upon the number of shares of our common stock sold and the resulting amount of the net proceeds available for investment from our offering as well as our ability to arrange debt financing.

~~When we acquire a property, our advisor prepares a capital plan~~ 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 ~~will~~ also ~~set~~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 loan established with respect to the investment, other borrowings ~~operating cash generated by the investment,~~or additional equity investments from us or joint venture ~~partners or, when necessary,~~partners. As of March 31, 2020, we had $227,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital reserves. Any capital reserve would be established from the net proceeds of our offering, proceeds from sales of other investments, operating cash generated by other investments or other cash on hand. In some cases, a lender may require us to establish capital reserves for a particular investment.expenditures. The capital plan for each investment ~~will be~~is adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs.

Based on the budget for the properties we own as of ~~September 30, 2017,~~March 31, 2020, we ~~estimate~~originally estimated that our discretionary expenditures for capital and tenant improvements could have required up to $10,946,000 for the remaining nine months of 2020. However, in light of the COVID-19 pandemic and to further preserve cash, we suspended all non-essential, discretionary expenditures for capital improvements ~~will require up~~that were anticipated during 2020 throughout our portfolio. In particular, we suspended capital expenditures that are not directly associated with the maintenance or expansion of tenant occupancy and the enhancement of net operating income. The duration of our suspension of capital expenditures is uncertain and an update to ~~$1,246,000~~the actual amounts forecasted to be expended for the ~~remaining three months~~remainder of ~~2017. As of September 30, 2017, we had $16,000 of restricted~~

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~~cash in reserve accounts for such capital expenditures. We~~the year cannot ~~provide assurance, however, that we will not exceed these~~be estimated ~~expenditure and distribution levels or be able to obtain additional sources of financing on commercially favorable terms or~~ at ~~all.~~this time.

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. There are currently no limits or restrictions on the use of proceeds from our advisor or its affiliates which would prohibit us from making the proceeds available for distribution. We may also pay distributions from cash from capital transactions, including, without limitation, the sale of one or more of our properties.

IfIn addition, we ~~experience lower occupancy levels, reduced rental rates, reduced revenues as a result~~are continuously monitoring the impact the COVID-19 pandemic is having on our business, residents, tenants, operating partners and on the United States and global economies. Due to the COVID-19 pandemic, there is risk and uncertainty in the financial and debt markets. The impact of ~~asset sales, or increased capital expenditures~~the COVID-19 pandemic on our portfolio of investments may be significant and ~~leasing costs compared to historical levels due to competitive market conditions for new~~its impact on our operations 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 basedliquidity will largely depend on ~~various assumptions~~future developments, which are ~~difficult~~highly uncertain and cannot be predicted at this time, including new information which may emerge concerning the severity of the COVID-19 pandemic, the success of actions taken to ~~predict,~~contain or treat COVID-19, and reactions by consumers, companies, governmental entities and capital markets. The COVID-19 pandemic has also negatively impacted the businesses of our medical office tenants, including ~~the levels~~physician practices and other medical service providers of ~~leasing activity~~non-essential and ~~related leasing costs. Any changes in these assumptions could impact our financial results~~ elective services,

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and ~~our~~their ability to ~~fund working capital~~pay rent on a timely basis. To the extent that our residents, tenants, operating partners and ~~unanticipated cash needs.~~managers continue to be impacted by the COVID-19 pandemic, or by the risks disclosed in our SEC filings, this could materially disrupt our business operations.

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 $ 2,237,000
$ 202,000
Net cash provided by (used in) operating activities 8,849,000
(2,391,000 )
Net cash used in investing activities (222,118,000 ) (56,637,000 )
Net cash provided by financing activities 215,429,000
61,401,000
Cash and cash equivalents — end of period $ 4,397,000
$ 2,575,000



	Three Months Ended March 31,
	2020			2019
Cash, cash equivalents and restricted cash — beginning of period	$	15,846,000		$	14,590,000
Net cash provided by operating activities	9,793,000			6,223,000
Net cash used in investing activities	(68,297,000		)	(21,016,000		)
Net cash provided by financing activities	63,522,000			45,471,000
Cash, cash equivalents and restricted cash — end of period	$	20,864,000		$	45,268,000

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, 2020 and ~~2016,~~2019, cash flows provided by operating activities primarily related to the cash flows provided by our property operations, offset by ~~the payment~~payments of general and administrative expenses. See ~~Results~~the “Results of ~~Operations~~Operations” section above for a further discussion. ~~We anticipate~~In general, cash flows ~~from~~provided by operating activities ~~to increase in 2017 as we acquire additional properties.~~will be affected by the timing of cash receipts and payments.

Investing Activities

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, cash flows used in investing activities related to our property acquisitions in the amount of $65,531,000 and the payment of $2,766,000 for capital expenditures. For the three months ended March 31, 2019, cash flows used in investing activities related primarily to our ~~eight~~ property acquisitions in the amount of ~~$215,738,000. For~~$18,653,000 and the ~~nine months ended September 30, 2016,~~payment of $1,615,000 for capital expenditures. We anticipate that cash flows used in investing activities ~~related~~will primarily be affected by the timing of capital expenditures, and generally will decrease as compared to prior years as a result of the acquisition of five medical office buildings in the amount of $55,619,000 and the payment of $1,000,000 for real estate deposits. Cash flows used in investing activities are heavily dependent upon the investmenttermination of our ~~net~~initial offering ~~proceeds~~ in ~~real estate investments. We anticipate cash flows used in investing activities to increase as we acquire additional properties and real estate-related investments.~~February 2019.

Financing Activities

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, cash flows provided by financing activities related primarily to net borrowings on our line of credit and term loans of $76,300,000, partially offset by the January 2020 payoff of one mortgage loan payable with a principal balance of $7,738,000 and $5,561,000 in distributions to our common stockholders. For the three months ended March 31, 2019, cash flows provided by financing activities related primarily to funds raised from investors in our initial offering in the amount of ~~$241,647,000,~~$90,477,000, partially offset by net payments on our line of credit and term loan of $25,000,000, the payment of offering costs of ~~$13,673,000~~$14,038,000 in connection with our initial offering ~~net payments on the Line of Credit of $7,900,000~~ and 2019 DRIP offering and $4,706,000 in distributions to our common stockholders of $4,006,000. For the nine months ended September 30, 2016, cash flows provided by financing activities related primarily to funds raised from investors in our offering in the amount of $52,484,000 and borrowings under the Line of Credit of $12,000,000, partially offset by the payment of offering costs of $1,889,000 in connection with our offering, the payment of deferred financing costs of $1,027,000 in connection with the Line of Credit and mortgage loan

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~~payable and distributions to our common stockholders of $148,000. We~~stockholders. Overall, we anticipate cash flows from financing activities to ~~increase~~decrease in the future assince we ~~raise additional funds from investors and incur debt to purchase properties.~~terminated our initial offering in February 2019.

Distributions

~~On April 13, 2016, our~~Our board ~~of directors~~ authorized, on a quarterly basis, a daily distribution to our Class T stockholders of record as of the close of business on each day of the period from May 1, 2016 through June 30, 2016. Our advisor agreed to waive certain asset management fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement until such time as the amount of such waived asset management fees was equal to the amount of distributions payable to our stockholders for the period beginning on May 1, 2016 and ending on the date of the acquisition of our first property or real estate-related investment, as such terms are defined in the Advisory Agreement. Having raised the minimum offering in April 2016, the distributions declared for each record date in the May 2016 and June 2016 periods were paid in June 2016 and July 2016, respectively, from legally available funds. The daily distributions were calculated based on 365 days in the calendar year and were equal to $0.001643836 per share of our Class T common stock. These distributions were aggregated and paid in cash or shares of our common stock pursuant to the DRIP monthly in arrears. We acquired our first property on June 28, 2016, and as such, our advisor waived $80,000 in asset management fees equal to the amount of distributions paid from May 1, 2016 through June 27, 2016. 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.

~~On June 28, 2016, our board of directors authorized a daily distribution to our Class T~~ stockholders of record as of the close of business on each day of the period commencing on ~~July~~May 1, 2016 and ending on September 30, 2016 and to our Class I stockholders of record as of the close of business on each day of the period commencing on the date that the first Class I share was sold and ending on September 30, 2016. Subsequently, our board of directors authorized on a quarterly basis a daily distribution to our Class T and Class I stockholders of record as of the close of business on each day of the quarterly periods commencing on October 1, 2016 and ending on DecemberMarch 31, ~~2017.~~2020. 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 Class T and Class I common stock, which is equal to an annualized distribution of $0.60 per share. These distributions were aggregated and paid monthly in arrears in cash or shares of our common stock pursuant to our DRIP Offerings, only from legally available funds.

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equal to an annualized distribution rate of $0.40 per share. The distributions were or will be aggregated and paid in cash or shares of our common stock pursuant to ~~our~~the DRIP, on a monthly basis, in arrears, only from legally available funds.

The amount of distributions paid to our stockholders is determined ~~quarterly~~ by our board ~~of directors~~ and is dependent on a number of factors, including funds available for payment of distributions, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our qualification as a REIT under the Code. We have not established any limit on the amount of offering proceeds that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences.

The distributions paid for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, along with the amount of distributions reinvested pursuant to ~~the~~our DRIP Offerings and the sources of distributions as compared to cash flows from operations were as follows:


	Nine Months Ended September 30,								Three Months Ended March 31,
	2017				2016				2020				2019
Distributions paid in cash	$	4,006,000			$	148,000			$	5,561,000			$	4,706,000
Distributions reinvested	5,492,000				222,000				6,437,000				5,869,000
	$	9,498,000			$	370,000			$	11,998,000			$	10,575,000
Sources of distributions:
Cash flows from operations	$	8,849,000	93.2	%	$	—	—	%	$	9,793,000	81.6	%	$	6,223,000	58.8	%
Proceeds from borrowings									2,205,000		18.4		—		—
Offering proceeds	649,000		6.8		370,000		100		—		—		4,352,000		41.2
	$	9,498,000	100	%	$	370,000	100	%	$	11,998,000	100	%	$	10,575,000	100	%

Under GAAP, certain acquisition related expenses, such as expenses incurred in connection with property acquisitions accounted for as business combinations, are expensed, and therefore, subtracted from cash flows from operations. However, these expenses may be paid from offering proceeds or debt.

~~Our~~As of March 31, 2020, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and all or any portion of a distribution to our stockholders may behave been paid from net offering ~~proceeds.~~proceeds and borrowings. The payment of distributions from our 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.

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As of ~~September 30, 2017,~~March 31, 2020, we had an amount payable of ~~$8,065,000~~$966,000 to our advisor or its affiliates primarily for ~~the Contingent Advisor Payment and~~ asset 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. See Note ~~12,~~13, Related Party Transactions — ~~Acquisition and Development~~Operational Stage, ~~— Acquisition Fee,~~ to our accompanying condensed consolidated financial statements, for a further discussion.

As of September 30, 2017, no amounts due to our advisor or its affiliates had been deferred, waived or forgiven other than the $80,000 in asset management fees waived by our advisor discussed above. Other than the waiver of asset management fees by our advisor to provide us with additional funds to pay initial distributions to our stockholders through June 27, 2016, 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 or continue to 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 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~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, along with the amount of distributions reinvested pursuant to ~~the~~our DRIP Offerings and the sources of our distributions as compared to funds from operations attributable to controlling interest, or FFO, were as follows:


	Nine Months Ended September 30,								Three Months Ended March 31,
	2017				2016				2020				2019
Distributions paid in cash	$	4,006,000			$	148,000			$	5,561,000			$	4,706,000
Distributions reinvested	5,492,000				222,000				6,437,000				5,869,000
	$	9,498,000			$	370,000			$	11,998,000			$	10,575,000
Sources of distributions:
FFO attributable to controlling interest	$	8,909,000	93.8	%	$	—	—	%	$	5,416,000	45.1	%	$	4,557,000	43.1	%
Proceeds from borrowings									6,582,000		54.9		—		—
Offering proceeds	589,000		6.2		370,000		100		—		—		6,018,000		56.9
	$	9,498,000	100	%	$	370,000	100	%	$	11,998,000	100	%	$	10,575,000	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 ~~Funds~~the “Funds from Operations and Modified Funds from ~~Operations,~~Operations” section below.

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Financing

We ~~intend to continue to finance a portion of the purchase price of our investments in real estate and real estate-related investments by borrowing funds. We~~ anticipate that after an initial phase of our operations (prior to the investment of all of the net proceeds of our offering) when we may employ greater amounts of leverage to enable us to purchase properties more quickly and therefore generate distributions for our stockholders sooner, our overall leverage will not exceed 50.0% of the combined market value of all of our properties and other real estate-related investments, as determined at the end of each calendar ~~year beginning with our first full year of operations.~~year. For these purposes, the fair market value of each asset will be equal to the purchase price paid for the asset or, if the asset was appraised subsequent to the date of purchase, then the fair 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, 2020, our aggregate borrowings were ~~10.6%~~40.0% of the combined market value of all of our real estate 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 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 9, 2017~~May 14, 2020 and ~~September 30, 2017,~~March 31, 2020, our leverage did not exceed 300% of the value of our net assets.

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Mortgage Loans Payable, Net

For a discussion of our mortgage loans payable, net, see Note 6, Mortgage Loans Payable, Net, to our accompanying condensed consolidated financial statements.

Line of Credit and Term Loans

For a discussion of ~~the Line~~our line of ~~Credit,~~credit and term loans, see Note 7, Line of Credit and Term Loans, to our accompanying condensed consolidated financial statements.

REIT Requirements

In order to maintain our qualification as a REIT for federal income tax purposes, we are required to make distributions to our stockholders of at least 90.0% of our annual taxable income, excluding net capital gains. 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 offering.~~properties.

Commitments and Contingencies

For a discussion of our commitments and contingencies, see Note 9,10, Commitments and Contingencies, to our accompanying condensed consolidated financial statements.

Debt Service Requirements

~~Typically, a~~A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of ~~September 30, 2017,~~March 31, 2020, we had ~~$11,718,000~~$19,229,000 ($~~11,639,000, including~~ 18,233,000, net of discount/premium and deferred financing ~~costs, net)~~costs) of fixed-rate mortgage loans payable outstanding secured by our properties. As of ~~September 30, 2017,~~March 31, 2020, we had ~~$26,000,000~~$473,100,000 outstanding, and ~~$74,000,000~~$56,900,000 remained available under ~~the Line~~our line of ~~Credit.~~credit and term loans. See Note 6, Mortgage Loans Payable, Net, and Note 7, Line of Credit and Term Loans, to our accompanying condensed consolidated financial statements.

We are required by the terms of certain loan documents to meet certain reporting requirements and covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ~~ratios and reporting requirements.~~ratios. As of ~~September 30, 2017,~~March 31, 2020, we were in compliance with all such covenants and requirements on our mortgage loans payable and ~~the Line~~our line of ~~Credit.~~credit and term loans. As of ~~September 30, 2017,~~March 31, 2020, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was ~~4.09%~~3.59% per annum.

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Contractual Obligations

The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and ~~the Line~~our line of ~~Credit;~~credit and term loans; (ii) interest payments on our mortgage loans payable and ~~the Line~~our line of ~~Credit;~~credit and term loans; and (iii) ground ~~and other~~ lease obligations as of ~~September 30, 2017:~~March 31, 2020:


	Payments Due by Period										Payments Due by Period
	2017		2018-2019		2020-2021		Thereafter		Total		2020		2021-2022		2023-2024		Thereafter		Total
Principal payments — fixed-rate debt	$	84,000	$	793,000	$	8,349,000	$	2,492,000	$	11,718,000	$	448,000	$	1,273,000	$	1,391,000	$	16,117,000	$	19,229,000
Interest payments — fixed-rate debt	145,000		1,117,000		421,000		455,000		2,138,000		565,000		1,429,000		1,309,000		5,443,000		8,746,000
Principal payments — variable-rate debt	—		26,000,000		—		—		26,000,000		—		473,100,000		—		—		473,100,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2017)	243,000		1,621,000		—		—		1,864,000
Ground and other lease obligations	24,000		491,000		492,000		11,466,000		12,473,000
Interest payments — variable-rate debt (based on rates in effect as of March 31, 2020)											11,000,000		13,400,000		—		—		24,400,000
Ground lease obligations											415,000		1,049,000		1,064,000		47,103,000		49,631,000
Total	$	496,000	$	30,022,000	$	9,262,000	$	14,413,000	$	54,193,000	$	12,428,000	$	490,251,000	$	3,764,000	$	68,663,000	$	575,106,000

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2020, we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.

Inflation

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, inflation has not significantly affected our operations because of the moderate inflation rate; however, we expect to be exposed to inflation risk as income from future long-term

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leases will be the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that will protect us from the impact of inflation. These provisions ~~will~~ include negotiated rental increases, reimbursement billings for operating expense pass-through charges, and real estate tax and insurance ~~reimbursements on a per square foot allowance.~~reimbursements. However, due to the long-term nature of the anticipated leases, among other factors, the leases may not re-set frequently enough to cover inflation.

Related Party Transactions

For a discussion of related party transactions, see Note ~~12,~~13, Related Party Transactions, to our accompanying condensed consolidated financial statements.

Funds from Operations and Modified Funds from Operations

Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure known as funds from operations, a non-GAAP measure, which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. The use of funds from operations is recommended by the REIT industry as a supplemental performance measure, and our management uses FFO to evaluate our performance over time. FFO is not equivalent to our net income (loss) as determined under GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on funds from operations approved by the Board of Governors of NAREIT, ~~as revised in February 2004,~~ or the White Paper. The White Paper defines funds from operations as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of ~~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).

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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 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.

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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 will use the proceeds raised in our 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, the Investment Program Association, or 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 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 Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or~~ the Practice Guideline issued by the IPA in November 2010. The Practice Guideline defines modified funds from operations as funds from operations further adjusted for the following items included in the determination of GAAP net income (loss): acquisition fees and expenses; amounts relating to deferred rent ~~receivables~~ and amortization of above- and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to closer to an expected to be received cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect modified funds from operations on the same basis. The accretion of discounts and amortization of premiums on debt investments, unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income (loss) in calculating cash flows from operations and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. We are responsible for managing interest rate, hedge and foreign exchange risk, and we do not rely on another party to manage such risk. In as much as interest rate hedges will not be a fundamental part of our operations, we believe it is appropriate to exclude such gains and losses in calculating MFFO, as such gains and losses are based on market fluctuations and may not be directly related or attributable to our operations.

Our MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, we exclude acquisition related expenses, amortization of above- and below-market leases, change in deferred rent, ~~receivables~~fair value adjustments of derivative financial instruments and the adjustments of such items related to ~~redeemable~~our investment in an unconsolidated entity and noncontrolling ~~interest.~~interests. The other 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 or put into escrow any specific amount of proceeds from our offering to be used to fund acquisition fees and expenses. The purchase of real estate and real estate-related investments, and the

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corresponding expenses associated with that process, is a key operational feature of our business plan in order to generate operating revenues and cash flows to make distributions to our stockholders. However, we do not intend to fund acquisition fees and expensesperiods presented in the future from operating revenues and cash flows, nor from the 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 from the proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties or from ancillary cash flows. 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 the proceeds of our offering.table below.

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~~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. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

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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 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 has limitations as a performance measure in offerings such as ours where the price of a share of common stock is a stated value and there is no net asset value determination during the offering stage and for a period thereafter. 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.

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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,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
Net income (loss)	$	754,000		$	(2,092,000	)	$	1,290,000		$	(2,855,000	)
Net loss													$	(7,933,000	)	$	(12,361,000	)
Add:
Depreciation and amortization — consolidated properties	3,442,000			64,000			7,619,000			64,000
Depreciation and amortization related to real estate — consolidated properties													12,530,000			16,078,000
Depreciation and amortization related to real estate — unconsolidated entity													882,000			848,000
Net loss attributable to noncontrolling interests													167,000			25,000
Less:
Net income (loss) attributable to redeemable noncontrolling interest	—			—			—			—
Depreciation and amortization related to noncontrolling interests													(230,000		)	(33,000		)
FFO attributable to controlling interest	$	4,196,000		$	(2,028,000	)	$	8,909,000		$	(2,791,000	)	$	5,416,000		$	4,557,000

Acquisition related expenses(1)	$	121,000		$	1,857,000		$	334,000		$	2,227,000		$	9,000		$	118,000
Amortization of above- and below-market leases(2)	(30,000		)	(33,000		)	(99,000		)	(33,000		)	18,000			(55,000		)
Change in deferred rent receivables(3)	(569,000		)	—			(1,124,000		)	—
Adjustments for redeemable noncontrolling interest(4)	—			—			—			—
Change in deferred rent(3)													(1,074,000		)	427,000
Loss in fair value of derivative financial instruments(4)													4,605,000			1,978,000
Adjustments for unconsolidated entity(5)													173,000			82,000
Adjustments for noncontrolling interests(5)													(6,000		)	—
MFFO attributable to controlling interest	$	3,718,000		$	(204,000	)	$	8,020,000		$	(597,000	)	$	9,141,000		$	7,107,000
Weighted average Class T and Class I common shares outstanding — basic and diluted	32,593,321			3,357,979			23,827,175			1,345,578			80,301,650			75,105,471
Net income (loss) per Class T and Class I common share — basic and diluted	$	0.02		$	(0.62	)	$	0.05		$	(2.12	)
Net loss per Class T and Class I common share — basic and diluted													$	(0.10	)	$	(0.16	)
FFO attributable to controlling interest per Class T and Class I common share — basic and diluted	$	0.13		$	(0.60	)	$	0.37		$	(2.07	)	$	0.07		$	0.06
MFFO attributable to controlling interest per Class T and Class I common share — basic and diluted	$	0.11		$	(0.06	)	$	0.34		$	(0.44	)	$	0.11		$	0.09

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(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.

(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, as a lessor, rental revenue ~~or rental expense~~ 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 for ~~the change in deferred rent receivables,~~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~~management’s analysis of operating performance.

(4)

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.


(5)	Includes all adjustments to eliminate the ~~redeemable~~unconsolidated entity’s share or noncontrolling ~~interest’s~~interests’ share, as applicable, of the adjustments described in notes (1) – ~~(3)~~(4) above to convert our FFO to MFFO.

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Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, acquisition related expenses, depreciation and amortization, interest expense, income or loss from unconsolidated entity, other income and ~~interest income. Acquisition fees and expenses are paid in cash by us, and we have not set aside~~income tax benefit or put into escrow any specific amount of proceeds from our offering 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 from the proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties or from ancillary cash flows. As a result, the amount of proceeds available for investment, 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 the proceeds of our offering. 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 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, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operating performance. Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any acquisition related expenses.

We believe that NOI is an appropriate supplemental performance measure to reflect the ~~operating~~ performance of our operating assets because NOI excludes certain items that are not associated with the ~~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.

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To facilitate understanding of this financial measure, the following is a reconciliation of net income ~~(loss),~~or loss, which is the most directly comparable GAAP financial measure, to NOI for the ~~three and nine months ended September 30, 2017 and 2016:~~periods presented below:


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2017		2016			2017			2016			2020			2019
Net income (loss)	$	754,000	$	(2,092,000	)	$	1,290,000		$	(2,855,000	)
Net loss												$	(7,933,000	)	$	(12,361,000	)
General and administrative	1,296,000		329,000			2,996,000			725,000			4,448,000			4,190,000
Acquisition related expenses	121,000		1,857,000			334,000			2,227,000			9,000			118,000
Depreciation and amortization	3,442,000		64,000			7,619,000			64,000			12,530,000			16,078,000
Interest expense	780,000		56,000			1,607,000			56,000			9,915,000			5,563,000
Interest income	—		—			(1,000		)	—
Income from unconsolidated entity												(255,000		)	(126,000		)
Other income												(9,000		)	(69,000		)
Income tax expense												—			3,000
Net operating income	$	6,393,000	$	214,000		$	13,845,000		$	217,000		$	18,705,000		$	13,396,000

~~Subsequent Events~~

~~For a discussion of our subsequent events, see Note 18, Subsequent Events, to our accompanying condensed consolidated financial statements.~~

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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~~2019 Annual Report on Form 10-K, as filed with the SEC on March ~~1, 2017.~~19, 2020.

Interest Rate Risk

We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire properties ~~and make loans~~ and other permitted investments. 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.

We have entered into and may ~~also~~continue to enter into derivative financial instruments such as interest rate swaps ~~and caps~~ in order to mitigate our interest rate risk on a related financial instrument. We do not apply hedge accounting treatment to these 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. As of March 31, 2020, our interest rate swap liabilities are recorded in our accompanying condensed consolidated balance sheets at their aggregate fair value of $8,990,000. We will not enter into derivatives or interest rate transactions for speculative purposes.

As of ~~September 30, 2017,~~March 31, 2020, the table below presents 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																							Expected Maturity Date
	2017			2018			2019			2020			2021			Thereafter			Total			Fair Value		2020			2021			2022			2023			2024			Thereafter			Total			Fair Value
Fixed-rate debt — principal payments	$	84,000		$	386,000		$	407,000		$	8,035,000		$	314,000		$	2,492,000		$	11,718,000		$	11,950,000	$	448,000		$	622,000		$	651,000		$	680,000		$	711,000		$	16,117,000		$	19,229,000		$	20,807,000
Weighted average interest rate on maturing fixed-rate debt	5.14		%	5.10		%	5.10		%	4.79		%	5.25		%	5.25		%	4.92		%	—		4.48		%	4.48		%	4.49		%	4.49		%	4.50		%	3.84		%	3.94		%	—
Variable-rate debt — principal payments	$	—		$	—		$	26,000,000		$	—		$	—		$	—		$	26,000,000		$	25,998,000	$	—		$	473,100,000		$	—		$	—		$	—		$	—		$	473,100,000		$	462,391,000
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2017)	—		%	—		%	3.72		%	—		%	—		%	—		%	3.72		%	—
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of March 31, 2020)																								—		%	2.72		%	—		%	—		%	—		%	—		%	2.72		%	—

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Mortgage Loans Payable, Net and Line of Credit and Term Loans

Mortgage loans payable ~~were $11,718,000~~was $19,229,000 ($~~11,639,000, including~~ 18,233,000, net of discount/premium and deferred financing ~~costs, net)~~costs) as of ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017,~~March 31, 2020, we had ~~two~~three fixed-rate mortgage loans payable with interest rates ranging from ~~4.77%~~3.67% to 5.25% per annum. In addition, as of ~~September 30, 2017,~~March 31, 2020, we had ~~$26,000,000~~$473,100,000 outstanding under ~~the Line~~our line of ~~Credit~~credit and term loans at a weighted average interest rate of ~~3.72%~~2.72% per annum.

As of ~~September 30, 2017,~~March 31, 2020, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was ~~4.09%~~3.59% per annum. An increase in the variable interest rate on our variable-rate ~~Line~~line of ~~Credit~~credit and term loans constitutes a market risk. As of ~~September 30, 2017,~~March 31, 2020, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on our variable-rate ~~Line~~line of ~~Credit~~credit and term loans by ~~$132,000,~~$1,131,000, or ~~7.45%~~5.88% of total annualized interest expense on our mortgage loans payable and ~~the Line~~our line of ~~Credit.~~credit and term loans. See Note 6, Mortgage Loans Payable, Net, and Note 7, Line of Credit and Term Loans, to our accompanying condensed consolidated financial statements, for a further discussion.

Other Market Risk

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

Item 4. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only

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reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of ~~September 30, 2017~~March 31, 2020 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of ~~September 30, 2017,~~March 31, 2020, were effective at the reasonable assurance level.

(b) Changes in internal control over financial reporting. There were no changes in internal control over financial reporting that occurred during the fiscal quarter ended ~~September 30, 2017~~March 31, 2020 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.

Item 1A. Risk Factors.

There were no material changes from the risk factors previously disclosed in our ~~2016~~2019 Annual Report on Form 10-K, as filed with the SEC on March ~~1, 2017,~~19, 2020, except as noted below.

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

We have used the net proceeds from our initial offering, borrowings and certain fees payable to our advisor which have been waived, and in the future, may use borrowed funds or other sources, to pay cash distributions to our stockholders, which may reduce the amount of proceeds available for investment and ~~may~~operations, cause us to incur additional interest expense as a result of borrowed funds or cause subsequent investors to experience dilution.

Distributions payable to our stockholders may partially include a return of capital, rather than a return on capital, and ~~it is likely that~~ we ~~will use offering~~have paid a portion of our distributions from the net proceeds ~~to fund a majority~~ of our initial ~~distributions.~~offering. We have not established any limit on the amount of net proceeds from our initial offering or borrowings that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences. The actual amount and timing of distributions ~~will be~~is determined by our board ~~of directors~~ in its sole discretion and typically ~~will depend~~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~~maintain our qualification as a REIT. As a result, our distribution rate and payment frequency may vary from time to time.

We have used the net proceeds from our offering and our advisor has waived certain fees payable to it as discussed below, and in the future, may use the net proceeds from our offering, borrowed funds, or other sources, to pay cash distributions to our stockholders in order to maintain our qualification as a REIT, 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.

~~On April 13, 2016,~~Prior to March 31, 2020, our board ~~of directors~~ authorized, on a quarterly basis, a daily distribution to our Class T stockholders of record as of the close of business on each day of the period from May 1, 2016 through June 30, 2016. Our advisor agreed to waive certain asset management fees that may otherwise have been due to our advisor pursuant to the Advisory Agreement until such time as the amount of such waived asset management fees was equal to the amount of distributions payable to our stockholders for the period beginning on May 1, 2016 and ending on the date of the acquisition of our first property or real estate-related investment, as such terms are defined in the Advisory Agreement. Having raised the minimum offering in April 2016, the distributions declared for each record date in the May 2016 and June 2016 periods were paid in June 2016 and July 2016, respectively, from legally available funds. The daily distributions were calculated based on 365 days in the calendar year and were equal to $0.001643836 per share of our Class T common stock. These distributions were aggregated and paid in cash or shares of our common stock pursuant to the DRIP monthly in arrears. We acquired our first property on June 28, 2016, and as such, our advisor waived $80,000 in asset management fees equal to the amount of distributions paid from May 1, 2016 through June 27, 2016. 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.

The amount of distributions paid to our stockholders is determined quarterly by our board of directors and is dependent on a number of factors, including funds available for payment of distributions, our financial condition, capital expenditure requirements and annual distribution requirements needed to maintain our qualification as a REIT under the Code. We have not established any limit on the amount of offering proceeds that may be used to fund distributions, except that, in accordance with

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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.


	Nine Months Ended September 30,								Three Months Ended March 31,
	2017				2016				2020				2019
Distributions paid in cash	$	4,006,000			$	148,000			$	5,561,000			$	4,706,000
Distributions reinvested	5,492,000				222,000				6,437,000				5,869,000
	$	9,498,000			$	370,000			$	11,998,000			$	10,575,000
Sources of distributions:
Cash flows from operations	$	8,849,000	93.2	%	$	—	—	%	$	9,793,000	81.6	%	$	6,223,000	58.8	%
Proceeds from borrowings									2,205,000		18.4		—		—
Offering proceeds	649,000		6.8		370,000		100		—		—		4,352,000		41.2
	$	9,498,000	100	%	$	370,000	100	%	$	11,998,000	100	%	$	10,575,000	100	%

The distributions paid for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, along with the amount of distributions reinvested pursuant to ~~the~~our DRIP Offerings and the sources of our distributions as compared to FFO were as follows:

Nine Months Ended September 30,
2017 2016
Distributions paid in cash $ 4,006,000
$ 148,000

Distributions reinvested 5,492,000
222,000

$ 9,498,000
$ 370,000

Sources of distributions:
FFO attributable to controlling interest $ 8,909,000
93.8 % $ —
— %
Offering proceeds 589,000
6.2
370,000
100
$ 9,498,000
100 % $ 370,000
100 %

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	Three Months Ended March 31,
	2020				2019
Distributions paid in cash	$	5,561,000			$	4,706,000
Distributions reinvested	6,437,000				5,869,000
	$	11,998,000			$	10,575,000
Sources of distributions:
FFO attributable to controlling interest	$	5,416,000	45.1	%	$	4,557,000	43.1	%
Proceeds from borrowings	6,582,000		54.9		—		—
Offering proceeds	—		—		6,018,000		56.9
	$	11,998,000	100	%	$	10,575,000	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 2.2, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations and Modified Funds from Operations.

~~A high concentration~~The declaration, amount and payment of future cash distributions to our stockholders are subject to uncertainty due to current market conditions.

All distributions will be declared at the discretion of our ~~properties in~~board and will depend on our earnings, our financial condition, REIT distribution requirements, and other factors as our board may deem relevant from time to time. The economic impact resulting from the COVID-19 pandemic could adversely affect our ability to pay distributions to our stockholders. Our board is under no obligation or requirement to declare a ~~particular geographic area would magnify the effects of downturns in that geographic area.~~

~~To the extent~~distribution and will continue to assess our distribution rate on an ongoing basis, as market conditions and our financial position continue to evolve. We cannot assure our stockholders that we ~~have a concentration of properties in any particular geographic area, any adverse situation~~will achieve results that ~~disproportionately effects that geographic area would have a magnified adverse effect~~will allow us to pay distributions on our ~~portfolio. As~~common stock or that the current level of ~~November 9, 2017,~~distributions will be maintained or increased.

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The estimated value per share of our ~~properties located in Florida, Nevada and Alabama accounted for approximately 20.4%, 13.7% and 12.2%, respectively,~~common stock may not be an accurate reflection of the ~~annualized base rent~~fair value of our ~~total property portfolio.~~assets and liabilities and likely will not represent the amount of net proceeds that would result if we were liquidated or dissolved or completed a merger or other sale of our company.

On April 2, 2020, our board, at the recommendation of the audit committee, which is comprised solely of independent directors, and after considering the uncertainties presented by the COVID-19 pandemic, unanimously approved and maintained an estimated per share NAV of our common stock of $9.54. We are providing this estimated per share NAV to assist broker-dealers in connection with their obligations under FINRA Rule 2231 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 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. 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 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 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. In addition, the estimated per share NAV is an estimate as of a given point in time and the value of our shares will fluctuate over time as a result of, among other things, developments related to individual assets and changes in the real estate and capital markets. Accordingly, ~~there~~with respect to the estimated per share NAV, we can give no assurance that:

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

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

the methodology used to estimate our per share NAV would be acceptable to FINRA or comply with reporting requirements under the Employee Retirement Income Security Act of 1974, the Code, other applicable law, or the applicable provisions of a retirement plan or individual retirement account.

Further, the 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 ~~geographic concentration~~fully diluted basis, calculated as of ~~risk subject~~December 31, 2019, prior to ~~fluctuations~~the reported emergence of COVID-19 in ~~each state’s economy.~~the United States. We are continuously monitoring the impact the COVID-19 pandemic is having on our business, residents, tenants, operating partners, managers and on the United States and global economies. The impact of the COVID-19 pandemic on our portfolio of investments may be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted at this time, including new information which may emerge concerning the severity of the COVID-19 pandemic, the success of actions taken to contain or treat COVID-19, and reactions by consumers, companies, governmental entities and capital markets. Therefore, although we intend to publish an updated estimated per share NAV on an annual basis, we may be required to reevaluate the estimated per share NAV sooner if the COVID-19 pandemic has a material adverse impact on our tenants, operators, managers or portfolio of investments or us. The estimated per share NAV of our Class T and Class I common stock of $9.54 is within the range of estimated values, but lower than the mid-point of $9.75 provided by the independent third party valuation firm that conducted the valuation, and is the same estimated per share NAV previously determined by the board and calculated as of December 31, 2018.

For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the estimated per share NAV, see our Current Report on Form 8-K filed with the SEC on April 3, 2020.

A significant portion of our annual base rent may be concentrated in a small number of tenants. Therefore, non-renewals, terminations or lease defaults by any of these significant tenants could reduce our net income and have a negative effect on our ability to pay distributions to our stockholders.

As of ~~November 9, 2017,~~May 14, 2020, rental payments by ~~two of~~ our ~~tenants, Colonial Oaks Master Tenant,~~tenant, RC Tier Properties, LLC, ~~and Prime Healthcare Services – Reno,~~ accounted for approximately ~~12.0% and 11.1%, respectively,~~10.4% of our total property portfolio’s annualized base ~~rent.~~rent or annualized NOI. The success of our investments materially depends upon the financial stability of the tenants leasing the properties we own. Therefore, a non-renewal after the expiration of a lease term,

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termination, default or other failure to meet rental obligations by significant tenants, such as ~~Colonial Oaks Master Tenant,~~RC Tier Properties, LLC, ~~and Prime Healthcare Services – Reno,~~ would significantly lower our net income. These events could cause us to reduce the amount of distributions to our stockholders.

~~Reductions in reimbursement from third-party payers, including Medicare and Medicaid, could adversely affect the profitability~~A high concentration of our ~~tenants and hinder their~~properties in a particular geographic area would magnify the effects of downturns in that geographic area.

We have a concentration of properties in particular geographic areas; therefore, any adverse situation that disproportionately effects one of those areas would have a magnified adverse effect on our portfolio. As of May 14, 2020, our properties located in Missouri accounted for approximately 11.5% of our total property portfolio’s annualized base rent or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.

Our results of operations, our ability to ~~make rent payments~~pay distributions to ~~us.~~our stockholders and our ability to dispose of our investments are subject to national and local economic factors we cannot control or predict.

~~Sources~~Our results of ~~revenue for~~operations are subject to the risks of a national economic slowdown or downturn and other changes in local economic conditions. The following factors may have affected and may continue to affect income from our ~~tenants may include the federal Medicare program, state Medicaid programs, private insurance carriers~~properties, our ability to acquire and ~~health maintenance organizations, among others. Efforts by such payers to reduce healthcare costs will likely continue, which~~dispose of properties, and yields from our properties:

poor economic times may result in defaults by tenants of our properties due to bankruptcy, lack of liquidity, or operational failures. We may provide rent concessions, tenant improvement expenditures or reduced rental rates to maintain or increase occupancy levels;

fluctuations in property values as a result of increases or decreases in supply and demand, occupancies and rental rates may cause the properties that we acquire to decrease in value. Consequently, we may not be able to recover the carrying amount of our properties, which may require us to recognize an impairment charge or record a loss on sale in earnings;

reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;

the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investment or other factors;

our lenders under our line of credit and term loans could refuse to fund its financing commitment to us or could fail and we may not be able to replace the financing commitment of such lender on favorable terms, or at all;

increases in index rates and lender spreads or other regulatory or market factors affecting the banking and commercial mortgage-backed securities industries may increase overall borrowing costs;

one or more counterparties to our interest rate swaps could default on their obligations to us or could fail, increasing the risk that we may not realize the benefits of these instruments;

constricted access to credit may result in tenant defaults or non-renewals under leases;

layoffs may lead to a lower demand for medical services and cause vacancies to increase and a lack of future population and job growth may make it difficult to maintain or increase occupancy levels;

future disruptions in the financial markets, deterioration in economic conditions or a public health crisis, such as the COVID-19 pandemic, have resulted and may continue to result in lower occupancy in our facilities, increased vacancy rates for commercial real estate due to generally lower demand for rentable space, as well as oversupply of rentable space;

governmental actions and initiatives, including risks associated with the impact of a prolonged government shutdown or budgetary reductions or ~~slower growth in reimbursement~~impasses; and

increased insurance premiums, real estate taxes or utilities or other expenses may reduce funds available for ~~certain services provided by some~~distribution or, to the extent such increases are passed through to tenants, may lead to tenant defaults. Also, any such increased expenses may make it difficult to increase rents to tenants on turnover, which may limit our ability to increase our returns.

The length and severity of any economic slowdown or downturn cannot be predicted at this time. Our results of operations, our ability to pay distributions to our stockholders and our ability to dispose of our ~~tenants. In addition, the healthcare billing rules~~investments have been and ~~regulations are complex, and the failure of any of our tenants~~we expect that we may continue to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government sponsored payment programs. Moreover, the state and federal governmental healthcare programs are subject 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 Access to Medicare Act of 2014 prevented the reduction of 24.4% in the physician fee schedule by replacing the scheduled reduction with a 0.5% increasebe negatively impacted to the physician fee schedule through December 31, 2014, and a 0% increase for January 1, 2015 through March 31, 2015. The potential 21.0% cut in reimbursement that was to be effective April 1, 2015 was removed by the Medicare Access & CHIP Reauthorization Act of 2015,extent an economic slowdown or ~~MACRA, and replaced with two new methodologies that will focus upon payment based upon quality outcomes. The first model~~downturn is ~~the Merit-Based Incentive Payment System,~~prolonged 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.

The healthcare industry continues to face various challenges, including increased government and private payer pressure on healthcare providers to control or reduce costs. It is possible that our tenants will continue to experience a shift in payer mix away from fee-for-service payers, resulting in an increase in the percentage of revenues attributable to reimbursement based upon value based principles and quality driven managed care programs, and general industry trends that include pressures to control healthcare costs. The federal government’s goal is to move approximately 90.0% of its reimbursement 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. 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 insurancebecomes more severe.

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~~exchange. Therefore, it is possible that~~The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

In December 2019, COVID-19 was identified in Wuhan, China. This virus continues to spread globally including in the United States. As a result of the COVID-19 pandemic, we have experienced a decline in occupancy rates at our senior housing — RIDEA facilities. In addition, due to the shelter in place and quarantine restrictions, our property values, net operating income and revenues may decline, and our tenants, operating partners and managers may ~~incur a change~~be limited in their reimbursement if the tenant does not have a participation agreement with the state insurance exchange payers and a large number of individuals elect to purchase insurance from the state insurance exchange. Further, the 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, which may vary based upon the market, the healthcare provider’s quality metrics, the number of providers participating in the area 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~~properly maintain our properties, generate income and/or service patients and residents. Additionally, the ~~Patient Protection~~public perception of a risk of a pandemic or media coverage of the COVID-19 pandemic and ~~Affordable Care Act~~related deaths or confirmed cases, or public perception of ~~2010,~~health risks linked to perceived regional healthcare safety in our senior housing or skilled nursing facilities, particularly if focused on regions in which our properties are located, may adversely affect us by reducing occupancy demand at our facilities. In addition, the ~~Patient Protection~~COVID-19 pandemic has adversely impacted and Affordable Care Act, and on March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act 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 expectingmay continue 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. These changes could have a material adverse effect on the financial condition of some or all of our ~~tenants. The financial impact on our~~medical office tenants, ~~could restrict~~many of whom have been restricted in their ability to ~~make~~work, to pay their rent ~~payments~~as and when due. We have also held discussions with our tenants, operating partners and managers and they have expressed their general concern about the uncertain economic condition. We believe that it is premature to determine the magnitude of the impact at this point.

Issues related to financing also are exacerbated in times of significant dislocation in the financial markets, such as those being experienced now related to the COVID-19 pandemic. It is possible our lenders will become unwilling or unable to provide us with financing, and we may not be able to replace the financing commitment of such lender on favorable terms, or at all. In addition, if the regulatory capital requirements imposed on our lenders change, they may be required to significantly increase the cost of the financing that they provide to us. As a result, our lenders may revise the terms of such financings to us, which ~~would have a material adverse effect on~~could adversely impact our ~~business, financial condition and results of operations~~liquidity and our ability to ~~pay distributions to~~make payments on our ~~stockholders.~~ existing obligations.

Furthermore, ~~beginning~~we and our co-sponsors and their employees that provide services to us rely on processes and activities that largely depend on people and technology, including access to information technology systems as well as information, applications, payment systems and other services provided by third parties. In response to the COVID-19 pandemic, business practices have been modified with all or a portion of our co-sponsors’ employees working remotely from their homes to have our operations uninterrupted as much as possible. Additionally, technology in ~~2016,~~such employees’ homes may not be as robust as in our co-sponsors’ offices and could cause the ~~Centers~~networks, information systems, applications and other tools available to such employees to be more limited or less reliable than in our co-sponsors’ offices. The continuation of these work-from-home measures may introduce increased cybersecurity risk. These cybersecurity risks include greater phishing, malware and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for ~~Medicare~~remote operations, increased risk of unauthorized dissemination of confidential information, greater risk of a security breach resulting in destruction or misuse of valuable information and 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’spotential impairment of our ability to ~~make rent payments~~perform certain functions, all of which could expose us to ~~us.~~risks of data or financial loss, litigation and liability and could disrupt our operations and the operations of any impacted third-parties.

~~Moreover, President Trump signed an Executive Order~~The extent to which the COVID-19 pandemic impacts our business will depend on ~~January 20, 2017 to “ease~~future developments, which are highly uncertain and cannot be predicted at this time, including new information which may emerge concerning the ~~burden of Obamacare.” On May 4, 2017, members~~severity of the ~~House of Representatives approved legislation~~COVID-19 pandemic and the actions to ~~repeal portions~~contain the COVID-19 pandemic or treat its impact, among others. We expect the significance of the ~~Healthcare Reform Act, which legislation was submitted~~COVID-19 pandemic, including the extent of its effect on our financial and operational results, 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,be dictated by, among other things, ~~(i) cut healthcare cost-sharing reduction subsidies, (ii) allow more small businesses~~its duration, the success of efforts to ~~join together to purchase insurance coverage, (iii) extend short-term coverage policies,~~contain it and ~~(iv) expand employers’ ability~~the impact of actions taken in response. For instance, recent government initiatives enacted to provide ~~workers cash~~substantial financial support to ~~buy coverage elsewhere. The Executive Order required~~businesses, such as the ~~government agencies to draft regulations for consideration related to Associated Health Plans, short-term limited duration insurance~~Payroll Protection Program 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 terminationdeferral of ~~the cost-share subsidies would impact the subsidy~~payroll tax 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 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

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whether any healthcare reform legislation will ultimately become law. If our tenants’ patients do not have insurance, it could adversely impact the tenants’ ability to pay rent and operate a practice.

In addition, the Trump administration has commented on the possibility that it may seek to cease the additional subsidies to the qualified health plans that provide coverage for beneficiaries on the health insurance exchange. There are also multiple lawsuits in several judicial districts brought by qualified health plans to recover the prior risk corridor payments that were anticipated to be paid as part of the health insurance exchange program. The multiple lawsuits are moving through the judicial process. Further, there is a current lawsuit, United States House of Representatives vs. Price, which alleges that the Executive Branch of the United States of America exceeded its authority in implementing the risk corridor payments under the Healthcare Reform Act and therefore the payments should not be made. At this time, the case is pending. If the Trump administration or the court system determines that risk corridor or risk share payments are not required to be paid to the qualified health plans offering insurance coverage on the health insurance exchange program the insurance companies may cease participation, causing millions of beneficiaries to lose insurance coverage. Therefore, our tenants may have an increase of self-pay patients and collections may decline, adversely impacting the tenants’ ability to pay rent.

Comprehensive healthcare reform legislation, the effects of which are not yet known, could materially adversely affect our business, financial condition and results of operations and our ability to pay distributions to our stockholders.

The Healthcare Reform Act is intended to reduce the number of individuals in the U.S. without health insurance and effect significant other changes to the ways in which healthcare is organized, delivered and reimbursed. Included within the legislation is a limitation on physician-owned hospitals from expanding, unless the facility satisfies very narrow federal exceptions to this limitation. Therefore, if our tenants are physicians that own and refer to a hospital, the hospital would be limited in its operations and expansion potential, which may limit the hospital’s services and resulting revenues and may impact the owner’s ability to make rental payments. The legislation will become effective through a phased approach, having begun in 2010 and concluding in 2018. On June 28, 2012, the United States Supreme Court upheld the individual mandate under the Healthcare ReformCARES Act, ~~although substantially limiting its expansion of Medicaid. At this time, the effects of healthcare reform and its impact on our properties are not yet known but~~ could ~~materially adversely affect our business, financial condition, results of operations and ability to pay distributions to our stockholders.~~

~~On May 4, 2017, members of the House of Representatives approved legislation to repeal portions of the Healthcare Reform Act, which legislation was submitted to the Senate~~provide helpful mitigation 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 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.

The U.S. Department of Labor has issued a final regulation revising the definition of “fiduciary” and the scope of “investment advice” under ERISA, which may have a negative impact on our ability to raise capital.

On April 8, 2016, the U.S. Department of Labor, or DOL, issued a final regulation relating to the definition of a fiduciary under ERISA and Section 4975 of the Code. The final regulation broadens the definition of fiduciary by expanding the range of

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activities that would be considered to be fiduciary investment advice under ERISA and is accompanied by new and revised prohibited transaction exemptions relating to investments by employee benefit plans subject to Title I of ERISA or retirement plans or accounts subject to Section 4975 of the Code (including IRAs). Under the final regulation, a person is deemed to be providing investment advice if that person renders advice as to the advisability of investing in our shares, and that person regularly provides investment advice to the plan pursuant to a mutual agreement or understanding that such advice will serve as the primary basis for investment decisions, and that the advice will be individualized for the plan based on its particular needs. The final regulation and the related exemptions were expected to become applicable for investment transactions on and after April 10, 2017, but generally should not apply to purchases of our shares before the final regulation becomes applicable. However, on February 3, 2017, the President asked for additional review of this regulation; the results of such review are unknown. In response, on March 2, 2017, the DOL published a notice seeking public comments on, among other things, a proposal to adopt a 60-day delay of the April 10 applicability date of the final regulation. On April 7, 2017, the DOL published a final rule extending for 60 days the applicability date of the final regulation, to June 9, 2017. However, certain requirements and exemptions under the regulation are implemented through a phased-in approach. Therefore, certain requirements and exemptions will not take effect until January 1, 2018 and other key requirements and exemptions will not take effect until July 1, 2019.

The final regulation and the accompanying exemptions are complex, and plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding this development. The final regulation could have negative implications on our ability to raise capital from potential investors, including those investing through IRAs.

We, our future 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 future tenants’ participation in the Medicaid and Medicare programs, we, our future 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 future 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 future 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 future 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 future 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 future 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 a 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,~~tenants, operating partners and managers. The ultimate impact of the CARES Act, however, is not yet clear. While we are not able at this time to estimate the impact of the COVID-19 pandemic on our ~~future tenants~~financial and ~~operators for our skilled nursing, senior housing and integrated senior health campuses and certain of their officers, might face potential criminal~~

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~~charges and/or civil claims, administrative sanctions and penalties for amounts that~~operational results, it 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 future 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 future 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 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.material.

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 Class T common stock to our independent directors. These shares of restricted Class T common stock were issued pursuant to our incentive plan in a private transaction exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act. The restricted Class T 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.

~~Use of Public Offering Proceeds~~

Our Registration Statement on Form S-11 (File No. 333-205960), registering a public offering of up to $3,150,000,000 in shares of our common stock, was declared effective under the Securities Act on February 16, 2016. Griffin Capital Securities, LLC is the dealer manager of our offering. Commencing on February 16, 2016, we offered to the public up to $3,150,000,000 in shares of our Class T common stock consisting of up to $3,000,000,000 in shares of our Class T common stock at a price of $10.00 per share in our primary offering and up to $150,000,000 in shares of our Class T common stock for $9.50 per share pursuant to the DRIP. Effective June 17, 2016, we reallocated certain of the unsold shares of Class T common stock being offered and began offering shares of Class I common stock, such that we are currently offering up to approximately $2,800,000,000 in shares of Class T common stock and $200,000,000 in shares of Class I common stock in our primary offering, and up to an aggregate of $150,000,000 in shares of our Class T and Class I common stock pursuant to the DRIP, aggregating up to $3,150,000,000. The shares of our Class T common stock in our primary offering are being offered at a price of $10.00 per share. The shares of our Class I common stock in our primary offering were being offered at a price of $9.30 per share prior to March 1, 2017 and are being offered at a price of $9.21 per share for all shares issued effective March 1, 2017. The shares of our Class T and Class I common stock issued pursuant to the DRIP were sold at a price of $9.50 per share prior to January 1, 2017 and are sold at a price of $9.40 per share for all shares issued pursuant to the DRIP effective January 1, 2017. After our board of directors determines an estimated NAV per share of our common stock, share prices are expected to be adjusted to reflect the estimated NAV per share and, in the case of shares offered pursuant to our primary offering, up-front selling commissions and dealer manager fees other than those funded by our advisor, and participants in the DRIP will receive Class T shares and Class I shares, as applicable, at the most recently published estimated NAV per share of our common stock. We reserve the right to reallocate the shares of common stock we are offering between the primary offering and the DRIP, and among classes of stock.

As of September 30, 2017, we had received and accepted subscriptions in our offering for 33,658,771 shares of Class T common stock and 1,863,639 shares of Class I common stock, or approximately $336,280,000 and $17,230,000, respectively, excluding shares of our common stock issued pursuant to the DRIP. As of September 30, 2017, a total of $6,096,000 in Class T distributions and $192,000 in Class I distributions were reinvested pursuant to the DRIP and 647,666 shares of Class T common stock and 20,369 shares of Class I common stock were issued pursuant to the DRIP.

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~~Our equity raise as of September 30, 2017 resulted in the following:~~

Amount
Gross offering proceeds — Class T and Class I common stock $ 353,510,000
Gross offering proceeds from Class T and Class I shares issued pursuant to the DRIP 6,288,000
Total gross offering proceeds 359,798,000
Less public offering expenses:
Selling commissions 9,807,000
Dealer manager fees 10,380,000
Advisor funding of dealer manager fees (6,963,000 )
Other organizational and offering expenses 4,343,000
Advisor funding of other organizational and offering expenses (4,343,000 )
Net proceeds from our offering $ 346,574,000

The cost of raising funds in our offering as a percentage of gross proceeds received in our primary offering was 3.7% as of September 30, 2017. As of September 30, 2017, we had used $307,938,000 in proceeds from our offering to purchase properties from unaffiliated third parties, $11,575,000 to pay acquisition fees and acquisition related expenses to affiliated parties, $5,021,000 to pay real estate deposits for proposed future acquisitions, $4,651,000 to pay acquisition related expenses to unaffiliated third parties and $1,321,000 to pay deferred financing costs on our mortgage loans payable and the Line of Credit.

~~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 of directors. All 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. 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.

The prices per share at which we will repurchase shares of our common stock will range, depending on the length of time the stockholder held such shares, from 92.5% to 100% of the price paid per share to acquire such shares from us. However, if shares of our common stock are to be repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price will be no less than 100% of the price paid to acquire the shares of our common stock from us.

~~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 —
$ —
—
(1 )
September 1, 2017 to September 30, 2017 11,209
$ 9.69
11,209
(1 )
Total 11,209
$ 9.69
11,209

~~___________~~


~~(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.

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, 2020 (and are numbered in accordance with Item 601 of Regulation S-K).



3.1	Third Articles of Amendment and Restatement of Griffin-American Healthcare REIT IV, Inc., dated December 28, 2015 (included as Exhibit 3.1 to Pre-effective Amendment No. 2 to our Registration Statement on Form S-11 (File No. 333-205960) filed January 5, 2016 and incorporated herein by reference)

3.2	Articles Supplementary of Griffin-American Healthcare REIT IV, Inc. filed May 25, 2016 (included as Exhibit 3.1 to our Current Report on Form 8-K filed May 26, 2016 and incorporated herein by reference)

3.3	Second Amended and Restated Bylaws of Griffin-American Healthcare REIT IV, Inc. (included as Exhibit 3.2 to Pre-effective Amendment No. 2 to our Registration Statement on Form S-11 (File No. 333-205960) filed January 5, 2016 and incorporated herein by reference)

4.1	Form of Subscription Agreement of Griffin-American Healthcare REIT IV, Inc. (included as Exhibit 4.1 to Post-effective Amendment No. 8 to our Registration Statement on Form S-11 (File No. 333-205960) filed May 30, 2017 and incorporated herein by reference)

~~4.2~~	Amended and Restated Distribution Reinvestment Plan of Griffin-American Healthcare REIT IV, Inc. (included as Exhibit ~~4.2 to Post-effective Amendment No. 8~~4.6 to our Registration Statement on Form ~~S-11~~S-3 (File No. ~~333-205960)~~333-229301) filed ~~May 30, 2017~~January 18, 2019 and incorporated herein by reference)

~~4.3~~	Share Repurchase Plan of Griffin-American Healthcare REIT IV, Inc. (included as Exhibit 4.3 to Post-effective Amendment No. 8 to our Registration Statement on Form S-11 (File No. 333-205960) filed May 30, 2017 and incorporated herein by reference)

~~4.4~~	Escrow Agreement by and among Griffin-American Healthcare REIT IV, Inc., Griffin Capital Securities, LLC and UMB Bank, N.A., dated February 16, 2016 (included as Exhibit 4.4 to our Annual Report on Form 10-K for the year ended December 31, 2015 filed March 7, 2016 and incorporated herein by reference)

10.1*	Purchase and Sale Agreement by and between NIC 5 Spring Haven Owner LLC, NIC 5 Lake Morton Plaza Owner LLC, NIC 5 Renaissance Retirement Owner LLC, NIC 5 Forest Oaks Owner LLC, NIC 5 Spring Haven Leasing LLC, NIC 5 Lake Morton Plaza Leasing LLC, NIC 5 Renaissance Retirement Leasing LLC, NIC 5 Forest Oaks Leasing LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated August 2, 2017

10.2*	Purchase and Sale Agreement by and between NIC 4 Bayside Terrace Owner LLC, NIC 4 Balmoral Owner LLC, NIC 4 Bradenton Oaks Owner LLC, NIC4 The Grande Owner LLC, NIC 4 Spring Oaks Owner LLC, NIC 4 Bayside Terrace Leasing LLC, NIC 4 Balmoral Leasing LLC, NIC 4 Bradenton Oaks Leasing LLC, NIC 4 The Grande Leasing LLC, NIC 4 Spring Oaks Leasing LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated August 2, 2017

10.3*	First Amendment to Purchase and Sale Agreement by and between NIC 5 Spring Haven Owner, LLC, NIC 5 Lake Morton Plaza Owner, LLC, NIC 5 Renaissance Retirement Owner, LLC, NIC 5 Forest Oaks Owner, LLC, NIC 5 Spring Haven Leasing, LLC, NIC 5 Lake Morton Plaza Leasing, LLC, NIC 5 Renaissance Retirement Leasing, LLC, NIC 5 Forest Oaks Leasing, LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated September 18, 2017

10.4*	First Amendment to Purchase and Sale Agreement by and between NIC 4 Bayside Terrace Owner LLC, NIC 4 Balmoral Owner LLC, NIC 4 Bradenton Oaks Owner LLC, NIC4 The Grande Owner LLC, NIC 4 Spring Oaks Owner LLC, NIC 4 Bayside Terrace Leasing, LLC, NIC 4 Balmoral Leasing, LLC, NIC 4 Bradenton Oaks Leasing, LLC, NIC 4 The Grande Leasing, LLC, NIC 4 Spring Oaks Leasing, LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated September 18, 2017

10.5*	Second Amendment to Purchase and Sale Agreement by and between NIC 5 Spring Haven Owner, LLC, NIC 5 Lake Morton Plaza Owner, LLC, NIC 5 Renaissance Retirement Owner, LLC, NIC 5 Forest Oaks Owner, LLC, NIC 5 Spring Haven Leasing, LLC, NIC 5 Lake Morton Plaza Leasing, LLC, NIC 5 Renaissance Retirement Leasing, LLC, NIC 5 Forest Oaks Leasing, LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated September 25, 2017

10.6*	Second Amendment to Purchase and Sale Agreement by and between NIC 4 Bayside Terrace Owner LLC, NIC 4 Balmoral Owner LLC, NIC 4 Bradenton Oaks Owner LLC, NIC4 The Grande Owner LLC, NIC 4 Spring Oaks Owner LLC, NIC 4 Bayside Terrace Leasing, LLC, NIC 4 Balmoral Leasing, LLC, NIC 4 Bradenton Oaks Leasing, LLC, NIC 4 The Grande Leasing, LLC, NIC 4 Spring Oaks Leasing, LLC and GAHC4 Central FL Senior Housing Portfolio, LLC, dated September 25, 2017

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

~~Table of Contents~~



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*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

___________



*	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.

6255

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 IV, Inc. (Registrant)

~~November 9, 2017~~May 14, 2020	By:	/s/ JEFFREY T. HANSON
Date		Jeffrey T. Hanson
		Chief Executive Officer and Chairman of the Board of Directors
		(Principal Executive Officer)

~~November 9, 2017~~May 14, 2020	By:	/s/ BRIAN S. PEAY
Date		Brian S. Peay
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

6356



	September 30, 2017			December 31, 2016
ASSETS
Real estate investments, net	$	318,942,000		$	117,942,000
Cash and cash equivalents	4,397,000			2,237,000
Accounts and other receivables, net	1,359,000			1,299,000
Restricted cash	16,000			—
Real estate deposits	5,021,000			200,000
Identified intangible assets, net	37,635,000			19,673,000
Other assets, net	4,142,000			1,407,000
Total assets	$	371,512,000		$	142,758,000

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage loans payable, net(1)	$	11,639,000		$	3,965,000
Line of Credit(1)	26,000,000			33,900,000
Accounts payable and accrued liabilities(1)	17,053,000			5,426,000
Accounts payable due to affiliates(1)	8,065,000			5,531,000
Identified intangible liabilities, net	1,822,000			1,063,000
Security deposits, prepaid rent and other liabilities(1)	786,000			616,000
Total liabilities	65,365,000			50,501,000

Commitments and contingencies (Note 9)

Redeemable noncontrolling interest (Note 10)	2,000			2,000

Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding	—			—
Class T common stock, $0.01 par value per share; 900,000,000 shares authorized; 34,346,388 and 11,000,433 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	343,000			110,000
Class I common stock, $0.01 par value per share; 100,000,000 shares authorized; 1,884,007 and 377,006 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	19,000			4,000
Additional paid-in capital	322,549,000			99,492,000
Accumulated deficit	(16,766,000		)	(7,351,000		)
Total stockholders’ equity	306,145,000			92,255,000
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	371,512,000		$	142,758,000



	September 30, 2017			December 31, 2016
Building and improvements	$	285,481,000		$	106,442,000
Land	39,386,000			12,322,000
	324,867,000			118,764,000
Less: accumulated depreciation	(5,925,000		)	(822,000		)
	$	318,942,000		$	117,942,000



Acquisition(1)	Location	Type	Date Acquired	Contract Purchase Price		Mortgage Loan Payable(2)		Line of Credit(3)		Total Acquisition Fee(4)
Battle Creek MOB	Battle Creek, MI	Medical Office	03/10/17	$	7,300,000	$	—	$	—	$	328,000
Reno MOB	Reno, NV	Medical Office	03/13/17	66,250,000		—		60,000,000		2,982,000
Athens MOB Portfolio	Athens, GA	Medical Office	05/18/17	16,800,000		—		7,800,000		756,000
SW Illinois Senior Housing Portfolio	Columbia, Millstadt, Red Bud and Waterloo, IL	Senior Housing	05/22/17	31,800,000		—		31,700,000		1,431,000
Lawrenceville MOB	Lawrenceville, GA	Medical Office	06/12/17	11,275,000		8,000,000		3,000,000		507,000
Northern California Senior Housing Portfolio	Belmont, Fairfield, Menlo Park and Sacramento, CA	Senior Housing	06/28/17	45,800,000		—		21,600,000		2,061,000
Roseburg MOB	Roseburg, OR	Medical Office	06/29/17	23,200,000		—		23,000,000		1,044,000
Fairfield County MOB Portfolio	Stratford and Trumbull, CT	Medical Office	09/29/17	15,395,000		—		15,500,000		693,000
Total				$	217,820,000	$	8,000,000	$	162,600,000	$	9,802,000



	2017 Acquisitions
Building and improvements	$	177,270,000
Land	27,064,000
In-place leases	20,518,000
Above-market leases	127,000
Total assets acquired	224,979,000
Mortgage loan payable	(8,000,000		)
Below-market leases	(571,000		)
Above-market leasehold interests	(395,000		)
Total liabilities assumed	(8,966,000		)
Net assets acquired	$	216,013,000



	September 30, 2017		December 31, 2016
Below-market leases, net of accumulated amortization of $263,000 and $60,000 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 6.6 years and 5.4 years as of September 30, 2017 and December 31, 2016, respectively)	$	1,431,000	$	1,063,000
Above-market leasehold interests, net of accumulated amortization of $4,000 and $0 as of September 30, 2017 and December 31, 2016, respectively (with a weighted average remaining life of 52.4 years and 0 years as of September 30, 2017 and December 31, 2016, respectively)	391,000		—
	$	1,822,000	$	1,063,000



	Number of Nonvested Shares of Our Restricted Common Stock		Weighted Average Grant Date Fair Value
Balance — December 31, 2016	12,000		$	10.00
Granted	22,500		$	10.00
Vested	(7,500	)	$	10.00
Forfeited	—		$	—
Balance — September 30, 2017	27,000		$	10.00
Expected to vest — September 30, 2017	27,000		$	10.00



Fee	September 30, 2017		December 31, 2016
Contingent Advisor Payment	$	7,759,000	$	5,404,000
Asset management fees	237,000		83,000
Property management fees	37,000		24,000
Operating expenses	22,000		20,000
Lease commissions	10,000		—
	$	8,065,000	$	5,531,000



Acquisition	Revenue		Net Income
Auburn MOB	$	239,000	$	74,000
Pottsville MOB	$	42,000	$	33,000
Charlottesville MOB	$	47,000	$	37,000
Rochester Hills MOB	$	6,000	$	4,000
Cullman MOB III	$	4,000	$	4,000



	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Revenue	$	1,632,000	$	4,849,000
Net income	$	45,000	$	536,000
Net income attributable to controlling interest	$	45,000	$	536,000
Net income per Class T and Class I common share attributable to controlling interest — basic and diluted	$	—	$	0.07



	Medical Office Buildings		Senior Housing		Three Months Ended September 30, 2017
Revenue:
Real estate revenue	$	6,330,000	$	2,158,000	$	8,488,000
Expenses:
Rental expenses	1,857,000		238,000		2,095,000
Segment net operating income	$	4,473,000	$	1,920,000	$	6,393,000
Expenses:
General and administrative					$	1,296,000
Acquisition related expenses					121,000
Depreciation and amortization					3,442,000
Other income (expense):
Interest expense (including amortization of deferred financing costs and debt premium)					(780,000		)
Net income					$	754,000



	Medical Office Buildings		Senior Housing		Nine Months Ended September 30, 2017
Revenue:
Real estate revenue	$	15,456,000	$	3,282,000	$	18,738,000
Expenses:
Rental expenses	4,543,000		350,000		4,893,000
Segment net operating income	$	10,913,000	$	2,932,000	$	13,845,000
Expenses:
General and administrative					$	2,996,000
Acquisition related expenses					334,000
Depreciation and amortization					7,619,000
Other income (expense):
Interest expense (including amortization of deferred financing costs and debt premium)					(1,607,000		)
Interest income					1,000
Net income					$	1,290,000



	September 30,
	2017					2016
	Number of Buildings	Aggregate Contract Purchase Price		Leased %		Number of Buildings	Aggregate Contract Purchase Price		Leased %
Medical office buildings	18	$	262,290,000	94.0	%	5	$	59,670,000	100	%
Senior housing	12	94,350,000		100	%	—	—		—	%
Total/weighted average	30	$	356,640,000	95.7	%	5	$	59,670,000	100	%



	Amount
Gross offering proceeds — Class T and Class I common stock	$	353,510,000
Gross offering proceeds from Class T and Class I shares issued pursuant to the DRIP	6,288,000
Total gross offering proceeds	359,798,000
Less public offering expenses:
Selling commissions	9,807,000
Dealer manager fees	10,380,000
Advisor funding of dealer manager fees	(6,963,000		)
Other organizational and offering expenses	4,343,000
Advisor funding of other organizational and offering expenses	(4,343,000		)
Net proceeds from our offering	$	346,574,000



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	—	$	—	—	(1	)
September 1, 2017 to September 30, 2017	11,209	$	9.69	11,209	(1	)
Total	11,209	$	9.69	11,209