Table of Contents

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

FORM 10-Q


(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172023
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                     
Commission File Number: 000-55775

GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
(Exact name of registrant as specified in its charter)
Maryland47-2887436
(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 classTrading Symbol(s)Name of each exchange on which registered
NoneNoneNone
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.x     ☒  Yes    ¨☐  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x☒  Yes    ¨☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filero☐Accelerated filero☐
Non-accelerated filerx☒Smaller reporting companyo☐
Emerging growth companyx☐
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, 2017,10, 2023, there were 36,675,85019,552,856 shares of Class T common stock and 2,028,98946,673,320 shares of Class I common stock of Griffin-AmericanAmerican Healthcare REIT, IV, Inc. outstanding.


Table of Contents

GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
(A Maryland Corporation)
TABLE OF CONTENTS

Page
PART I — FINANCIAL INFORMATION
3
Condensed Consolidated Balance Sheets as of September 30, 20172023 and December 31, 20162022
3
Condensed Consolidated Statements of Operations and Comprehensive Lossfor the Three and Nine Months Ended September 30, 20172023 and 20162022
5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 20172023 and 20162022
6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172023 and 20162022
79
Notes to Condensed Consolidated Financial Statements
912
3644
5160
5162
PART II — OTHER INFORMATION
5363
5363
5964
6064
6064
6164
6165
6366




2
Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 20172023 and December 31, 20162022
(In thousands, except share and per share amounts) (Unaudited)

September 30,
2023		December 31,
2022
ASSETS
Real estate investments, net$3,430,640 $3,581,609 
Debt security investment, net85,922 83,000 
Cash and cash equivalents35,178 65,052 
Restricted cash46,978 46,854 
Accounts and other receivables, net169,484 137,501 
Identified intangible assets, net196,884 236,283 
Goodwill234,942 231,611 
Operating lease right-of-use assets, net233,955 276,342 
Other assets, net154,934 128,446 
Total assets$4,588,917 $4,786,698 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:
Mortgage loans payable, net(1)$1,221,238 $1,229,847 
Lines of credit and term loan, net(1)1,277,076 1,281,794 
Accounts payable and accrued liabilities(1)233,925 243,831 
Identified intangible liabilities, net9,346 10,837 
Financing obligations(1)38,181 48,406 
Operating lease liabilities(1)231,148 273,075 
Security deposits, prepaid rent and other liabilities(1)44,334 49,545 
Total liabilities3,055,248 3,137,335 
Commitments and contingencies (Note 10)
Redeemable noncontrolling interests (Note 11)59,961 81,598 
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; 200,000,000 shares authorized; 19,562,539 and 19,535,095 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively194 194 
Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 46,673,320 and 46,675,367 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively467 467 
Additional paid-in capital2,548,390 2,540,424 
Accumulated deficit(1,232,183)(1,138,304)
Accumulated other comprehensive loss(2,624)(2,690)
Total stockholders’ equity1,314,244 1,400,091 
Noncontrolling interests (Note 12)159,464 167,674 
Total equity1,473,708 1,567,765 
Total liabilities, redeemable noncontrolling interests and equity$4,588,917 $4,786,698 

 September 30, 2017 December 31, 2016
ASSETS
Real estate investments, net$318,942,000
 $117,942,000
Cash and cash equivalents4,397,000
 2,237,000
Accounts and other receivables, net1,359,000
 1,299,000
Restricted cash16,000
 —
Real estate deposits5,021,000
 200,000
Identified intangible assets, net37,635,000
 19,673,000
Other assets, net4,142,000
 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, net1,822,000
 1,063,000
Security deposits, prepaid rent and other liabilities(1)786,000
 616,000
Total liabilities65,365,000
 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, respectively343,000
 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, respectively19,000
 4,000
Additional paid-in capital322,549,000
 99,492,000
Accumulated deficit(16,766,000) (7,351,000)
Total stockholders’ equity306,145,000
 92,255,000
Total liabilities, redeemable noncontrolling interest and stockholders’ equity$371,512,000
 $142,758,000
3
___________


3
Table of Contents


GRIFFIN-AMERICAN
AMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
As of September 30, 20172023 and December 31, 20162022
(In thousands) (Unaudited)

___________

(1)Such liabilities of Griffin-American Healthcare REIT IV, Inc. as of September 30, 2017 and December 31, 2016 represented liabilities of Griffin-American Healthcare REIT IV Holdings, LP, a variable interest entity and consolidated subsidiary of Griffin-American Healthcare REIT IV, Inc. The creditors of Griffin-American Healthcare REIT IV Holdings, LP do not have recourse against Griffin-American Healthcare REIT IV, Inc., except for the Line of Credit, as defined in Note 7, held by Griffin-American Healthcare REIT IV Holdings, LP in the amount of $26,000,000 and $33,900,000 as of September 30, 2017 and December 31, 2016, respectively, which is guaranteed by Griffin-American Healthcare REIT IV, Inc.

(1)Such liabilities of American Healthcare REIT, Inc. represented liabilities of American Healthcare REIT Holdings, LP or its consolidated subsidiaries as of September 30, 2023 and December 31, 2022. American Healthcare REIT Holdings, LP is a variable interest entity, or VIE, and a consolidated subsidiary of American Healthcare REIT, Inc. The creditors of American Healthcare REIT Holdings, LP or its consolidated subsidiaries do not have recourse against American Healthcare REIT, Inc., except for the 2022 Credit Facility, as defined in Note 8, held by American Healthcare REIT Holdings, LP in the amount of $910,900 and $965,900 as of September 30, 2023 and December 31, 2022, respectively, which was guaranteed by American Healthcare REIT, Inc.
The accompanying notes are an integral part of these condensed consolidated financial statements.



4
Table of Contents


GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Three and Nine Months Ended September 30, 20172023 and 20162022
(In thousands, except share and per share amounts) (Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenue:       
Real estate revenue$8,488,000
 $312,000
 $18,738,000
 $338,000
Expenses:       
Rental expenses2,095,000
 98,000
 4,893,000
 121,000
General and administrative1,296,000
 329,000
 2,996,000
 725,000
Acquisition related expenses121,000
 1,857,000
 334,000
 2,227,000
Depreciation and amortization3,442,000
 64,000
 7,619,000
 64,000
Total expenses6,954,000

2,348,000
 15,842,000
 3,137,000
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)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted32,593,321
 3,357,979
 23,827,175
 1,345,578
Distributions declared per Class T and Class I common share$0.15
 $0.15
 $0.45
 $0.25

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues and grant income:
Resident fees and services$416,206 $368,306 $1,235,458 $1,013,505 
Real estate revenue46,970 51,323 141,134 154,371 
Grant income1,064 6,533 7,445 22,716 
Total revenues and grant income464,240 426,162 1,384,037 1,190,592 
Expenses:
Property operating expenses374,603 337,487 1,117,298 920,706 
Rental expenses14,574 14,850 44,422 44,800 
General and administrative11,342 9,626 36,169 31,673 
Business acquisition expenses1,024 231 2,244 2,161 
Depreciation and amortization49,273 40,422 138,644 122,704 
Total expenses450,816 402,616 1,338,777 1,122,044 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)(42,005)(27,524)(122,006)(71,194)
Gain in fair value of derivative financial instruments3,402 — 8,200 500 
Gain on dispositions of real estate investments, net31,981 2,113 29,777 2,796 
Impairment of real estate investments(12,510)(21,851)(12,510)(39,191)
(Loss) income from unconsolidated entities(505)(344)(924)1,680 
Gain on re-measurement of previously held equity interests— 19,567 726 19,567 
Foreign currency (loss) gain(1,704)(3,695)372 (8,689)
Other income1,755 670 5,952 2,399 
Total net other expense(19,586)(31,064)(90,413)(92,132)
Loss before income taxes(6,162)(7,518)(45,153)(23,584)
Income tax expense(284)(126)(775)(499)
Net loss(6,446)(7,644)(45,928)(24,083)
Net loss (income) attributable to noncontrolling interests457 (5,861)1,884 (9,688)
Net loss attributable to controlling interest$(5,989)$(13,505)$(44,044)$(33,771)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted$(0.09)$(0.21)$(0.67)$(0.51)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted66,048,991 65,819,808 66,036,253 65,735,176 
Net loss$(6,446)$(7,644)$(45,928)$(24,083)
Other comprehensive (loss) income:
Foreign currency translation adjustments(180)(477)66 (1,164)
Total other comprehensive (loss) income(180)(477)66 (1,164)
Comprehensive loss(6,626)(8,121)(45,862)(25,247)
Comprehensive loss (income) attributable to noncontrolling interests457 (5,861)1,884 (9,688)
Comprehensive loss attributable to controlling interest$(6,169)$(13,982)$(43,978)$(34,935)
The accompanying notes are an integral part of these condensed consolidated financial statements.

5
Table of Contents


GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 20172023 and 20162022
(In thousands, except share and per share amounts) (Unaudited)


Three Months Ended September 30, 2023
Stockholders’ Equity
 Class T and Class I
Common Stock		  
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — June 30, 202366,235,859 $661 $2,547,135 $(1,209,578)$(2,444)$1,335,774 $160,628 $1,496,402 
Amortization of nonvested restricted common stock and stock units— — 1,558 — — 1,558 — 1,558 
Stock based compensation— — — — — — 21 21 
Distributions to noncontrolling interests— — — — — — (764)(764)
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (21)(21)
Adjustment to value of redeemable noncontrolling interests— — (303)— — (303)(21)(324)
Distributions declared ($0.25 per share)— — — (16,616)— (16,616)— (16,616)
Net loss— — — (5,989)— (5,989)(379)(6,368)(1)
Other comprehensive loss— — — — (180)(180)— (180)
BALANCE — September 30, 202366,235,859 $661 $2,548,390 $(1,232,183)$(2,624)$1,314,244 $159,464 $1,473,708 

Three Months Ended September 30, 2022
Stockholders’ Equity
Class T and Class I
Common Stock
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — June 30, 202266,091,145 $661 $2,543,478 $(1,024,328)$(2,653)$1,517,158 $172,602 $1,689,760 
Issuance of common stock under the DRIP98,794 1 3,670 — — 3,671 — 3,671 
Issuance of nonvested restricted common stock4,965 — — — — — — — 
Amortization of nonvested restricted common stock and stock units— — 914 — — 914 — 914 
Stock based compensation— — — — — — 20 20 
Repurchase of common stock(152,035)(2)(5,648)— — (5,650)— (5,650)
Distributions to noncontrolling interests— — — — — — (3,516)(3,516)
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (20)(20)
Adjustment to value of redeemable noncontrolling interests— — (8,394)— — (8,394)(2,367)(10,761)
Distributions declared ($0.40 per share)— — — (26,437)— (26,437)— (26,437)
Net (loss) income— — — (13,505)— (13,505)5,507 (7,998)(1)
Other comprehensive loss— — — — (477)(477)— (477)
BALANCE — September 30, 202266,042,869 $660 $2,534,020 $(1,064,270)$(3,130)$1,467,280 $172,226 $1,639,506 

6
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)
For the Three and Nine Months Ended September 30, 2023 and 2022
(In thousands, except share and per share amounts) (Unaudited)

 Class T and Class I Common Stock      
 
Number
of Shares
 Amount 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
BALANCE — December 31, 201611,377,439
 $114,000
 $99,492,000
 $(7,351,000) $92,255,000
Issuance of common stock24,264,521
 242,000
 241,193,000
 —
 241,435,000
Offering costs — common stock—
 —
 (23,544,000) —
 (23,544,000)
Issuance of common stock under the DRIP584,318
 6,000
 5,486,000
 —
 5,492,000
Issuance of vested and nonvested restricted common stock22,500
 —
 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, 201736,230,395
 $362,000
 $322,549,000
 $(16,766,000) $306,145,000
Nine Months Ended September 30, 2023
Stockholders’ Equity
 Class T and Class I
Common Stock		  
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — December 31, 202266,210,462 $661 $2,540,424 $(1,138,304)$(2,690)$1,400,091 $167,674 $1,567,765 
Issuance of nonvested restricted common stock26,156 — — — — — — — 
Vested restricted stock units(2)4,120 — (72)— — (72)— (72)
Amortization of nonvested restricted common stock and stock units— — 4,173 — — 4,173 — 4,173 
Stock based compensation— — — — — — 62 62 
Repurchase of common stock(4,879)— (165)— — (165)— (165)
Distributions to noncontrolling interests— — — — — — (6,958)(6,958)
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (62)(62)
Adjustment to value of redeemable noncontrolling interests— — 4,030 — — 4,030 68 4,098 
Distributions declared ($0.75 per share)— — — (49,835)— (49,835)— (49,835)
Net loss— — — (44,044)— (44,044)(1,320)(45,364)(1)
Other comprehensive income— — — — 66 66 — 66 
BALANCE — September 30, 202366,235,859 $661 $2,548,390 $(1,232,183)$(2,624)$1,314,244 $159,464 $1,473,708 


7
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)
For the Three and Nine Months Ended September 30, 2023 and 2022
(In thousands, except share and per share amounts) (Unaudited)

 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, 201520,833
 $—
 $200,000
 $—
 $200,000
 $2,000
 $202,000
Issuance of common stock5,374,861
 54,000
 53,449,000
 —
 53,503,000
 —
 53,503,000
Offering costs — common stock—
 —
 (7,584,000) —
 (7,584,000) —
 (7,584,000)
Issuance of common stock under the DRIP23,379
 —
 222,000
 —
 222,000
 —
 222,000
Issuance of vested and nonvested restricted common stock15,000
 —
 30,000
 —
 30,000
 —
 30,000
Amortization of nonvested common stock compensation—
 —
 36,000
 —
 36,000
 —
 36,000
Reclassification of noncontrolling interest to mezzanine equity—
 —
 —
 —
 —
 (2,000) (2,000)
Distributions declared—
 —
 —
 (598,000) (598,000) —
 (598,000)
Net loss—
 —
 —
 (2,855,000) (2,855,000) —
 (2,855,000)
BALANCE — September 30, 20165,434,073
 $54,000
 $46,353,000
 $(3,453,000) $42,954,000
 $—
 $42,954,000
Nine Months Ended September 30, 2022
Stockholders’ Equity
 Class T and Class I
Common Stock		  
Number
of
Shares		AmountAdditional
Paid-In
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity		Noncontrolling
Interests		Total Equity
BALANCE — December 31, 202165,758,004 $658 $2,533,904 $(951,303)$(1,966)$1,581,293 $175,553 $1,756,846 
Offering costs — common stock— — (2)— — (2)— (2)
Issuance of common stock under the DRIP705,169 7 26,111 — — 26,118 — 26,118 
Issuance of nonvested restricted common stock18,690 — — — — — — — 
Amortization of nonvested restricted common stock and stock units— — 2,705 — — 2,705 — 2,705 
Stock based compensation— — — — — — 62 62 
Repurchase of common stock(438,994)(5)(16,228)— — (16,233)— (16,233)
Distributions to noncontrolling interests— — — — — — (10,568)(10,568)
Adjustment to noncontrolling interest in connection with the Merger— — (1,173)— — (1,173)1,173 — 
Reclassification of noncontrolling interests to mezzanine equity— — — — — — (62)(62)
Adjustment to value of redeemable noncontrolling interests— — (11,297)— — (11,297)(3,297)(14,594)
Distributions declared ($1.20 per share)— — — (79,196)— (79,196)— (79,196)
Net (loss) income— — — (33,771)— (33,771)9,365 (24,406)(1)
Other comprehensive loss— — — — (1,164)(1,164)— (1,164)
BALANCE — September 30, 202266,042,869 $660 $2,534,020 $(1,064,270)$(3,130)$1,467,280 $172,226 $1,639,506 

___________
(1)For the three months ended September 30, 2023 and 2022, amounts exclude $(78) and $354, respectively, of net (loss) income attributable to redeemable noncontrolling interests. For thenine months ended September 30, 2023 and 2022, amounts exclude $(564) and $323, respectively, of net (loss) income attributable to redeemable noncontrolling interests. See Note 11, Redeemable Noncontrolling Interests, for further discussion.
(2)The amounts are shown net of common stock withheld from issuance to satisfy employee minimum tax withholding requirements in connection with the vesting of restricted stock units. See Note 12, Equity — AHR 2015 Incentive Plan, for further discussion.
The accompanying notes are an integral part of these condensed consolidated financial statements.

8
6
Table of Contents


GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 20172023 and 20162022
(In thousands) (Unaudited)

Nine Months Ended September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss$(45,928)$(24,083)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization138,644 122,716 
Other amortization46,576 21,316 
Deferred rent(2,896)(5,414)
Stock based compensation4,235 2,658 
Gain on dispositions of real estate investments, net(29,777)(2,796)
Impairment of real estate investments12,510 39,191 
Loss (income) from unconsolidated entities924 (1,680)
Gain on re-measurement of previously held equity interests(726)(19,567)
Foreign currency (gain) loss(351)8,427 
Loss on extinguishments of debt345 5,038 
Change in fair value of derivative financial instruments(8,200)(500)
Changes in operating assets and liabilities:
Accounts and other receivables(19,997)(8,051)
Other assets(6,817)(7,688)
Accounts payable and accrued liabilities12,375 9,410 
Accounts payable due to affiliates— (184)
Operating lease liabilities(27,708)(15,638)
Security deposits, prepaid rent and other liabilities(443)(9,714)
Net cash provided by operating activities72,766 113,441 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from dispositions of real estate investments167,861 25,622 
Developments and capital expenditures(74,386)(51,358)
Acquisitions of real estate investments(45,382)(75,125)
Acquisitions of previously held equity interests(335)(13,713)
Investments in unconsolidated entities(12,000)(4,437)
Issuance of notes receivable(13,778)(3,000)
Real estate and other deposits(1,279)(528)
Net cash provided by (used in) investing activities20,701 (122,539)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under mortgage loans payable85,477 89,950 
Payments on mortgage loans payable(96,596)(61,954)
Borrowings under the lines of credit and term loan301,750 1,068,400 
Payments on the lines of credit and term loan(306,484)(1,002,100)
Borrowings under financing obligation16,283 — 
Payments on financing and other obligations(34,292)(12,892)
Deferred financing costs(3,418)(5,829)
Debt extinguishment costs(269)(3,222)
Distributions paid to common stockholders(59,685)(35,391)
Repurchase of common stock(165)(16,233)
9
 Nine Months Ended September 30,
 2017 2016
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:   
Depreciation and amortization7,619,000
 64,000
Other amortization (including deferred financing costs, above/below-market leases, leasehold interests, above-market leasehold interests and debt premium)251,000
 27,000
Deferred rent(1,124,000) (33,000)
Stock based compensation100,000
 66,000
Share discounts3,000
 49,000
Bad debt expense94,000
 —
Changes in operating assets and liabilities:   
Accounts and other receivables(362,000) (80,000)
Other assets(305,000) (105,000)
Accounts payable and accrued liabilities1,394,000
 449,000
Accounts payable due to affiliates169,000
 33,000
Security deposits, prepaid rent and other liabilities(280,000) (6,000)
Net cash provided by (used in) operating activities8,849,000
 (2,391,000)
CASH FLOWS FROM INVESTING ACTIVITIES   
Acquisition of real estate investments(215,738,000) (55,619,000)
Capital expenditures(845,000) (18,000)
Restricted cash(16,000) —
Real estate deposits(4,821,000) (1,000,000)
Pre-acquisition expenses(698,000) —
Net cash used in investing activities(222,118,000)
(56,637,000)
CASH FLOWS FROM FINANCING ACTIVITIES   
Payments on mortgage loan payable(189,000) (19,000)
Borrowings under the Line of Credit192,600,000
 12,000,000
Payments on the Line of Credit(200,500,000) —
Proceeds from issuance of common stock241,647,000
 52,484,000
Deferred financing costs(175,000) (1,027,000)
Repurchase of common stock(178,000) —
Payment of offering costs(13,673,000) (1,889,000)
Security deposits(97,000) —
Distributions paid(4,006,000) (148,000)
Net cash provided by financing activities215,429,000
 61,401,000
NET CHANGE IN CASH AND CASH EQUIVALENTS2,160,000
 2,373,000
CASH AND CASH EQUIVALENTS — Beginning of period2,237,000
 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
 $—

7
Table of Contents


GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
For the Nine Months Ended September 30, 20172023 and 20162022
(In thousands) (Unaudited)

Nine Months Ended September 30,
20232022
Payments to taxing authorities in connection with common stock directly withheld from employees$(72)$— 
Distributions to noncontrolling interests in total equity(7,371)(9,821)
Contribution from redeemable noncontrolling interest— 273 
Distributions to redeemable noncontrolling interests(1,190)(1,918)
Repurchase of redeemable noncontrolling interests(15,954)— 
Payment of offering costs(885)(666)
Security deposits(306)(628)
Net cash (used in) provided by financing activities(123,177)7,969 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH$(29,710)$(1,129)
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH(40)(59)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period111,906 125,486 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period$82,156 $124,298 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:
Cash and cash equivalents$65,052 $81,597 
Restricted cash46,854 43,889 
Cash, cash equivalents and restricted cash$111,906 $125,486 
End of period:
Cash and cash equivalents$35,178 $79,421 
Restricted cash46,978 44,877 
Cash, cash equivalents and restricted cash$82,156 $124,298 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest$114,002 $60,328 
Income taxes$1,014 $653 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued developments and capital expenditures$19,329 $25,096 
Capital expenditures from financing obligations$1,301 $— 
Tenant improvement overage$2,359 $605 
Issuance of common stock under the DRIP$— $26,118 
Distributions declared but not paid — common stockholders$16,559 $26,417 
Distributions declared but not paid — limited partnership units$875 $1,400 
Distributions declared but not paid — restricted stock units$140 $54 
Accrued offering costs$1,685 $1,796 
10
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
For the Nine Months Ended September 30, 2023 and 2022
(In thousands) (Unaudited)
 Nine Months Ended September 30,
 2017 2016
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES   
Investing Activities:   
Accrued capital expenditures$931,000
 $—
Accrued pre-acquisition expenses$601,000
 $—
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
Mortgage loans payable$8,000,000
 $3,968,000
Accounts payable and accrued liabilities$803,000
 $75,000
Security deposits and prepaid rent$545,000
 $106,000
Financing Activities:   
Issuance of common stock under the DRIP$5,492,000
 $222,000
Distributions declared but not paid$1,739,000
 $228,000
Accrued Contingent Advisor Payment$7,759,000
 $3,802,000
Accrued stockholder servicing fee$11,496,000
 $1,847,000
Reclassification of noncontrolling interest to mezzanine equity$—
 $2,000
Accrued deferred financing costs$22,000
 $72,000
Receivable from transfer agent$807,000
 $926,000

Nine Months Ended September 30,
20232022
The following represents the net increase (decrease) in certain assets and liabilities in connection with our acquisitions and dispositions of investments:
Accounts and other receivables$(1,784)$2,410 
Other assets, net$(3,211)$(10,967)
Mortgage loan payable, net$— $33,241 
Accounts payable and accrued liabilities$(1,460)$14,828 
Financing obligations$12 $65 
Security deposits, prepaid rent and other liabilities$(458)$15,994 
The accompanying notes are an integral part of these condensed consolidated financial statements.

11
8
Table of Contents


GRIFFIN-AMERICANAMERICAN HEALTHCARE REIT, IV, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
For the Three and Nine Months Ended September 30, 20172023 and 20162022
The use of the words “we,” “us” or “our” refers to Griffin-AmericanAmerican Healthcare REIT, IV, Inc. and its subsidiaries, including Griffin-AmericanAmerican Healthcare REIT IV Holdings, LP, except where the context otherwise requires.noted.
1. Organization and Description of Business
Griffin-AmericanOverview and Background
American Healthcare REIT, IV, Inc., a Maryland corporation, was incorporated on January 23, 2015 and therefore we consideris a self-managed real estate investment trust, or REIT, that our date of inception. We were initially capitalized on February 6, 2015. We invest inowns a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, hospitals,or MOBs, senior housing, skilled nursing facilities, senior housingor SNFs, hospitals and other healthcare-related facilities. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). Our healthcare facilities operated under a RIDEA structure include our senior housing operating properties, or SHOP, and our integrated senior health campuses. We have originated and acquired secured loans and may also originate and acquire secured loans andother real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income.income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We qualifiedhave elected to be taxed as a real estate investment trust, or REIT under the Internal Revenue Code of 1986, as amended, or the Code, for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2016,purposes. We believe that we have been organized and operated, and we intend to continue to qualify to be taxedoperate, in conformity with the requirements for qualification and taxation as a REIT.REIT under the Code.
On February 16, 2016, we commenced our initial public offering,October 1, 2021, Griffin-American Healthcare REIT III, Inc., or our offering, in which we were offering to the public up to $3,150,000,000 in sharesGAHR III, merged with and into a wholly owned subsidiary, or Merger Sub, 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 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 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 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,Inc., or GAHR IV, with Merger Sub being the surviving company, which we refer to as the REIT Merger, and our operating partnership, Griffin-American Healthcare REIT IV Advisor,Holdings, LP, merged with and into Griffin-American Healthcare REIT III Holdings, LP, or the Surviving Partnership, with the Surviving Partnership being the surviving entity, which we refer to as the Partnership Merger and, together with the REIT Merger, the Merger. Following the Merger on October 1, 2021, our company was renamed American Healthcare REIT, Inc. and the Surviving Partnership was renamed American Healthcare REIT Holdings, LP, or our advisor. We reserveoperating partnership.
Also on October 1, 2021, immediately prior to the rightconsummation of the Merger, and pursuant to reallocatea contribution and exchange agreement dated June 23, 2021, GAHR III acquired a newly formed entity, American Healthcare Opps Holdings, LLC, or NewCo, which we refer to as the shares of common stock we are offering betweenAHI Acquisition. Following the primary offeringMerger and the DRIP, and among classes of stock. As of September 30, 2017, we had received and accepted subscriptions inAHI Acquisition, our offering for 35,522,410 aggregate shares of our Class T and Class I common stock, or approximately $353,510,000, excluding shares of our common stock issued pursuant to the DRIP.company became self-managed.
Operating Partnership
We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, orour operating partnership and we are the sole general partner of our operating partnership. We are externally advised by our advisor pursuant to an advisory agreement, or the Advisory Agreement, between usAs of both September 30, 2023 and our advisor. The Advisory Agreement was effective as of February 16, 2016 and had a one-year term, subject to successive one-year renewals upon the mutual consentDecember 31, 2022, we owned 95.0% of the parties. The Advisory Agreement was renewed pursuant topartnership units, or OP units, in our operating partnership, and the mutual consent ofremaining 5.0% limited OP units, were owned by AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T. Hanson, the parties on February 13, 2017 and expires on February 16, 2018. Our advisor uses its best efforts, subject to the oversight and reviewnon-executive Chairman of our board of directors, to, among other things, research, identify, reviewor our board, Danny Prosky, our Chief Executive Officer and make investments inPresident, and dispositionsMathieu B. Streiff, one of propertiesour directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by American Healthcare Investors, LLC, or American Healthcare Investors, and 25.0% owned by a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital (formerly knowncollectively, the NewCo Sellers. See Note 11, Redeemable Noncontrolling Interests, and Note 12, Equity — Noncontrolling Interests in Total Equity, for a further discussion of the ownership in our operating partnership.
Public Offerings
As of September 30, 2023, after taking into consideration the impact of the Merger and the reverse stock split as Griffin Capital Corporation),discussed in Note 2, Summary of Significant Accounting Policies, we had issued 65,445,557 shares for a total of $2,737,716,000 of common stock since February 26, 2014 in our initial public offerings and our distribution reinvestment plan, or collectively, our co-sponsors. American Healthcare Investors is 47.1% ownedDRIP, offerings (includes historical offering amounts sold by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Colony NorthStar, Inc. (NYSE: CLNS), or Colony NorthStar (formerly known as NorthStar Asset Management Group Inc.GAHR III and GAHR IV prior to its mergerthe Merger).
On September 16, 2022, we filed with Colony Capital, Inc.the United States Securities and NorthStar Realty Finance Corp.Exchange Commission, or the SEC, a Registration Statement on January 10, 2017)Form S-11 (File No. 333-267464), which was last amended on November 7, 2023 upon filing with the SEC Amendment No. 2 to Registration Statement on Form S-11, with respect to a proposed public offering by us of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock Exchange, or the Proposed Listing. Such registration statement and 7.8% owned by James F. Flaherty III, a former partner of Colony NorthStar. Wecontemplated listing are not affiliated with Griffin Capital, Griffin Capital Securities, LLC, oryet effective.
12
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
See Note 12, Equity — Common Stock, and Note 12, Equity — Distribution Reinvestment Plan, for a further discussion of our dealer manager, Colony NorthStar or Mr. Flaherty; however, we are affiliated with Griffin-American Healthcare REIT IV Advisor, American Healthcare Investors and AHI Group Holdings.public offerings.
Our Real Estate Investments Portfolio
We currently operate through twosix reportable business segmentssegments: integrated senior health campuses, MOBs, SHOP, SNFs, senior housing — medical office buildingsleased and senior housing.hospitals. As of September 30, 2017, we had completed 17 real estate acquisitions whereby2023, we owned 29 properties, comprising 30and/or operated 298 buildings orand integrated senior health campuses, including completed development and expansion projects, representing approximately 1,418,00018,875,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $356,640,000.$4,485,940,000. In addition, as of September 30, 2023, we also owned a real estate-related debt investment purchased for $60,429,000.

COVID-19
9
Our residents, tenants, operating partners and managers, our industry and the U.S. economy have been adversely affected by the impacts of the COVID-19 pandemic, including its economic impact. While the immediate effects of the COVID-19 pandemic have subsided, the timing and extent of the economic recovery towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the effectiveness and frequency of booster vaccinations, the duration and implications of ongoing or future restrictions and safety measures, the availability of ongoing government financial support to our tenants, operating partners and managers and the overall pace of economic recovery, among others. As an owner and operator of healthcare facilities, we expect to continue to be adversely affected by the long-term effects of the COVID-19 pandemic for some period of time; however, it is not possible to predict the full extent of its future impact on us, including our residents, tenants, operating partners and managers, the operations of our properties or the markets in which they are located, or the overall healthcare industry.
TableWe have evaluated such economic impacts of Contentsthe COVID-19 pandemic on our business thus far and have incorporated information concerning such impacts into our assessments of liquidity, impairment and collectability from tenants and residents as of September 30, 2023. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information.

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

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 and all non-wholly owned subsidiaries in which we have control, as well as any variable interest entities, or VIEs in which we are the primary beneficiary. The portion of equity in any subsidiary that is not wholly owned by us is presented in our accompanying condensed consolidated financial statements as a noncontrolling interest. 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 performanceperformance.
Our condensed consolidated financial statements have been and are prepared on the going concern basis of accounting, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As of September 30, 2023, the 2019 Trilogy Credit Facility, as defined in Financial Accounting Standards Board,Note 8, Lines of Credit and Term Loan, for our consolidated subsidiary of which we indirectly own approximately 74.0%, has an outstanding balance of approximately $367,000,000 and matures in less than 12 months on September 5, 2024. The 2019 Trilogy Credit Facility is secured by 28 of our integrated senior health campuses and is non-recourse to us. We also do not guarantee the 2019 Trilogy Credit Facility for any nonperformance of the principal or FASB, Accounting Standards Codification,interest payments. Management plans to refinance the outstanding balance prior to its maturity. Management also believes that given the current value of these campuses relative to the current outstanding balance of the 2019 Trilogy Credit Facility, it is probable such loan could be refinanced under current lending conditions to extend the maturity date beyond 12 months from the filing date of our accompanying condensed consolidated financial statements.
13
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
On November 15, 2022 we effected a one-for-four reverse stock split of our common stock and a corresponding reverse split of the OP units, or ASC, Topic 810, Consolidation, or ASC Topic 810.the Reverse Splits. All numbers of common shares and per share data, as well as the OP units, in our accompanying condensed consolidated financial statements and related notes have been retroactively adjusted for all periods presented to give effect to the Reverse Splits.
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 and all non-wholly owned subsidiaries of which we have control, will own substantially all of the interests in properties acquired on our behalf. We are the sole general partner of ourour operating partnership and as of both September 30, 20172023 and December 31, 2016,2022, we owned greater than a 99.99%95.0% general partnership interest therein. Our advisor is a limited partner,therein, and as of September 30, 2017 and December 31, 2016, owned less than a 0.01% noncontrollingthe remaining 5.0% limited partnership interest was owned by the NewCo Sellers.
The accounts of our operating partnership are consolidated in our operating partnership.
Becauseaccompanying condensed consolidated financial statements 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 condensed consolidated financial statements.. All intercompany accounts and transactions are eliminated in consolidation.
Interim Unaudited Financial Data
Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the United States Securities and Exchange Commission, or SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SECthe SEC’s rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable.
In preparing our accompanying condensed consolidated financial statements, management has evaluated subsequent events through the financial statement issuance date. We believe that although the disclosures contained herein are adequate to prevent the information presented from being misleading, our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017.17, 2023.
Use of Estimates
The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through property acquisitions, including through business combinations, goodwill and its impairment, revenues and grant income, allowance for credit losses, impairment of long-lived and intangible assets and contingencies. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

1014
Table of Contents


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

Revenue Recognition — Resident Fees and Services Revenue
AllowanceDisaggregation of Resident Fees and Services Revenue
The following tables disaggregate our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time (in thousands):
Three Months Ended September 30,
20232022
Integrated
Senior Health
Campuses		SHOP(1)TotalIntegrated
Senior Health
Campuses		SHOP(1)Total
Over time$305,379 $42,752 $348,131 $265,705 $38,740 $304,445 
Point in time66,912 1,163 68,075 63,046 815 63,861 
Total resident fees and services$372,291 $43,915 $416,206 $328,751 $39,555 $368,306 
Nine Months Ended September 30,
20232022
Integrated
Senior Health
Campuses		SHOP(1)TotalIntegrated
Senior Health
Campuses		SHOP(1)Total
Over time$902,836 $134,965 $1,037,801 $729,079 $113,848 $842,927 
Point in time194,081 3,576 197,657 168,266 2,312 170,578 
Total resident fees and services$1,096,917 $138,541 $1,235,458 $897,345 $116,160 $1,013,505 

The following tables disaggregate our resident fees and services revenue by payor class (in thousands):
Three Months Ended September 30,
20232022
Integrated
Senior Health
Campuses		SHOP(1)TotalIntegrated
Senior Health
Campuses		SHOP(1)Total
Private and other payors$177,901 $41,296 $219,197 $151,296 $36,228 $187,524 
Medicare112,773 974 113,747 112,547 — 112,547 
Medicaid81,617 1,645 83,262 64,908 3,327 68,235 
Total resident fees and services$372,291 $43,915 $416,206 $328,751 $39,555 $368,306 
Nine Months Ended September 30,
20232022
Integrated
Senior Health
Campuses		SHOP(1)TotalIntegrated
Senior Health
Campuses		SHOP(1)Total
Private and other payors$512,733 $129,674 $642,407 $420,518 $106,897 $527,415 
Medicare357,238 1,753 358,991 300,744 — 300,744 
Medicaid226,946 7,114 234,060 176,083 9,263 185,346 
Total resident fees and services$1,096,917 $138,541 $1,235,458 $897,345 $116,160 $1,013,505 
15
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
___________
(1)Includes fees for Uncollectible Accountsbasic housing, as well as fees for assisted living or skilled nursing care. We record revenue when services are rendered at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For patients under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.
Accounts Receivable, Net — Resident Fees and Services Revenue
The beginning and ending balances of accounts receivable, net— resident fees and services are as follows (in thousands):
Private
and
Other Payors		MedicareMedicaidTotal
Beginning balance — January 1, 2023
$55,484 $45,669 $20,832 $121,985 
Ending balance — September 30, 2023
58,195 46,385 29,975 134,555 
Increase$2,711 $716 $9,143 $12,570 
Deferred Revenue — Resident Fees and Services Revenue
Deferred revenue is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets. The beginning and ending balances of deferred revenue— resident fees and services, almost all of which relates to private and other payors, are as follows (in thousands):
Total
Beginning balance — January 1, 2023
$17,901 
Ending balance — September 30, 2023
20,893 
Increase$2,992 
Resident and Tenant Receivables and Allowances
Resident receivables, which are related to resident fees and unbilled deferred rent receivablesservices revenue, are carried net of an allowance for uncollectible amounts.credit losses. An allowance is maintained for estimated losses resulting from the inability of certain tenantsresidents and payors to meet the contractual obligations under their lease or service agreements. We also maintain an allowance for deferred rent receivables arising from the straight line recognitionSubstantially all of rents. Suchsuch allowances are chargedrecorded as direct reductions of resident fees and services revenue as contractual adjustments provided to bad debt expense, which is included in general and administrativethird-party payors or implicit price concessions in our accompanying condensed consolidated statements of operations.operations and comprehensive loss. Our determination of the adequacy of these allowances is based primarily upon evaluations of historical loss experience, the tenant’sresidents’ financial condition, security deposits, letters of credit, lease guarantees,cash collection patterns by payor and by state, current economic conditions, future expectations in estimating credit losses and other relevant factors.
As of September 30, 2017 Tenant receivables, which are related to real estate revenue, and December 31, 2016, we had $94,000 and $0, respectively, in allowance for uncollectible accounts, which was determined necessary to reduce receivables to our estimate of the amount recoverable. For the three and nine months ended September 30, 2017 and 2016, we did not write off any of our receivables directly to bad debt expense. For the three and nine months ended September 30, 2017 and 2016, we did not write 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 ourunbilled deferred rent receivables were directly written off to bad debt expense. For the threeare reduced for amounts where collectability is not probable, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations and nine months ended September 30, 2016, we did not write off anycomprehensive loss.
The following is a summary of our deferred rent receivables directlyadjustments 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 completedallowances 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.2023 and 2022 (in thousands):
Nine Months Ended September 30,
20232022
Beginning balance
$14,071 $12,378 
Additional allowances14,035 16,476 
Write-offs(7,011)(9,120)
Recoveries collected or adjustments(6,446)(5,451)
Ending balance
$14,649 $14,283 
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 until


11
16
Table of Contents


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

Accounts Payable and Accrued Liabilities
January 1, 2019, when we adoptAs of September 30, 2023 and December 31, 2022, accounts payable and accrued liabilities primarily include insurance reserves of $43,050,000 and $39,893,000, respectively, reimbursement of payroll-related costs to the managers of our SHOP and integrated senior health campuses of $40,650,000 and $38,624,000, respectively, accrued property taxes of $28,619,000 and $24,926,000, respectively, accrued developments and capital expenditures to unaffiliated third parties of $19,329,000 and $30,211,000, respectively, and accrued distributions to common stockholders of $16,559,000 and $26,484,000, respectively.
Recently Issued Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2016-02, Leases2020-04, Facilitation of the Effects of Reference Rate Reform of Financial Reporting, or ASU 2016-02. We have not yet selected a transition method2020-04, which provides optional expedients and we expectexceptions for applying GAAP to complete our evaluationcontract modifications, hedging relationships and other transactions, subject to meeting certain criteria. ASU 2020-04 applies to the aforementioned transactions that reference the London Inter-bank Offered Rate, or LIBOR, or another reference rate expected to be discontinued because of the impact of the adoption of ASC Topic 606 and its amendments on our consolidated financial statements during the fourth quarter of 2017.
reference rate reform. In January 2016,2021, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities2021-01, Reference Rate Reform (Topic 848), or ASU 2016-01,2021-01, which amends the classificationclarifies that certain optional expedients and measurement of financial instruments. ASU 2016-01 revises theexceptions for contract modification and hedge accounting related to: (i) the classification and measurement of investments in equity securities; and (ii) the presentation of certain fair value changesapply to derivative instruments that use an interest rate for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01margining, discounting or contract price alignment that is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, with respect to only certainmodified as a result of the amendments in ASU 2016-01, for financial statements that have not yet been made available for issuance. ASU 2016-01 requires the applicationdiscontinuation of the amendments by meansuse of LIBOR as a cumulative-effect adjustmentbenchmark interest rate due 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.
reference rate reform. In February 2016,December 2022, the FASB issued ASU 2016-02,2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, or ASU 2022-06, which amendsextends the period of time entities can utilize the reference rate reform relief guidance on accounting for leases, including extensive amendmentsunder ASU 2020-04 from December 31, 2022 to the disclosure requirements. UnderDecember 31, 2024. 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;2020-04, ASU 2021-01 and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under ASU 2016-02 from a lessor perspective, the guidance will require bifurcation of lease revenues into lease components and non-lease components and to separately recognize and disclose non-lease components that2022-06 are executory in nature. Lease components will continue to be recognized on a straight-line basis over the lease term and certain non-lease components will be accounted for under the new revenue recognition guidance in ASC Topic 606. The disaggregated disclosure of lease and executory non-lease components (e.g., maintenance) will be required upon the adoption of ASU 2016-02. ASU 2016-02 is effective for fiscal years and interim periods beginning after March 12, 2020 and through the effective date December 15, 2018. Early adoption is permitted for financial statements that have not yet been made available for issuance.31, 2024, as extended by 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 2016-022022-06. We adopted such accounting pronouncements on January 1, 2019, we will recognize all of our operating leases for2023, which we are the lessee, including facilities leases and ground leases,has not had a material impact on our consolidated balance sheets and will capitalize fewer legal costs related to the drafting and execution of our lease agreements. We are still 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 to our consolidated financial statements and disclosures.disclosures as of September 30, 2023.
In June 2016,July 2023, the FASB issued ASU 2016-13, Measurement2023-03, Presentation of Credit Losses on Financial Instruments, Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280-General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, or ASU 2016-13, which introduces2023-03. ASU 2023-03 amends the Accounting Standards Codification, or ASC, for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a material impact on our consolidated financial statements and disclosures.
In August 2023, the FASB issued ASU 2023-05,Business Combinations — Joint Venture Formations (Subtopic 805- 60): Recognition and Initial Measurement, or ASU 2023-05. ASU 2023-05 applies to the initial formation of a “joint venture” or a “corporate joint venture” as defined in the accounting literature and requires a joint venture to apply a new approach to estimate credit losses on certain typesbasis of financial instruments based on expected losses. It also modifiesaccounting by initially measuring and recognizing all contributions received upon its formation at fair value. In particular, a joint venture will measure its total assets and liabilities upon formation as the impairment modelfair value of the joint venture as a whole, which would equal the fair value of all of the joint venture’s outstanding equity interests. The new guidance does not change the definition of a joint venture, the accounting by the investors for available-for-sale debt securitiestheir investments in a joint venture (e.g., equity method accounting) or the accounting by a joint venture for contributions received after its formation. ASU 2023-05 will be applied prospectively 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 beginningall newly-formed joint venture entities with a formation date on or after December 15, 2019.January 1, 2025. Early adoption is permitted after December 15, 2018.permitted. We do not expect the adoption of ASU 2016-132023-05 on January 1, 20202025 to have a material impact onto our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receiptsstatements and Cash Payments, or ASU 2016-15, which intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2016-15 on January 1, 2018 to have a material impact on our consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, or ASU 2016-16, which removes the prohibition in ASC 740, Income Taxes, against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2016-16 on January 1, 2018 to have a material impact on our consolidated financial statements.
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 on our consolidated financial statements.

disclosures.
12
17
Table of Contents


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

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, or ASU 2017-09, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Modification accounting is only applied if the value, the vesting conditions or the classification of the award (or equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. We do not expect the adoption of ASU 2017-09 on January 1, 2018 to have a material impact on our consolidated financial statements.
3. Real Estate Investments, Net and Business Combinations
Our real estate investments, net consisted of the following as of September 30, 20172023 and December 31, 2016:2022 (in thousands):
 
September 30,
2017
 
December 31,
2016
Building and improvements$285,481,000
 $106,442,000
Land39,386,000
 12,322,000
 324,867,000
 118,764,000
Less: accumulated depreciation(5,925,000) (822,000)
 $318,942,000
 $117,942,000
 
September 30,
2023
December 31,
2022
Building, improvements and construction in process$3,588,614 $3,670,361 
Land and improvements335,517 344,359 
Furniture, fixtures and equipment234,311 221,727 
4,158,442 4,236,447 
Less: accumulated depreciation(727,802)(654,838)
$3,430,640 $3,581,609 
Depreciation expense for the three months ended September 30, 2023 and 2022 was $36,929,000 and $35,327,000, respectively, and for the nine months ended September 30, 2023 and 2022 was $109,967,000 and $104,077,000, respectively.
The following is a summary of our capital expenditures for the three and nine months ended September 30, 2017 was $2,305,0002023 (in thousands):
Three Months
Ended
September 30,
2023
Nine Months
Ended
September 30,
2023
Integrated senior health campuses$8,806 $37,865 
MOBs5,235 16,077 
SHOP5,006 8,935 
Senior housing — leased172 417 
SNFs— — 
Hospitals— — 
Total$19,219 $63,294 
Acquisitions of Real Estate Investments and $5,110,000, respectively. Depreciation expense forPreviously Leased Real Estate Investments
Acquisitions of Real Estate Investments
For the three and nine months ended September 30, 2016 was $40,000. 
For2023, using cash on hand and debt financing, we, through a majority-owned subsidiary of Trilogy Investors, LLC, or Trilogy, completed the three months ended September 30, 2017, we incurred capital expendituresacquisition of $324,000 onone integrated senior health campus. The following is a summary of our medical office buildings and $700,000 on our senior housing facilities. In addition to the acquisitions discussed below,property acquisition for the nine months ended September 30, 2017,2023 (dollars in thousands):
LocationDate AcquiredContract
Purchase Price		Mortgage
Loan Payable
Louisville, KY02/15/23$11,000 $7,700 
In addition, on June 30, 2023, we, incurred capital expendituresthrough a majority-owned subsidiary of $1,076,000 on our medical office buildings and $700,000 on our senior housing facilities.
We reimburse our advisor or its affiliatesTrilogy, acquired a land parcel in Ohio for acquisition expenses related to selecting, evaluating and acquiring assets. The reimbursement of acquisition expenses, acquisition fees, total development costs and real estate commissions and other fees paid to unaffiliated third parties will not exceed, in the aggregate, 6.0% of thea 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 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$660,000, plus closing costs, for the acquisitionsfuture expansion 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.

an existing integrated senior health campus.
13
18
Table of Contents


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

Acquisitions in 2017of Previously Leased Real Estate Investments
For the nine months ended September 30, 2017,2023, using net proceeds from our offeringcash and debt financing, we, completed eight property acquisitions comprising 18 buildings from unaffiliated third parties. The aggregate contract purchase pricethrough a majority-owned subsidiary of these properties was $217,820,000Trilogy, acquired three previously leased real estate investments located in Indiana and we incurred $9,802,000 in total acquisition fees to our advisor in connection with these property acquisitions.Ohio. The following is a summary of such acquisitions, which are included in our propertyintegrated senior health campuses segment (dollars in thousands):
LocationDate AcquiredContract
Purchase Price		Mortgage
Loan Payable		Financing
Obligation
Washington, IN07/13/23$14,200 $12,212 $— 
Tell City, IN07/13/232,400 1,988 — 
New Albany, OH07/13/2316,283 — 16,283 
Total$32,883 $14,200 $16,283 
We accounted for our acquisitions forof land and real estate investments completed during the nine months ended September 30, 2017:2023 as asset acquisitions. The following table summarizes the purchase price of such assets acquired at the time of acquisition based on their relative fair values and adjusted for $28,623,000 operating lease right-of-use assets and $30,498,000 operating lease liabilities (in thousands):
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
___________
(1)We own 100% of our properties acquired in 2017.2023
Acquisitions
Building and improvements$38,517 
Land and improvements4,917 
(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 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
Total assets 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, for a further discussion.$43,434 

Dispositions of Real Estate Investments
For the nine months ended September 30, 2023, we disposed of six SHOP and 14 MOBs. We recognized a total aggregate net gain on such dispositions of $30,022,000. The following is a summary of such dispositions (dollars in thousands):
LocationNumber of
Buildings		TypeDate
Disposed		Contract
Sales Price
Pinellas Park, FL(1)1 SHOP02/01/23$7,730 
Olympia Fields, IL1 MOB04/10/233,750 
Auburn, CA1 MOB04/26/237,050 
Pottsville, PA1 MOB04/26/236,000 
New London, CT1 MOB05/24/234,200 
Stratford, CT1 MOB05/24/234,800 
Westbrook, CT1 MOB05/24/237,250 
Lakeland, FL(1)1 SHOP06/01/237,080 
Winter Haven, FL(1)1 SHOP06/01/2317,500 
Acworth, GA3 MOB06/14/238,775 
Lithonia, GA1 MOB06/14/233,445 
Stockbridge, GA1 MOB06/14/232,430 
Lake Placid, FL(1)1 SHOP06/30/235,620 
Brooksville, FL(1)1 SHOP06/30/237,800 
Spring Hill, FL(1)1 SHOP08/01/237,800 
Morristown, NJ1 MOB08/09/2362,210 
Evendale, OH1 MOB08/29/2311,900 
Longview, TX1 MOB09/19/231,500 
Total20 $176,840 
___________
14
19
Table of Contents


GRIFFIN-AMERICANAMERICAN 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(1)As of September 30, 20172023, we had disposed of all of the facilities that comprised the Central Florida Senior Housing Portfolio. See Note 11, Redeemable Noncontrolling Interests, for information about the ownership of the Central Florida Senior Housing Portfolio.
Impairment of Real Estate Investments
As we continue to evaluate additional non-strategic properties for sale, we determined that two of our SHOP were impaired 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 assetsrecognized an aggregate impairment charge of $12,510,000 for the three and nine months ended September 30, 20172023, which reduced the total aggregate carrying value of such assets to $15,977,000. The remaining $3,477,000 carrying value of one such SHOP was $1,196,000 and $2,683,000, respectively,then reclassified to properties held for sale, which is 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 interestsin other assets, net in our accompanying condensed consolidated statementsbalance sheet. The fair value of operations. Amortization expenseone SHOP was based on identified intangibleits projected sales price from independent third-party letters of intent, which were considered Level 2 measurements within the fair value hierarchy. The fair value of the other SHOP was determined by a third-party appraiser based on the sales comparison approach with the most significant inputs based on a price per unit and price per square foot analysis within the area for similar types of assets. The ranges of these inputs were $190,000 to $200,000 per unit and $250 to $260 per square foot, which were considered Level 3 measurements within the fair value hierarchy.
In 2022, we commenced an initiative to evaluate non-strategic assets for sale. In doing so, we determined that five and eight of our SHOP, respectively, were impaired and recognized an aggregate impairment charge of $21,851,000 and $39,191,000, for the three and nine months ended September 30, 20162022, respectively, which reduced the total carrying value of such eight SHOP to $63,154,000. The fair value of one SHOP was $24,000,determined by the sales price from an executed purchase and sale agreement with a third-party buyer, which relatedwas considered a Level 2 measurement within the fair value hierarchy. The fair values of the remaining seven SHOP were based on their projected sales prices, which were considered Level 2 measurements within the fair value hierarchy. We disposed of three such impaired facilities during the fourth quarter of 2022, and we disposed of the remaining five such impaired facilities during the nine months ended September 30, 2023. See the “Dispositions of Real Estate Investments” section above.
Business Combinations
On February 15, 2023, we, through a majority-owned subsidiary of Trilogy, acquired from an unaffiliated third party, a 60.0% controlling interest in a privately held company, Memory Care Partners, LLC, or MCP, that operated integrated senior health campuses located in Kentucky. The contract purchase price for the acquisition of MCP was $900,000, which was acquired using cash on hand. Prior to in-place leases.such acquisition, we owned a 40.0% interest in MCP, which was accounted for as an equity method investment and was included in investments in unconsolidated entities within other assets, net in our accompanying condensed consolidated balance sheet as of December 31, 2022. In connection with the acquisition of the remaining interest in MCP, we now own a 100% controlling interest in MCP. As a result, we re-measured the fair value of our previously held equity interest in MCP and recognized a gain on re-measurement of $726,000 in our accompanying condensed consolidated statements of operations and comprehensive loss.

On January 3, 2022, we, through a majority-owned subsidiary of Trilogy, acquired an integrated senior health campus in Kentucky from an unaffiliated third party. The contract purchase price for such property acquisition was $27,790,000 plus immaterial transaction costs. We acquired such property using cash on hand and placed a mortgage loan payable of $20,800,000 on the property at the time of acquisition.
On April 1, 2022, we, through a majority-owned subsidiary of Trilogy, acquired a 50.0% interest in a pharmaceutical business in Florida from an unaffiliated third party and incurred transaction costs of $938,000. Prior to such pharmaceutical business acquisition, we owned the other 50.0% interest in such business, which was accounted for as an equity method investment. Therefore, through March 31, 2022, our 50.0% interest in the net earnings or losses of such unconsolidated entity was included in income or loss from unconsolidated entities in our accompanying condensed consolidated statements of operations and comprehensive loss.
15
20
Table of Contents


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

On August 1, 2022, we, through a majority-owned subsidiary of Trilogy, acquired a 50.0% controlling interest in a privately held company, RHS Partners, LLC, or RHS, that owns and/or operates 16 integrated senior health campuses located in Indiana, from an unaffiliated third party. The contract purchase price for the acquisition of RHS was $36,661,000 plus immaterial closing costs, which was primarily acquired using cash on hand. Prior to such acquisition, we owned a 50.0% interest in RHS, which was accounted for as an equity method investment and was included in investments in unconsolidated entities within other assets, net in our accompanying condensed consolidated balance sheet as of December 31, 2021. Therefore, through July 31, 2022, our 50.0% equity interest in the net earnings or losses of RHS was included in income or loss from unconsolidated entities in our accompanying condensed consolidated statements of operations and comprehensive loss. In connection with the acquisition of the remaining interest in RHS, we now own a 100% controlling interest in RHS. As a result, we re-measured the fair value of our previously held equity interest in RHS and recognized a gain on re-measurement of $19,567,000 in our accompanying condensed consolidated statements of operations and comprehensive loss.
Based on quantitative and qualitative considerations, such business combinations were not material to us individually or in the aggregate and therefore, pro forma financial information is not provided. The fair values of the assets acquired and liabilities assumed were preliminary estimates at acquisition.Any necessary adjustments are finalized within one year from the date of acquisition. The table below summarizes the acquisition date fair values of the assets acquired and liabilities assumed of our business combinations during the nine months ended September 30, 2023 and 2022 (in thousands):
2023
Acquisition		2022
Acquisitions
Building and improvements$— $80,533 
Land— 8,755 
In-place leases— 10,330 
Goodwill3,331 44,990 
Furniture, fixtures and equipment39 1,936 
Cash and restricted cash565 9,723 
Certificates of need— 3,567 
Operating lease right-of-use assets— 153,777 
Other assets66 1,787 
Accounts receivable, net— 19,472 
Total assets acquired4,001 334,870 
Security deposits and other liabilities(812)(15,994)
Mortgage loans payable— (45,300)
Accounts payable and accrued liabilities(1,676)(15,060)
Operating lease liabilities— (161,121)
Financing obligations(12)(65)
Total liabilities assumed(2,500)(237,540)
Net assets acquired$1,501 $97,330 
4. Debt Security Investment, Net
Our investment in a commercial mortgage-backed debt security, or debt security, bears an interest rate on the stated principal amount thereof equal to 4.24% per annum, the terms of which security provide for monthly interest-only payments. The debt security matures on August 25, 2025 at a stated amount of $93,433,000, resulting in an anticipated yield-to-maturity of 10.0% per annum. The debt security was issued by an unaffiliated mortgage trust and represents a 10.0% beneficial ownership interest in such mortgage trust. The debt security is subordinate to all other interests in the mortgage trust and is not guaranteed by a government-sponsored entity.
21
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
As of September 30, 2023 and December 31, 2022, the carrying amount of the debt security investment was $85,922,000 and $83,000,000, respectively, net of unamortized closing costs of $563,000 and $767,000, respectively. Accretion on the debt security for the three months ended September 30, 2023 and 2022 was $1,060,000 and $960,000, respectively, and for the nine months ended September 30, 2023 and 2022 was $3,126,000 and $2,926,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss. Amortization expense of closing costs for the three months ended September 30, 2023 and 2022 was $71,000 and $60,000, respectively, and for the nine months ended September 30, 2023 and 2022 was $204,000 and $174,000, respectively, which is recorded as a decrease to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss. We evaluated credit quality indicators such as the agency ratings and the underlying collateral of such investment in order to determine expected future credit loss. We did not record a credit loss for the three and nine months ended September 30, 2023 and 2022.
5. Intangibles
Identified intangible assets, net and identified intangible liabilities, net consisted of the following as of September 30, 2023 and December 31, 2022 (dollars in thousands):
September 30,
2023
December 31,
2022
Amortized intangible assets:
In-place leases, net of accumulated amortization of $45,275 and $38,930 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.5 years and 7.0 years as of September 30, 2023 and December 31, 2022, respectively)$47,766 $75,580 
Above-market leases, net of accumulated amortization of $6,676 and $6,360 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.7 years and 9.0 years as of September 30, 2023 and December 31, 2022, respectively)16,667 30,194 
Customer relationships, net of accumulated amortization of $897 and $785 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 12.9 years and 13.7 years as of September 30, 2023 and December 31, 2022, respectively)1,943 2,055 
Unamortized intangible assets:
Certificates of need99,721 97,667 
Trade names30,787 30,787 
Total identified intangible assets, net$196,884 $236,283 
Amortized intangible liabilities:
Below-market leases, net of accumulated amortization of $3,187 and $2,508 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.9 years and 8.4 years as of September 30, 2023 and December 31, 2022, respectively)$9,346 $10,837 
Total identified intangible liabilities, net$9,346 $10,837 
Amortization expense on identified intangible assets for the three months ended September 30, 2023 and 2022 was $15,351,000 and $5,534,000, respectively, which included $3,573,000 and $1,113,000, respectively, of amortization recorded as a decrease to real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive loss. Amortization expense on identified intangible assets for the nine months ended September 30, 2023 and 2022 was $40,133,000 and $19,894,000, respectively, which included $13,515,000 and $3,340,000, respectively, of amortization recorded as a decrease to real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive loss. On March 1, 2023, we transitioned our SNFs within Central Wisconsin Senior Care Portfolio to a RIDEA structure, which resulted in a full amortization of $8,073,000 of above-market leases and $885,000 of in-place leases. In addition, we fully amortized $2,756,000 of above-market leases and $5,750,000 of in-place leases during the three months ended September 30, 2023 in connection with the transition of our senior housing — leased facilities within Michigan ALF Portfolio to a RIDEA structure.
22
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Amortization expense on below-market leases for the three months ended September 30, 2023 and 2022 was $470,000 and $413,000, respectively, and for the nine months ended September 30, 2023 and 2022 was $1,282,000 and $1,436,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss. In connection with the transition of our senior housing — leased facilities within Michigan ALF Portfolio to a RIDEA structure, we fully amortized $112,000 of below-market leases during the three months ended September 30, 2023.
The aggregate weighted average remaining life of the identified intangible assets was 19.67.7 years as of both September 30, 2023 and December 31, 2022. The aggregate weighted average remaining life of the identified intangible liabilities was 7.9 years and 28.68.4 years as of September 30, 20172023 and December 31, 2016,2022, respectively. As of September 30, 2017,2023, estimated amortization expense on the identified intangible assets and liabilities for the three months ending December 31, 20172023 and for each of the next four years ending December 31, and thereafter was as follows:follows (in thousands):
Amortization Expense
YearIntangible
Assets		Intangible
Liabilities
2023$5,459 $3,252 
202411,613 1,072 
20258,862 956 
20267,794 840 
20277,270 825 
Thereafter25,378 2,401 
Total$66,376 $9,346 
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
5.6. Other Assets, Net
Other assets, net consisted of the following as of September 30, 20172023 and December 31, 2016:2022 (dollars in thousands):
 
September 30,
2023
December 31,
2022
Deferred rent receivables$46,944 $46,867 
Prepaid expenses, deposits, other assets and deferred tax assets, net33,783 25,866 
Inventory — finished goods21,998 19,775 
Investments in unconsolidated entities20,807 9,580 
Lease commissions, net of accumulated amortization of $6,794 and $6,260 as of September 30, 2023 and December 31, 2022, respectively17,538 19,217 
Derivative financial instrument8,200 — 
Deferred financing costs, net of accumulated amortization of $8,013 and $5,704 as of September 30, 2023 and December 31, 2022, respectively3,120 4,334 
Lease inducement, net of accumulated amortization of $2,456 and $2,193 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.2 years and 7.9 years as of September 30, 2023 and December 31, 2022, respectively)2,544 2,807 
Total$154,934 $128,446 
 
September 30,
2017
 
December 31,
2016
Prepaid expenses and deposits$1,968,000
 $257,000
Deferred rent receivables1,330,000
 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, respectively134,000
 —
 $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.
Deferred financing costs included in other assets, net were related to the 2019 Trilogy Credit Facility and the senior unsecured revolving credit facility portion of the 2022 Credit Facility. See Note 8, Lines of Credit and Term Loan, for further discussion. Amortization expense on deferred financing costs of the Line of Creditlease inducement for both the three and nine months ended September 30, 20172023 and 2022 was $90,000$87,000 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$263,000, respectively, which is recorded as a decrease to interest expensereal estate revenue in our accompanying condensed consolidated statements of operations. Amortization expense on lease commissions for the threeoperations 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.


comprehensive loss.
16
23
Table of Contents


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

7. Mortgage Loans Payable, Net
Mortgage loans payable, net consisted of the following as of September 30, 2023 and December 31, 2022 (dollars in thousands):
September 30,
2023
December 31,
2022
Total fixed-rate debt (71 loans and 68 loans as of September 30, 2023 and December 31, 2022, respectively)$908,000 $885,892 
Total variable-rate debt (13 loans and 11 loans as of September 30, 2023 and December 31, 2022, respectively)335,358 368,587 
Total fixed- and variable-rate debt1,243,358 1,254,479 
Less: deferred financing costs, net(8,996)(8,845)
Add: premium184 237 
Less: discount(13,308)(16,024)
Mortgage loans payable, net$1,221,238 $1,229,847 
Based on interest rates in effect as of September 30, 2023 and December 31, 2022, effective interest rates ranged from 2.21% to 8.44% per annum and 2.21% to 7.26% per annum, respectively, with a weighted average effective interest rate of 4.64% and 4.29%, respectively. We are required by the terms of certain loan documents to meet certain reporting requirements and covenants, such as net worth ratios, fixed charge coverage ratios and leverage ratios.
The following table reflects the changes in the carrying amount of mortgage loans payable, net consisted of the following for the nine months ended September 30, 20172023 and 2016:2022 (in thousands):
Nine Months Ended September 30,
20232022
Beginning balance$1,229,847 $1,095,594 
Additions:
Borrowings under mortgage loans payable85,477 156,120 
Assumption of mortgage loans payable due to acquisition of real estate investments, net— 45,300 
Amortization of deferred financing costs1,690 1,701 
Amortization of discount/premium on mortgage loans payable, net2,662 1,879 
Deductions:
Scheduled principal payments on mortgage loans payable(59,931)(53,317)
Early payoff of mortgage loans payable(9,809)(78,437)
Payoff of a mortgage loans payable due to disposition of real estate investment(26,856)(8,637)
Deferred financing costs(1,842)(1,044)
Ending balance$1,221,238 $1,159,159 
For the three and nine months ended September 30, 2023, we incurred a loss on the early extinguishment of mortgage loan payable of $345,000, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. Such loss was related to the payoff of a mortgage loan payable due to the disposition of a real estate investment in August 2023. For the three and nine months ended September 30, 2022, we incurred an aggregate loss on the early extinguishment of mortgage loans payable of $628,000 and $1,877,000, respectively, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. Such aggregate loss was primarily related to the payoff of a mortgage loan payable due to the disposition of a real estate investment in September 2022 and the write-off of unamortized loan discount related to eight mortgage loans payable that we refinanced on January 1, 2022 that were due to mature in 2044 through 2052.
24
 Nine Months Ended September 30,
 2017 2016
Beginning balance$3,965,000
 $—
Additions:   
Assumptions of mortgage loans payable8,000,000
 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
Table of Contents
___________
(1)In accordance with ASU 2015-03 and ASU 2015-15, deferred financing costs only include costs related to our mortgage loans payable.
AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
As of September 30, 2017,2023, the principal payments due on our mortgage loans payable for the three months ending December 31, 20172023 and for each of the next four years ending December 31, and thereafter were as follows:follows (in thousands):
YearAmount
2023$4,862 
2024310,860 
2025166,186 
2026170,035 
202735,128 
Thereafter556,287 
Total$1,243,358 
Year Amount
2017 $84,000
2018 386,000
2019 407,000
2020 8,035,000
2021 314,000
Thereafter 2,492,000
  $11,718,000
7. Line8. Lines of Credit and Term Loan
2022 Credit Facility
On August 25, 2016, January 19, 2022, we, through our operating partnership, as borrower, and certain of our subsidiaries, or the subsidiary guarantors, and us, collectively as guarantors, entered into a creditan agreement, or the 2022 Credit Agreement, to amend and restate the credit agreement for our existing credit facility 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 agentCitizens Bank, National Association, and letters ofthe lenders named therein. The 2022 Credit Agreement provides for a credit issuer, to obtain a revolving line of creditfacility with an aggregate maximum principal amount of $100,000,000,up to $1,050,000,000, or the Line2022 Credit Facility, which consists of Credit, subject to certain termsa senior unsecured revolving credit facility in the initial aggregate amount of $500,000,000 and conditions.
On August 25, 2016, we also entered into separate revolving notes, ora senior unsecured term loan facility in the Revolving Notes, with each of Bank of America and KeyBank, whereby we promised to pay the principalinitial aggregate amount of each revolving loan and accrued interest to the respective lender or its registered assigns, in accordance with the terms and conditions of the Credit Agreement. $550,000,000. The proceeds of loans made under the Line of2022 Credit Facility may be used for refinancing existing indebtedness and for general corporate purposes including for working capital, (including acquisitions), capital expenditures and other general corporate purposes not inconsistent with obligations under the 2022 Credit Agreement. We may also obtain up to $20,000,000$25,000,000 in the form of standby letters of credit and uppursuant to $25,000,000the 2022 Credit Facility. Unless defined herein, all capitalized terms under this “2022 Credit Facility” subsection are defined in the form2022 Credit Agreement.
Under the terms of swing line loans. The Line ofthe 2022 Credit maturesAgreement, the revolving loans mature on August 25, 2019,January 19, 2026, and may be extended for one 12-month period, during the term of the Credit Agreement subject to the satisfaction of certain conditions, including payment of an extension fee.
The term loan matures on January 19, 2027, and may not be extended. The maximum principal amount of the 2022 Credit AgreementFacility may be increased by up to $100,000,000, for a total principalan aggregate incremental amount of $200,000,000,$700,000,000, subject to: (i) the terms of the 2022 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
The 2022 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.

17
Table of Contents

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

At our option, the Line of CreditFacility bears interest at varying rates based upon, at our option, (i) Daily SOFR, plus the Applicable Rate for Daily SOFR Rate Loans or (ii) the Term SOFR, plus the Applicable Rate for Term SOFR Rate Loans. If, under the terms of the 2022 Credit Agreement, there is an inability to determine the Daily SOFR or the Term SOFR then the 2022 Credit Facility will bear interest at a rate per annum rates equal to (a) (i) the Eurodollar Rate (as defined in the Credit Agreement) plus (ii) a margin ranging from 1.75% to 2.25% based on our Consolidated Leverage Ratio (as defined in the Credit Agreement), or (b) (i) the greater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate (as defined in the Credit Agreement) plus 0.50%, (3) the one-month EurodollarBase Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from 0.55% to 1.05% based on our Consolidated Leverage Ratio. Accrued interest on the Line of Credit is payable monthly.Applicable Rate for Base Rate Loans. 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 theThe 2022 Credit Agreement at a per annum rate equal to 0.20% if the average daily used amount is greater than 50.0% of the commitments and 0.25% if the average daily used amount is less than or equal to 50.0% 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 permitsrequires us to add additional subsidiaries as guarantors.guarantors in the event the value of the assets owned by the subsidiary guarantors falls below a certain threshold as set forth in the 2022 Credit Agreement. In the event of default, Bank of America has the right to terminate its obligationsthe commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions under the 2022 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 withOn March 1, 2023, we entered into an amendment to the 2022 Credit Agreement, we also entered into a Pledge Agreement on August 25, 2016, pursuant to which we pledgedor 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.First Amendment. The pledged collateral will be released upon achieving a consolidated total asset value of at least $750,000,000.
As of September 30, 2017 and December 31, 2016, our aggregate borrowing capacity under the Line of Credit was $100,000,000. As of September 30, 2017 and December 31, 2016, borrowings outstanding totaled $26,000,000 and $33,900,000, 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 borrowings outstanding was 3.72% and 4.30% per annum, respectively.
8. Identified Intangible Liabilities, Net
Identified intangible liabilities, net consistedmaterial terms of the followingFirst Amendment provided for revisions to certain financial covenants for a limited period of time. Except as modified by the terms of September 30, 2017the First Amendment, the material terms of the 2022 Credit Agreement remain in full force 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 of operations. We did not incur any amortization expense on identified intangible liabilities for the three and nine months ended September 30, 2016.

effect.
18
25
Table of Contents


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

TheAs of both September 30, 2023 and December 31, 2022, our aggregate weighted average remaining lifeborrowing capacity under the 2022 Credit Facility was $1,050,000,000, excluding the $25,000,000 in standby letters of the identified intangible liabilities was 16.4 years and 5.4 years ascredit described above. As of September 30, 20172023 and December 31, 2016,2022, borrowings outstanding under the 2022 Credit Facility totaled $910,900,000 ($910,076,000, net of deferred financing costs related to the senior unsecured term loan facility portion of the 2022 Credit Facility) and $965,900,000 ($965,060,000, net of deferred financing costs related to the senior unsecured term loan facility portion of the 2022 Credit Facility), respectively, and the weighted average interest rate on such borrowings outstanding was 7.07% and 6.07% per annum, respectively. As of September 30, 2017, estimated amortization2023, we have entered into interest rate swaps to mitigate the risk associated with the entire $550,000,000 outstanding borrowing amount of our term loan. See Note 9, Derivative Financial Instruments, for a further discussion.
In January 2022, in connection with the 2022 Credit Agreement, we incurred an aggregate $3,161,000 loss on the extinguishment of a portion of senior unsecured term loan related to former credit facilities. Such loss on extinguishment of debt is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss, and primarily consisted of lender fees we paid to obtain the 2022 Credit Facility.
2019 Trilogy Credit Facility
We, through Trilogy RER, LLC, are party to an amended and restated loan agreement, or the 2019 Trilogy Credit Agreement, among certain subsidiaries of Trilogy OpCo, LLC, Trilogy RER, LLC, and Trilogy Pro Services, LLC; KeyBank; CIT Bank, N.A.; Regions Bank; KeyBanc Capital Markets, Inc.; Regions Capital Markets; Bank of America; The Huntington National Bank; and a syndicate of other banks, as lenders named therein, with respect to a senior secured revolving credit facility that had an aggregate maximum principal amount of $360,000,000, consisting of: (i) a $325,000,000 secured revolver supported by real estate assets and ancillary business cash flow and (ii) a $35,000,000 accounts receivable revolving credit facility supported by eligible accounts receivable, or the 2019 Trilogy Credit Facility. The proceeds of the 2019 Trilogy Credit Facility may be used for acquisitions, debt repayment and general corporate purposes. The maximum principal amount of the 2019 Trilogy Credit Facility could have been increased by up to $140,000,000, for a total principal amount of $500,000,000, subject to certain conditions.
On December 20, 2022, we entered into an amendment to the 2019 Trilogy Credit Agreement, or the 2019 Trilogy Credit Amendment. The material terms of the 2019 Trilogy Credit Amendment provided for an increase to the secured revolver amount from $325,000,000 to $365,000,000, thereby increasing our aggregate maximum principal amount under the credit facility from $360,000,000 to $400,000,000. In addition, all references to LIBOR were replaced with the Secured Overnight Financing Rate, or SOFR. On March 30, 2023, we further amended the 2019 Trilogy Credit Agreement to update the definition of Implied Debt Service, which is used to calculate the Real Estate Borrowing Base Availability, for interest rate changes and to add an annual interest-only payment calculation option. Except as modified by the terms of the amendments, the material terms of the 2019 Trilogy Credit Agreement remain in full force and effect. Unless defined herein, all capitalized terms under this “2019 Trilogy Credit Facility” subsection are defined in the 2019 Trilogy Credit Amendment.
The 2019 Trilogy Credit Facility was due to mature on identified intangible liabilitiesSeptember 5, 2023; however, pursuant to the terms of the 2019 Trilogy Credit Agreement, at such time we extended the maturity date for one 12-month period to mature on September 4, 2024, and paid an extension fee of $600,000. At our option, the 2019 Trilogy Credit Facility bears interest at per annum rates equal to (a) SOFR, plus 2.75% for SOFR Rate Loans and (b) for Base Rate Loans, 1.75% plus the highest of: (i) the fluctuating rate per annum of interest in effect for such day as established from time to time by KeyBank as its prime rate, (ii) 0.50% above the Federal Funds Effective Rate and (iii) 1.00% above one-month Adjusted Term SOFR.
As of both September 30, 2023 and December 31, 2022, our aggregate borrowing capacity under the 2019 Trilogy Credit Facility was $400,000,000. As of September 30, 2023 and December 31, 2022, borrowings outstanding under the 2019 Trilogy Credit Facility totaled $367,000,000 and $316,734,000, respectively, and the weighted average interest rate on such borrowings outstanding was 8.18% and 7.17% per annum, respectively.
26
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
9. Derivative Financial Instruments
We use derivative financial instruments to manage interest rate risk associated with our variable-rate term loan pursuant to our 2022 Credit Facility and we record such derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability measured at fair value. We did not have any derivative financial instruments as of December 31, 2022. The following table provides information with respect to the derivative financial instruments held by us as of September 30, 2023, which were included in other assets, net in our accompanying condensed consolidated balance sheet (dollars in thousands):
InstrumentNotional AmountIndexInterest RateEffective DateMaturity DateFair Value
September 30, 2023
Swap$275,000 one month
Term SOFR		3.74%02/01/2301/19/26$6,125 
Swap275,000 one month
Term SOFR		4.41%08/08/2301/19/262,075 
$550,000 $8,200 
As of September 30, 2023, our derivative financial instruments were not designated as hedges. Derivative financial instruments not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements. For the three months ending December 31, 2017ended September 30, 2023 and 2022, we recorded $3,402,000 and $0, respectively, and for eachthe nine months ended September 30, 2023 and 2022, we recorded $8,200,000 and $500,000, respectively, as a decrease to total interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss related to the next four years ending December 31 and thereafter was as follows:change in the fair value of our derivative financial instruments.
See Note 13, Fair Value Measurements, for a further discussion of our derivative financial instruments.
Year Amount
2017 $85,000
2018 338,000
2019 310,000
2020 147,000
2021 125,000
Thereafter 817,000
  $1,822,000
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 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.
10.11. Redeemable Noncontrolling InterestInterests
As of both September 30, 20172023 and December 31, 2016,2022, we, through our direct and indirect subsidiaries, owned greater than a 99.99%95.0% general partnership interest in our operating partnership and our advisor owned less than a 0.01%the remaining 5.0% limited partnership interest in our operating partnership. The noncontrolling interestpartnership was owned by the NewCo Sellers. Some of the limited partnership units outstanding, which account for approximately 1.0% of our advisor in ourtotal operating partnership which hasunits outstanding, have redemption features outside of our control isand are accounted for as a redeemable noncontrolling interest and isinterests 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, Related Party Transactions — Liquidity Stage — Subordinated Participation Interest — Subordinated Distribution Upon Listing, and Note 12, Related Party Transactions — Subordinated Distribution Upon Termination, for a further discussion of the redemption features of the limited partnership units.

19
27
Table of Contents


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

As of both September 30, 2023 and December 31, 2022, we, through Trilogy REIT Holdings LLC, or Trilogy REIT Holdings, in which we indirectly hold a 76.0% ownership interest, owned approximately 97.4% and 96.2%, respectively, of the outstanding equity interests of Trilogy. As of September 30, 2023 and December 31, 2022, certain members of Trilogy’s management and certain members of an advisory committee to Trilogy’s board of directors owned approximately 2.6% and 3.8%, respectively, of the outstanding equity interests of Trilogy. We account for such equity interests as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets in accordance with FASB Accounting Standards Codification Topic 480-10-S99-3A given certain features associated with such equity interests. For the nine months ended September 30, 2023, we redeemed a portion of the equity interests owned by current members of Trilogy’s management for an aggregate of $15,954,000. For the nine months ended September 30, 2022, we did not redeem any equity interests of Trilogy.
As of September 30, 2023 and December 31, 2022, we own, through our operating partnership, approximately 98.0% of the joint ventures with an affiliate of Meridian Senior Living, LLC, or Meridian, that own Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF and Pinnacle Warrenton ALF. The noncontrolling interests held by Meridian have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets. See Note 3, Real Estate Investments, Net and Business Combinations — Dispositions of Real Estate Investments, for dispositions within our Central Florida Senior Housing Portfolio in 2023.
We previously owned 90.0% of the joint venture with Avalon Health Care, Inc., or Avalon, that owned Catalina West Haven ALF and Catalina Madera ALF. The noncontrolling interests held by Avalon had redemption features outside of our control and were accounted for as redeemable noncontrolling interests until December 1, 2022, when we exercised our right to purchase the remaining 10.0% of the joint venture with Avalon for a contract purchase price of $295,000. As such, 10.0% of the net earnings of such joint venture were allocated to redeemable noncontrolling interests in our accompanying consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022.
We record the carrying amount of redeemable noncontrolling interestinterests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interest’sinterests’ share of net income or loss and distributions;distributions or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interestinterests consisted of the following for the nine months ended September 30, 20172023 and 2016:2022 (in thousands):
Nine Months Ended September 30,
20232022
Beginning balance$81,598 $72,725 
Additional redeemable noncontrolling interest— 273 
Reclassification from equity62 62 
Distributions(1,083)(2,108)
Repurchase of redeemable noncontrolling interests(15,954)— 
Adjustment to redemption value(4,098)14,594 
Net (loss) income attributable to redeemable noncontrolling interests(564)323 
Ending balance$59,961 $85,869 
  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
OurPursuant to our charter, authorizes uswe are authorized to issue 200,000,000 shares of our preferred stock, par value $0.01$0.01 per share. As of both September 30, 20172023 and December 31, 2016,2022, no shares of preferred stock were issued and outstanding.
Common Stock
OurPursuant to our charter, authorizes usas amended, we are authorized 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, 900,000,000whereby 200,000,000 shares are classified as Class T common stock and 100,000,000800,000,000 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 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, 20172023, after taking into consideration the Merger and December 31, 2016, our advisor owned 20,833 sharesthe impact of our Class T common stock.
Through September 30, 2017,the reverse stock split as discussed below, we had issued 35,522,410 aggregate65,445,557 shares for a total of our Class T and Class I$2,737,716,000 of common stock since February 26, 2014 in connection with the primary portion of our initial public offerings and DRIP offerings (includes historical offering amounts sold by GAHR III and 668,035 aggregate shares of our Class T and Class I common stock pursuantGAHR IV prior to the DRIP. We also granted an aggregate of 37,500 shares of our restricted Class T common stock to our independent directors and repurchased 18,383 shares of our common stock under our share repurchase plan through September 30, 2017. As of September 30, 2017 and December 31, 2016, we had 36,230,395 and 11,377,439 aggregate shares of our Class T and Class I common stock, respectively, issued and outstanding.

Merger). See “Distribution Reinvestment Plan” section below for further discussion.
20
28
Table of Contents


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

On November 15, 2022 we effected a one-for-four reverse split of our common stock and a corresponding reverse split of the partnership units in our operating partnership. As a result 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 registered and reserved $150,000,000 inthe Reverse Splits, every four shares of our common stock, for sale pursuantor four partnership units in our operating partnership, were automatically combined and converted into one issued and outstanding share of our common stock of like class, or one partnership unit of like class, as applicable, rounded to the DRIPnearest 1/100th share or unit. The Reverse Splits impacted all classes of common stock and partnership units proportionately and had no impact on any stockholder’s or partner’s ownership percentage. Neither the number of authorized shares nor the par value of the Class T common stock and Class I common stock were ultimately impacted. All numbers of common shares and per share data, as well as partnership units in our offering. Theoperating partnership, in our accompanying condensed consolidated financial statements and related notes have been retroactively adjusted for all periods presented to give effect to the Reverse Splits.
Distribution Reinvestment Plan
Our DRIP allowsallowed our stockholders to purchaseelect to reinvest an amount equal to the distributions declared on their shares of common stock in additional Class T shares and Class I shares of our common stock throughin lieu of receiving cash distributions. However, in connection with the reinvestment of distributions duringProposed Listing, on November 14, 2022, our offering. Prior to January 1, 2017, we issued both Class T shares and Class I shares pursuant toboard suspended the DRIP atoffering beginning with the distributions declared for the quarter ended December 31, 2022. As a priceresult of $9.50the suspension of the DRIP offering, unless and until our board reinstates the DRIP offering, stockholders who are current participants in the DRIP were or will be paid distributions in cash.
Our board has been establishing an estimated per share. Effective January 1, 2017, sharesshare net asset value, or NAV, annually. Shares of both Class T shares and Class I sharesour common stock issued pursuant to theour DRIP are issued at a price of $9.40the current estimated per share NAV until such time as our board of directors determinesdetermined an updated estimated NAV per share NAV.
The following is a summary of our common stock. After our board of directors determines anthe historical estimated NAV per share NAV:
Approval Date by our BoardEstimated Per Share NAV
03/24/22$37.16 
03/15/23$31.40 
For both the three and nine months ended September 30, 2023, there were no distributions reinvested and no shares of our common stock participants in thewere issued pursuant to our 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.
offerings. For the three and nine months ended September 30, 2017, $2,618,0002022, $3,671,000 and $5,492,000,$26,118,000, respectively, in distributions were reinvested and 278,52098,794 and 584,318705,169 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. As of September 30, 2017 and December 31, 2016, a total of $6,288,000 and $796,000, respectively, in distributions were reinvested that resulted in 668,035 and 83,717 shares of our common stock, respectively, being issued pursuant to the DRIP.DRIP offerings.
Share Repurchase Plan
In February 2016, our board of directors approved a share repurchase plan. TheOur share repurchase plan allowsallowed for repurchases of shares of our common stock by us when certain criteria arewere met. Share repurchases will bewere made at the sole discretion of our board of directors. Subject to the availabilityboard. On October 4, 2021, as a result of the funds for share repurchases, we will limitMerger, our board authorized the number of sharespartial reinstatement of our common stock repurchased during any calendar yearshare repurchase plan with respect to 5.0% of the weighted average number ofrequests to repurchase shares of our common stock outstanding during the prior calendar year; provided, however, that shares subject to a repurchase requested uponresulting from the death or qualifying disability of a stockholderstockholders, effective with respect to qualifying repurchases for the fiscal quarter ending December 31, 2021. All share repurchase requests other than those requests resulting from the death or qualifying disability of stockholders were rejected. On November 14, 2022, our board suspended our share repurchase plan beginning with share repurchase requests for the quarter ending December 31, 2022. All share repurchase requests, including requests resulting from the death or qualifying disability of stockholders, received commencing with the quarter ended December 31, 2022, will not be subject to this cap. processed, will be considered canceled in full and will not be considered outstanding repurchase requests.
Funds for the repurchase of shares of our common stock will come exclusivelywere derived from the cumulative proceeds we receive from the sale of shares of our common stock pursuant to the DRIP.
All repurchases will be subject to a one-year holding period, except for repurchases made in connection with a stockholder’s death or “qualifying disability,” as defined in our share repurchase plan. Further, all share repurchases will be repurchased following a one-year holding period at a price between 92.5% to 100% of each stockholder’s repurchase amount depending on the period of time their shares have been held. During our offering, the repurchase amount for shares repurchased under our share repurchase plan shall be equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the per share offering price in our offering. If we are no longer engaged in an offering, the repurchase amount for shares repurchased under our share repurchase plan will be determined by our board of directors. 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, we received share 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 for the three and nine months ended September 30, 2016.
As of September 30, 2017, we received share repurchase requests and repurchased 18,383 shares of our common stock for an aggregate of $178,000 at an average repurchase price of $9.68 per share. All shares were repurchased using proceeds we received from the sale of shares of our common stock pursuant to our DRIP offerings. Pursuant to our share repurchase plan, the DRIP. Asrepurchase price with respect to repurchases resulting from the death or qualifying disability of December 31, 2016, nostockholders was equal to the most recently published estimated per share repurchasesNAV.
We did not repurchase any shares of our common stock pursuant to our share repurchase plan for the three months ended September 30, 2023. For the nine months ended September 30, 2023, pursuant to our share repurchase plan, we repurchased 1,681 shares of common stock for $62,000, at a repurchase price of $37.16 per share. For the three and nine months ended September 30, 2022, pursuant to our share repurchase plan, we repurchased 152,035 and 438,994 shares of common stock, respectively, for an aggregate of $5,650,000 and $16,233,000, respectively, at a repurchase price of $37.16 and $36.98 per share, respectively. Such repurchase requests were requested or made.

submitted prior to the suspension of our share repurchase plan.
21
29
Table of Contents


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

Noncontrolling Interests in Total Equity
As of September 30, 2023 and December 31, 2022, Trilogy REIT Holdings owned approximately 97.4% and 96.2%, respectively, of Trilogy. We are the indirect owner of a 76.0% interest in Trilogy REIT Holdings pursuant to an amended joint venture agreement with an indirect, wholly owned subsidiary of NorthStar Healthcare Income, Inc., or NHI. We serve as the managing member of Trilogy REIT Holdings. As of both September 30, 2023 and December 31, 2022, NHI indirectly owned a 24.0% membership interest in Trilogy REIT Holdings and as such, for the three and nine months ended September 30, 2023 and 2022, 24.0% of the net earnings of Trilogy REIT Holdings were allocated to noncontrolling interests. See Note 19, Subsequent Event, for a further discussion of our ownership in Trilogy REIT Holdings.
In connection with our operation of Trilogy, time-based profit interest units in Trilogy, or the Profit Interests, were issued to Trilogy Management Services, LLC and two independent directors of Trilogy, both unaffiliated third parties that manage or direct the day-to-day operations of Trilogy. The Profit Interests are measured at their grant date fair value and vest in increments of 20.0% on each anniversary of the respective grant date over a five-year period. We amortize the Profit Interests on a straight-line basis over the vesting periods, which are recorded to general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive loss. The nonvested Profit Interests are presented as noncontrolling interests in total equity in our accompanying condensed consolidated balance sheets, and are re-classified to redeemable noncontrolling interests upon vesting as they have redemption features outside of our control, similar to the common stock units held by Trilogy’s management. See Note 11, Redeemable Noncontrolling Interests, for further discussion.
There were no canceled, expired or exercised Profit Interests during the three and nine months ended September 30, 2023 and 2022. For the three months ended September 30, 2023 and 2022, we recognized stock compensation expense related to the time-based Profit Interests of $21,000 and $20,000, respectively. For both the nine months ended September 30, 2023 and 2022, we recognized stock compensation expense related to the time-based Profit Interests of $62,000.
One of our consolidated subsidiaries issued non-voting preferred shares of beneficial interests to qualified investors for total proceeds of $125,000. These preferred shares of beneficial interests are entitled to receive cumulative preferential cash dividends at the rate of 12.5% per annum. We classify the value of our subsidiary’s preferred shares of beneficial interests as noncontrolling interests in our accompanying condensed consolidated balance sheets and the dividends of the preferred shares of beneficial interests in net income or loss attributable to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss.
As of both September 30, 2023 and December 31, 2022, we owned an 86.0% interest in a consolidated limited liability company that owns Lakeview IN Medical Plaza. As such, 14.0% of the net earnings of Lakeview IN Medical Plaza were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.
As of both September 30, 2023 and December 31, 2022, we owned a 90.6% membership interest in a consolidated limited liability company that owns Southlake TX Hospital. As such, 9.4% of the net earnings of Southlake TX Hospital were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.
As of both September 30, 2023 and December 31, 2022, we owned a 90.0% interest in a joint venture that owns the Louisiana Senior Housing Portfolio. As such, 10.0% of the net earnings of the joint venture were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.
As discussed in Note 1, Organization and Description of Business, as of both September 30, 2023 and December 31, 2022, we, through our direct and indirect subsidiaries, own a 95.0% general partnership interest in our operating partnership and the remaining 5.0% limited partnership interest in our operating partnership is owned by the NewCo Sellers. As of both September 30, 2023 and December 31, 2022, 4.0% of our total operating partnership units outstanding is presented in total equity in our accompanying condensed consolidated balance sheets. See Note 11, Redeemable Noncontrolling Interests, for further discussion.
30
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
AHR 2015 Incentive Plan
In February 2016, we adopted our incentive plan, pursuantPursuant to whichthe Amended and Restated 2015 Incentive Plan, our board (with respect to options and restricted shares of directorscommon stock granted to independent directors), or aour compensation committee of our independent directors(with respect to any other award), may make grants ofgrant options, restricted shares of common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, officers, employees and consultants. TheOn June 15, 2023, we adopted the Second Amended and Restated 2015 Incentive Plan, or the AHR Incentive Plan, which, among other things, increased the maximum number of shares of our common stock that may be issued pursuant to our incentivesuch plan isfrom 1,000,000 to 4,000,000 shares.shares, extended the term of such plan to June 15, 2033 and made certain administrative changes to the Amended and Restated 2015 Incentive Plan.
ThroughRestricted common stock
Pursuant to the AHR Incentive Plan, through September 30, 2017,2023, we granted an aggregate of 22,500315,459 shares of our restricted common stock, or RSAs, which include restricted Class T common stock and restricted Class I common stock, as defined in our incentive plan,the AHR Incentive Plan. RSAs were granted 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 directorsor in consideration forof their past services rendered. These sharesIn addition, certain executive officers and key employees received grants of restricted Class T common stock. RSAs generally have a vesting period ranging from one to four years and are subject to continuous service through the vesting dates.
Restricted stock vest under the same period described above. Shares of our restricted common stock may not be sold, transferred, exchanged, assigned, pledged, hypothecated or otherwise encumbered. Such restrictions expire upon vesting. Shares of our restricted common stock will have full voting rights and rights to distributions.units
From the applicable service inception datesPursuant to the applicable grant dates,AHR Incentive Plan, through September 30, 2023, we recognized compensation expense relatedgranted our executive officers an aggregate 70,751 of performance-based restricted stock units, or PBUs, representing the right to thereceive shares of our restricted Class T common stock based onupon vesting. We also granted to our executive officers and certain employees 169,529 time-based restricted stock units, or TBUs, representing the reporting date fair value, which was estimated at $10.00 per share, the price paidright to acquire one sharereceive shares of our Class T common stock in our offering. Beginning on the applicable grant dates, compensation cost relatedupon vesting. PBUs and TBUs are collectively referred 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 paidas RSUs. RSUs granted 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 applicableexecutive officers and employees generally have a 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. For the three months ended September 30, 2017 and 2016, we recognized compensation expense of $61,000 and $14,000, respectively, and for the nine months ended September 30, 2017 and 2016, we recognized stock compensation expense of $100,000 and $66,000, 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.up to three years and are subject to continuous service through the vesting dates, and any performance conditions, as applicable.
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 theour nonvested shares of our restricted Class T common stockRSAs and RSUs as of September 30, 20172023 and December 31, 20162022 and the changes for the nine months ended September 30, 20172023 is presented below:
Number of 
Nonvested
RSAs
Weighted
Average
Grant Date
Fair Value -
RSAs		Number of 
Nonvested
RSUs		Weighted
Average
Grant Date
Fair Value -
RSUs
Number of Nonvested
Shares of Our
Restricted Common Stock
 
Weighted
Average Grant
Date Fair Value
Balance — December 31, 201612,000
 $10.00
Balance — December 31, 2022Balance — December 31, 2022183,240 $36.97 48,553 $37.16 
Granted22,500
 $10.00
Granted26,156 $31.83 191,728 $31.40 
Vested(7,500) $10.00
Vested(22,528)$37.52 (6,400)(1)$37.16 
Forfeited—
 $—
Forfeited— $— (3,452)$31.40 
Balance — September 30, 201727,000
 $10.00
Expected to vest — September 30, 201727,000
 $10.00
Balance — September 30, 2023Balance — September 30, 2023186,868 $36.18 230,429 $32.45 
Offering Costs___________
Selling Commissions
Generally, we pay our dealer manager selling commissions of up to 3.0% of the gross offering proceeds from the sale of Class T(1)Amount includes 2,280 shares of our common stock that were withheld from issuance to satisfy employee minimum tax withholding requirements associated with the vesting of RSUs during the nine months ended September 30, 2023.
For the three months ended September 30, 2023 and 2022, we recognized $1,558,000 and $914,000, respectively, and for the nine months ended September 30, 2023 and 2022, we recognized $4,173,000 and $2,705,000, respectively, in stock compensation expense related to awards granted pursuant to our primary offering. To the extentAHR Incentive Plan. Such stock compensation expense is based on the grant date fair value for time based awards and for performance-based awards that selling commissions are less than 3.0%probable of vesting, which grant date fair value is equal to the gross offering proceeds for any Class T shares sold, such reduction in selling commissions will be accompanied by a corresponding reduction in the applicablemost recently published estimated per share purchase price for purchasesNAV. Stock compensation expense is included in general and administrative expenses in our accompanying condensed consolidated statements of such shares. No selling commissions are

operations and comprehensive loss.
22
31
Table of Contents


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

13. Fair Value Measurements
payableAssets and Liabilities Reported at Fair Value
The table below presents our assets and liabilities measured at fair value on Class I shares or sharesa recurring basis as of our common stock sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these fees to participating broker-dealers. For the three months ended September 30, 20172023, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable Inputs
(Level 3)		Total
Assets:
Derivative financial instruments$— $8,200 $— $8,200 
Total assets at fair value$— $8,200 $— $8,200 
There were no transfers into and 2016, we incurred $2,059,000 and $1,012,000, respectively, in selling commissions to our dealer manager. Forout of fair value measurement levels during the nine months ended September 30, 20172023 and 2016, we incurred $6,763,0002022. We did not have any assets and $1,392,000, respectively, in selling commissionsliabilities measured at fair value on a recurring basis as of December 31, 2022.
Derivative Financial Instruments
We entered into interest rate swaps to our dealer manager.manage interest rate risk associated with variable-rate debt. We also previously used interest rate swaps or interest rate caps to manage such interest rate risk. The valuation of these instruments was determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. Such commissions were chargedvaluation reflected the contractual terms of the derivatives, including the period to stockholders’ equitymaturity, and used observable market-based inputs, including interest rate curves, as such amounts were paid to our dealer manager from the gross proceedswell as option volatility. The fair values of our offering.interest rate swaps were determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts were based on an expectation of future interest rates derived from observable market interest rate curves.
Dealer Manager Fee
With respectWe incorporated credit valuation adjustments to sharesappropriately 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 Class T common stock, our dealer manager generally receives a dealer manager feederivative contracts for the effect of up to 3.0%nonperformance risk, we considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.
Although we determined that the majority of the gross offering proceeds from the sale of Class T shares ofinputs used to value our common stock pursuant to our primary offering, of which 1.0%derivative financial instruments fell within Level 2 of the gross offering proceeds is fundedfair value hierarchy, the credit valuation adjustments associated with this instrument utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and up to an amount equal to 2.0% of the gross offering proceeds is 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 our primary 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, our dealer manager generally receives 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 our primary offering, all of which is 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 is payable on shares of our common stock sold pursuant to the DRIP. Our dealer manager may re-allow all or a portion of these fees to participating broker-dealers.
For the three months ended September 30, 2017 and 2016, 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, 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 offering. See Note 12, 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 paid with respect to Class I shares or shares of our common stock sold pursuant to the DRIP. 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 our primary 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 our primary offering. We will cease paying the stockholder servicing fee with respect to our Class T shares sold in our 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.
For the three months ended September 30, 2017 and 2016, 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, in stockholder servicing fees to our dealer manager. As of September 30, 2017 and December 31, 2016, we accrued $11,496,000 and $3,973,000, 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 of Limited Partner in Operating Partnership
On February 6, 2015, our advisor made an initial capital contribution of $2,000 to our operating partnership in exchange for Class T partnership units. Upon the effectiveness of the Advisory Agreement on February 16, 2016, Griffin-American Healthcare REIT IV Advisor became our advisor. As our advisor, Griffin-American Healthcare REIT IV Advisor is entitled to redemption rights of its limited partnership units. Therefore, as of February 16, 2016, such limited partnership units no longer

23
Table of Contents

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

meet the criteria for classification within the equity section of our accompanying condensed consolidated balance sheets, and as such, were reclassified outside of permanent 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 31, 2016, our advisor owned all of our 208 Class T partnership units outstanding.
12. 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 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. For the three months ended September 30, 2017 and 2016, we incurred $2,856,000 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, respectively, in fees and expenses to our affiliates as detailed below.
Offering Stage
Dealer Manager Fee
With respect to shares of our Class T common stock, our dealer manager generally receives 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 offering, of which 1.0% of the gross offering proceeds is funded by us and up to an amount equal to 2.0% of the gross offering proceeds is 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 our primary 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, our dealer manager generally receives 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 our primary offering, all of which is 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 is payable on shares of our common stock sold pursuant to the DRIP. Our advisor intends to recoup the portion of the dealer manager fee it funds through the receipt of the Contingent Advisor Payment from us, as described below, through the payment of acquisition fees.
For the three months ended September 30, 2017 and 2016, 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, 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' equity as incurred with a corresponding offset to accounts payable due to affiliates in our accompanying condensed consolidated balance sheets. See Note 11, Equity — Offering Costs — Dealer Manager Fee, for a further discussion of the dealer manager fee funded by us.
Other Organizational and Offering Expenses
Our other organizational and offering expenses in connection with our offering (other than selling commissions, the dealer manager fee and the stockholder servicing fee) are funded by our advisor. Our advisor intends to recoup such expenses it funds 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

24
Table of Contents

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

our advisor had incurred. For the nine months ended September 30, 2017 and 2016, we incurred $1,151,000 and $2,759,000, respectively, 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' 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 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. The Contingent Advisor Payment allows 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 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 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 retained by us until the later of the termination of our last public offering or the third anniversary of the commencement date of our initial public offering, at which time such amount shall be 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. Our advisor or its affiliates will be entitled to receive these acquisition fees for properties and real estate-related investments acquired with funds raised in our offering, including acquisitions completed after the termination of the Advisory Agreement (including imputed leverage of 50.0% on funds raised in our 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 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 and 2016, we paid base acquisition fees of $347,000 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, respectively, to our advisor. As of September 30, 2017 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, we have paid $3,548,000 in Contingent Advisor Payments to our advisor. For a further discussion of amounts paid in connection with the Contingent Advisor Payment, see Dealer Manager Fee and 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 and 2016, we did not incur any development fees to our advisor or its affiliates.
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

25
Table of Contents

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

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 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. For a further discussion, see Note 3, Real Estate Investments, Net.
Reimbursements of acquisition expenses in connection with the acquisition of properties accounted for as business combinations are expensed as incurred and included in acquisition related expenses in our accompanying condensed consolidated statements of operations. 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, we incurred $0 and $2,000, 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 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, we incurred $700,000 and $1,505,000, 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 fees 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 rental expenses in our accompanying condensed consolidated statements of operations. For the three months ended September 30, 2017 and 2016, we incurred property management fees of $103,000 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, respectively, to American Healthcare Investors.

26
Table of Contents

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

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.
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, we incurred lease fees of $12,000. For the three and nine months ended September 30, 2016, we did not incur any lease fees to our advisor or its affiliates.
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 and 2016, we did not incur any construction management fees to our advisor or its affiliates.
Operating Expenses
We reimburse our advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations.counterparty. However, we will not reimburse our advisor or its affiliates at the end of any fiscal quarter for total operating expenses that, in the four consecutive fiscal quarters then ended, exceed the greater of: (i) 2.0% of our average invested assets, as defined in the Advisory Agreement; or (ii) 25.0% of our net income, as defined in the Advisory Agreement, unless our independent directors determined that such excess expenses were justified based on unusual and nonrecurring factors which they deem sufficient.
Our operating expenses as a percentage of average invested assets and as a percentage of net income were 1.4% and 40.9%, respectively, for the 12 months ended September 30, 2017; however, we did not exceed the aforementioned limitation 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 and 2016, our advisor incurred operating expenses on our behalf of $21,000, 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, 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 and 2016, our advisor and its affiliates were not compensated for any additional services.
Liquidity Stage
Disposition Fees
For services relating to the sale of one or more properties, we pay our advisor or its affiliates a disposition fee 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 and 2016, we did not incur any disposition fees to our advisor or its affiliates.

27
Table of Contents

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

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 and 2016, 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 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 and 2016, 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 and December 31, 2016, we had not recorded any charges to earnings related to the subordinated distribution upon termination.
Stock Purchase Plans
On February 29, 2016, 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 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 T common stock. In addition, on February 29, 2016, three 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.

28
Table of Contents

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

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, as well as Wendie Newman and Christopher M. Belford, both of whom were appointed as our Vice Presidents of Asset Management as of June 2017, each executed similar 2017 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 as employees of American Healthcare Investors directly into our company by purchasing shares of our Class I common stock. The 2017 Stock Purchase Plans terminate 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, 20172023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. On January 25, 2022, our prior interest rate swap contracts matured and as of 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 Measurements2022, we did not have any derivative financial instruments.
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.

29
Table of Contents

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

Our accompanying condensed consolidated balance sheets include the following financial instruments: debt security investment, cash and cash equivalents, restricted cash, 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 Lineour lines of Credit.credit and term loan.
We consider the carrying values of cash and cash equivalents, restricted cash, accounts and other receivables restricted cash, real estate deposits and accounts payable and accrued liabilities to approximate the fair valuesvalue 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
32
Table of cash and cash equivalents is classified in Level 1 of the fair value hierarchy. The fair value of accounts payable due to affiliates is not determinable due to the related party nature of the accounts payable. The fair value of the other financial instruments is classified in Level 2 of the fair value hierarchy.Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
The fair value of our mortgage loans payable and the Line of Creditdebt security investment is estimated using a discounted cash flow analysis using interest rates available to us for investments with similar terms and maturities. The fair values of our mortgage loans payable and our lines of credit and term loan are estimated using discounted cash flow analyses 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 the valuations of our debt security investment, mortgage loans payable and the Linelines of Creditcredit and term loan are classified in Level 2 within the fair value hierarchy.
14. Business Combinations
For the nine months ended The carrying amounts and estimated fair values of such financial instruments as of September 30, 2017, none2023 and December 31, 2022 were as follows (in thousands):
September 30,
2023
December 31,
2022
 Carrying
Amount(1)		Fair
Value		Carrying
Amount(1)		Fair
Value
Financial Assets:
Debt security investment$85,922 $93,047 $83,000 $93,230 
Financial Liabilities:
Mortgage loans payable$1,221,238 $1,057,769 $1,229,847 $1,091,667 
Lines of credit and term loan$1,273,956 $1,278,709 $1,277,460 $1,285,205 
___________
(1)Carrying amount is net of any discount/premium and unamortized deferred financing costs.
14. Income Taxes
As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our property acquisitions were accountedconsolidated subsidiaries as taxable REIT subsidiaries, or TRS, pursuant to the Code. TRS may participate in services that would otherwise be considered impermissible for as business combinations. See Note 3, Real Estate Investments, Net, forREITs and are subject to federal and state income tax at regular corporate tax rates.
Current Income Tax
Federal and state income taxes are generally a discussionfunction of the level of income recognized by our TRS. Foreign income taxes are generally a function of our 2017 property acquisitions accountedincome on our real estate located in the United Kingdom, or UK, and Isle of Man.
Deferred Taxes
Deferred income tax is generally a function of the period’s temporary differences (primarily basis differences between tax and financial reporting for as asset acquisitions. Forreal estate assets and equity investments) and generation of tax net operating loss that may be realized in future periods depending on sufficient taxable income.
We recognize the nine months endedfinancial 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 September 30, 2016, using net proceeds from our offering2023 and debt financing,December 31, 2022, we completed five property acquisitions comprising five buildings, which were accounteddid not have any tax benefits or liabilities for as business combinations. The aggregate contract purchase price for these property acquisitions was $59,670,000, plus closing costs and base acquisition fees of $2,005,000, which are included in acquisition related expensesuncertain tax positions that we believe should be recognized in our accompanying condensed consolidated statements of operations. In addition,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 incurred Contingent Advisor Payments of $1,342,000 to our advisor for these property acquisitions. See See Note 12, Related Party Transactions, forbelieve it is more likely than not that all or a further discussionportion of the Contingent Advisor Payment.
Resultsdeferred tax assets are not realizable. As of operations for these property acquisitions during the nine months endedboth September 30, 2016 are reflected2023 and December 31, 2022, our valuation allowance fully reserves the net deferred tax assets due to historical losses and inherent uncertainty of future income. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in our accompanying condensed consolidated statements of operations 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:future.
33
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

30
Table of Contents


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

15. Leases
The following table summarizes the acquisition date fair values of our five property acquisitions in 2016:
Lessor
 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
Land406,000
 1,493,000
 4,768,000
 1,702,000
 —
In-place leases386,000
 740,000
 2,030,000
 1,073,000
 1,249,000
Leasehold interests—
 —
 —
 —
 1,412,000
Total assets acquired5,392,000
 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), forWe have operating leases with tenants that expire at various dates through 2050. For the three months ended September 30, 2023 and 2022, we recognized $45,582,000 and $50,041,000, respectively, of revenues related to operating lease payments, of which $9,800,000 and $9,522,000, respectively, was for variable lease payments. For the nine months ended September 30, 2016, unaudited pro forma revenue, net income, net income attributable2023 and 2022, we recognized $137,101,000 and $150,860,000, respectively, of revenues related to controlling interestoperating lease payments, of which $29,551,000 and net income per Class T and Class I common share attributable to controlling interest — basic and diluted would have been as follows:
 
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.
15. Segment Reporting
ASC Topic 280, Segment Reporting, establishes standards$29,598,000, respectively, was 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.variable lease payments. As of September 30, 2017,2023, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the three months ending December 31, 2023 and for each of the next four years ending December 31 and thereafter for properties that we wholly own (in thousands):
YearAmount
2023$34,625 
2024132,971 
2025120,998 
2026110,939 
2027105,771 
Thereafter534,266 
Total$1,039,570 
Lessee
We lease certain land, buildings, furniture, fixtures, campus and office equipment and automobiles. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Most leases include one or more options to renew, with renewal terms that generally can extend at various dates through 2107, excluding extension options. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property.
The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may also include other variable lease costs (i.e., common area maintenance, property taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of lease costs were as follows (in thousands):
Three Months Ended September 30,
Lease CostClassification20232022
Operating lease cost(1)Property operating expenses, rental expenses or general and administrative expenses$11,049 $9,322 
Finance lease cost:
Amortization of leased assetsDepreciation and amortization334 310 
Interest on lease liabilitiesInterest expense82 43 
Sublease incomeResident fees and services revenue or other income(97)(156)
Total lease cost$11,368 $9,519 
34
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Nine Months Ended September 30,
Lease CostClassification20232022
Operating lease cost(1)Property operating expenses, rental expenses or general and administrative expenses$34,445 $21,086 
Finance lease cost:
Amortization of leased assetsDepreciation and amortization934 939 
Interest on lease liabilitiesInterest expense239 183 
Sublease incomeResident fees and services revenue or other income(425)(538)
Total lease cost$35,193 $21,670 
___________
(1)Includes short-term leases and variable lease costs, which are immaterial.
Additional information related to our leases for the periods presented below was as follows (dollars in thousands):
Lease Term and Discount Rate
September 30,
2023
December 31,
2022
Weighted average remaining lease term (in years):
Operating leases12.312.8
Finance leases1.72.3
Weighted average discount rate:
Operating leases5.76 %5.69 %
Finance leases7.76 %7.66 %
Nine Months Ended September 30,
Supplemental Disclosure of Cash Flows Information20232022
Operating cash outflows related to finance leases$239 $183 
Financing cash outflows related to finance leases$50 $40 
Right-of-use assets obtained in exchange for operating lease liabilities$6,153 $153,777 
Operating Leases
As of September 30, 2023, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, 2023 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance sheet (in thousands):
YearAmount
2023$8,972 
202435,818 
202535,119 
202635,073 
202735,618 
Thereafter202,020 
Total undiscounted operating lease payments352,620 
Less: interest121,472 
Present value of operating lease liabilities$231,148 
35
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Finance Leases
As of September 30, 2023, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, 2023 and for each of the next four years ending December 31 and thereafter, as well as a reconciliation of those cash flows to finance lease liabilities (in thousands):
YearAmount
2023$13 
202476 
202532 
2026— 
2027— 
Thereafter— 
Total undiscounted finance lease payments121 
Less: interest8 
Present value of finance lease liabilities$113 
16. Segment Reporting
As of September 30, 2023, we evaluated our business and made resource allocations based on twosix reportable business segmentssegments: integrated senior health campuses, MOBs, SHOP, SNFs, senior housing — medical office buildingsleased and senior housing. hospitals.Our medical office buildingsMOBs are typically leased to multiple tenants under separate leases, in each building, thus requiring active management and responsibility for many of the associated operating expenses (although many(much of thesewhich are, or can effectively be, passed through to the tenants). Our integrated senior health campuses each provide a range of independent living, assisted living, memory care, skilled nursing services and certain ancillary businesses that are owned and operated utilizing a RIDEA structure. Our senior housing — leased 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. In addition, our senior housing — leased segment includes our debt security investment. Our hospital investments are similarly structured to our leased skilled nursing and senior housing facilities. Our SHOP segment includes senior housing facilities, which may provide assisted living care, independent living, memory care or skilled nursing services, 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, which excludes depreciation and amortization, general and administrative expenses, acquisition related expenses, interest expense and interest income for each segment. WeWhile we believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement. However,measurement, we evaluate our segments’ performance based upon segment net operating income or loss, or NOI. We define segment NOI as total revenues and grant income, less property operating expenses and rental expenses, which excludes depreciation and amortization, general and administrative expenses, business acquisition expenses, interest expense, gain or loss on dispositions of real estate investments, impairment of real estate investments, income or loss from unconsolidated entities, impairment of goodwill, foreign currency gain or loss, gain on re-measurement of previously held equity interests, other income and income tax benefit or expense for each segment. We believe that segment net operating incomeNOI 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.

31
Table of Contents

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

Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance.
Non-segment assets primarily consist of corporate assets including cash and cash equivalents, other receivables, real estate depositsdeferred financing costs and other assets not attributable to individual properties.
36
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Summary information for the reportable segments during the three and nine months ended September 30, 20172023 and 20162022 was 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
follows (in thousands):


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)

Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitals
Three Months
Ended
September 30,
2023
Revenues and grant income:
Resident fees and services$372,291 $43,915 $— $— $— $— $416,206 
Real estate revenue— — 35,688 2,684 6,175 2,423 46,970 
Grant income1,064 — — — — — 1,064 
Total revenues and grant income373,355 43,915 35,688 2,684 6,175 2,423 464,240 
Expenses:
Property operating expenses335,563 39,040 — — — — 374,603 
Rental expenses— — 13,690 446 352 86 14,574 
Segment net operating income$37,792 $4,875 $21,998 $2,238 $5,823 $2,337 $75,063 
Expenses:
General and administrative$11,342 
Business acquisition expenses1,024 
Depreciation and amortization49,273 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)(42,005)
Gain in fair value of derivative financial instruments3,402 
Gain on dispositions of real estate investments, net31,981 
Impairment of real estate investments(12,510)
Loss from unconsolidated entities(505)
Foreign currency loss(1,704)
Other income1,755 
Total net other expense(19,586)
Loss before income taxes(6,162)
Income tax expense(284)
Net loss$(6,446)
32
37
Table of Contents


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

Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitals
Three Months
Ended
September 30,
2022
Revenues and grant income:
Resident fees and services$328,751 $39,555 $— $— $— $— $368,306 
Real estate revenue— — 37,128 5,143 6,633 2,419 51,323 
Grant income5,796 737 — — — — 6,533 
Total revenues and grant income334,547 40,292 37,128 5,143 6,633 2,419 426,162 
Expenses:
Property operating expenses299,197 38,290 — — — — 337,487 
Rental expenses— — 14,155 160 437 98 14,850 
Segment net operating income$35,350 $2,002 $22,973 $4,983 $6,196 $2,321 $73,825 
Expenses:
General and administrative$9,626 
Business acquisition expenses231 
Depreciation and amortization40,422 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)(27,524)
Gain on dispositions of real estate investments2,113 
Impairment of real estate investments(21,851)
Loss from unconsolidated entities(344)
Gain on re-measurement of previously held equity interest19,567 
Foreign currency loss(3,695)
Other income670 
Total net other expense(31,064)
Loss before income taxes(7,518)
Income tax expense(126)
Net loss$(7,644)
  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
38
Table of Contents
  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)

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Assets
Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitals
Nine Months
Ended
September 30,
2023
Revenues and grant income:
Resident fees and services$1,096,917 $138,541 $— $— $— $— $1,235,458 
Real estate revenue— — 109,811 13,352 10,633 7,338 141,134 
Grant income7,445 — — — — — 7,445 
Total revenues and grant income1,104,362 138,541 109,811 13,352 10,633 7,338 1,384,037 
Expenses:
Property operating expenses992,620 124,678 — — — — 1,117,298 
Rental expenses— — 42,025 874 1,199 324 44,422 
Segment net operating income$111,742 $13,863 $67,786 $12,478 $9,434 $7,014 $222,317 
Expenses:
General and administrative$36,169 
Business acquisition expenses2,244 
Depreciation and amortization138,644 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)(122,006)
Gain in fair value of derivative financial instruments8,200 
Gain on dispositions of real estate investments, net29,777 
Impairment of real estate investments(12,510)
Loss from unconsolidated entities(924)
Gain on re-measurement of previously held equity interest726 
Foreign currency gain372 
Other income5,952 
Total net other expense(90,413)
Loss before income taxes(45,153)
Income tax expense(775)
Net loss$(45,928)
39
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitals
Nine Months
Ended
September 30,
2022
Revenues and grant income:
Resident fees and services$897,345 $116,160 $— $— $— $— $1,013,505 
Real estate revenue— — 111,798 15,703 19,625 7,245 154,371 
Grant income21,861 855 — — — — 22,716 
Total revenues and grant income919,206 117,015 111,798 15,703 19,625 7,245 1,190,592 
Expenses:
Property operating expenses811,281 109,425 — — — — 920,706 
Rental expenses— — 42,259 551 1,644 346 44,800 
Segment net operating income$107,925 $7,590 $69,539 $15,152 $17,981 $6,899 $225,086 
Expenses:
General and administrative$31,673 
Business acquisition expenses2,161 
Depreciation and amortization122,704 
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)(71,194)
Gain in fair value of derivative financial instruments500 
Gain on dispositions of real estate investments, net2,796 
Impairment of real estate investments(39,191)
Income from unconsolidated entities1,680 
Gain on re-measurement of previously held equity interest19,567 
Foreign currency loss(8,689)
Other income2,399 
Total net other expense(92,132)
Loss before income taxes(23,584)
Income tax expense(499)
Net loss$(24,083)
Total assets by reportable segment as of September 30, 20172023 and December 31, 20162022 were as follows:follows (in thousands):
September 30,
2023
December 31,
2022
Integrated senior health campuses$2,178,158 $2,157,748 
MOBs1,253,406 1,379,502 
SHOP572,960 635,190 
Senior housing — leased240,123 249,576 
SNFs216,507 245,717 
Hospitals105,045 106,067 
Other22,718 12,898 
Total assets$4,588,917 $4,786,698 
40
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
 
September 30,
2017
 
December 31,
2016
Medical office buildings$263,970,000
 $123,223,000
Senior housing98,836,000
 16,758,000
Other8,706,000
 2,777,000
Total assets$371,512,000
 $142,758,000
As of and for the nine months ended September 30, 2023 and 2022, goodwill by reportable segment was as follows (in thousands):
Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitalsTotal
Balance — December 31, 2022$164,846 $— $47,812 $5,924 $8,640 $4,389 $231,611 
Goodwill acquired3,331 — — — — — 3,331 
Balance — September 30, 2023
$168,177 $— $47,812 $5,924 $8,640 $4,389 $234,942 
16.
Integrated
Senior Health
Campuses		SHOPMOBsSenior
Housing —
Leased		SNFsHospitalsTotal
Balance — December 31, 2021$119,856 $23,277 $47,812 $5,924 $8,640 $4,389 $209,898 
Goodwill acquired44,990 — — — — — 44,990 
Balance — September 30, 2022
$164,846 $23,277 $47,812 $5,924 $8,640 $4,389 $254,888 
See Note 3, Real Estate Investments, Net and Business Combinations, for a further discussion of goodwill recognized in connection with our business combinations.
Our portfolio of properties and other investments are located in the United States, the UK and Isle of Man. Revenues and grant income and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for our operations for the periods presented (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Revenues and grant income:
United States$463,053 $425,070 $1,380,542 $1,187,069 
International1,187 1,092 3,495 3,523 
$464,240 $426,162 $1,384,037 $1,190,592 
The following is a summary of real estate investments, net by geographic regions as of September 30, 2023 and December 31, 2022 (in thousands):
 
September 30,
2023
December 31,
2022
Real estate investments, net:
United States$3,388,749 $3,539,453 
International41,891 42,156 
$3,430,640 $3,581,609 
17. Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk are primarily our debt security investment, cash and cash equivalents, restricted cash and accounts and other receivables, restricted cash and real estate deposits.receivables. We are exposed to credit risk with respect to our debt security investment, but we believe collection of the outstanding amount is probable. 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, 20172023 and December 31, 2016,2022, we had cash and cash equivalents in excess of FDIC insured limits. We believe

33
Table of Contents

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 and residents is limited. In general, weWe perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.
41
Table of Contents

AMERICAN HEALTHCARE REIT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
Based on leases in effect as of September 30, 2017, three2023, properties in two states in the United States accounted for 10.0% or more of our total consolidated property portfolio’s annualized base rent or annualized NOI, which is based on contractual base rent from leases in effect for our non-RIDEA properties and annualized NOI for our SHOP and integrated senior health campuses as of September 30, 2023. Properties located in Indiana and Ohio accounted for 31.3% and 12.5%, respectively, of our total consolidated property portfolio. Our properties located in Nevada, Alabama and California accounted for approximately 17.2%, 15.3% and 12.6%, respectively, of theportfolio’s annualized base rent of our total property portfolio.or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in each state’s economy.
Based on leases in effect as of September 30, 2023, our six reportable business segments, integrated senior health campuses, MOBs, SHOP, SNFs, senior housing — leased and hospitals accounted for 47.6%, 31.5%, 7.1%, 7.0%, 3.9% and 2.9%, respectively, of our total consolidated property portfolio’s annualized base rent or annualized NOI. As of September 30, 2017, we had two2023, none of our tenants thatat our properties accounted for 10.0% or more of our total consolidated property portfolio’s annualized base rent as follows:or annualized NOI.
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. The loss of these tenants or their inability to pay rent could have a material adverse effect on our business and results of operations.
17.18. 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$963,000 and $2,000$1,497,000 for the three months ended September 30, 20172023 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 $8,0002022, respectively, and $3,000$2,851,000 and $4,485,000 for the nine months ended September 30, 20172023 and 2016,2022, 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. NonvestedTBUs, nonvested shares of our restricted common stockRSAs 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, 20172023 and 2016,2022, there were 27,000186,868 and 12,000223,064 nonvested shares, respectively, of our restricted Class T common stockRSAs 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 both September 30, 20172023 and 2016,2022, there were 208 units of redeemable3,501,976 limited partnership units of our operating partnership outstanding, but such units were also excluded from the computation of diluted earnings (loss) per share because such units were anti-dilutive during these periods.
18. Subsequent Events
Status of Our Offering
As of September 30, 2023 and 2022, there were 159,678 and 19,200 nonvested time-based restricted stock units outstanding, respectively, but such units were excluded from the computation of diluted earnings (loss) per share because such restricted stock units were anti-dilutive during the period.
As of September 30, 2023, there were 70,751 nonvested performance-based restricted stock units outstanding, which were treated as contingently issuable shares pursuant to ASC Topic 718, Compensation — Stock Compensation. Such contingently issuable shares were excluded from the computation of diluted earnings (loss) per share because they were anti-dilutive during the period.
19. Subsequent Event
Option to Acquire Minority Joint Venture Partner’s Membership Interest in Trilogy REIT Holdings
On 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, 2017,2023, we entered into an amendment to the Credita Membership Interest Purchase Agreement, or the Amendment,MIPA, with Banksubsidiaries of America, as administrative agent, andNHI, which provides us with the subsidiary guarantors and lenders named therein. The material termsoption to purchase their 24.0% minority membership interest in Trilogy REIT Holdings. If we exercise this purchase option, we will own 100% of Trilogy REIT Holdings, which (assuming that there are no changes in the equity capitalization of Trilogy prior to consummation of the Amendment provide for: (i)purchase) will in turn cause us to indirectly own approximately 97.4% of Trilogy. Subject to our first satisfying certain closing conditions, the option is exercisable for a $50,000,000closing before September 30, 2025 assuming that we exercise both extension options described below. If we exercise our purchase option, the all cash purchase price would be $240,500,000 if we consummate the purchase on or before March 31, 2024, would increase into $247,000,000 if we consummate the Line of Creditpurchase from an aggregate principal amount of $100,000,000April 1, 2024 to $150,000,000; (ii) a term loan with an aggregate maximum principal amount of $50,000,000,and including December 31, 2024 and would further increase to $260,000,000 if we consummate the purchase on 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

after January 1, 2025.
34
42
Table of Contents


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

Indebtedness,The MIPA also allows us (at our election), instead of paying all cash, to consummate the purchase transaction by using a combination of cash and the issuance of new Series A Cumulative Convertible Preferred Stock, $0.01 par value per share, or our Convertible Preferred Stock, as definedpurchase price consideration. We must pay at least a minimum amount of the purchase price in cash, in which case we would pay the Credit Agreement,remaining amount in shares of our Convertible Preferred Stock. The minimum cash amount will be $24,050,000 if we consummate the purchase on or before March 31, 2024, $24,700,000 if we consummate the purchase from April 1, 2024 to $20,000,000, and including December 31, 2024, or $26,000,000 if we consummate the purchase on or after January 1, 2025, or the Minimum Cash Consideration. If issued, our Convertible Preferred Stock will be perpetual, will have a cumulative cash dividend with an increase in such amount forinitial annual rate of 4.75% (on the liquidation preference per share of $25.00 of our Convertible Preferred Stock) and will be redeemable by us at 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 summaryannual dividend rate will increase over time, and the redemption price will vary based on the date of redemption. In addition, holders of shares of our property acquisition subsequentConvertible Preferred Stock will have the right, at any time on or after July 1, 2026 and from time to September 30, 2017:time, to convert some or all of such shares into shares of our common stock, subject to certain customary exceptions.
43
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.


35
Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The use of the words “we,” “us” or “our” refers to Griffin-AmericanAmerican Healthcare REIT, IV, Inc. and its subsidiaries, including Griffin-AmericanAmerican Healthcare REIT IV Holdings, LP, except where the context otherwise requires.noted.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to promote understanding of our results of operations and financial condition. Such discussion is provided as a supplement to, and 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 20162022 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or the SEC, on March 1, 2017.17, 2023. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of September 30, 20172023 and December 31, 2016,2022, together with our results of operations and cash flows for the three and nine months ended September 30, 20172023 and 20162022. Our results of operations and cash flows forfinancial condition, as reflected in the nine months ended September 30, 2017accompanying condensed consolidated financial statements and 2016.related notes, are subject to management’s evaluation and interpretation of business conditions, changing capital market conditions, and other factors that could affect the ongoing viability of our tenants and residents.
Forward-Looking Statements
Historical results and trends should not be taken as indicative of future operations. OurCertain statements contained in this report, that are notother than historical facts, are forward-looking. Actual results may differ materially from those includedbe considered forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995 (collectively with the “Securities Act and Exchange Act, or the Acts”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements. Forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations, are generally identifiablecan be identified by the use of the words “expect,” “project,”forward-looking terminology such as “may,” “will,” “should,“can,” “could,” “would,“expect,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,“possible,” “potential”“initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the negativedate this report is filed with the SEC.
Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, such terms and other comparable terminology. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors whichassumptions made by, our management and involve uncertainties that could have a material adverse effect onsignificantly affect our operations and future investments on a consolidated basisfinancial results. Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives and prospects, including our proposed listing and future capital-raising initiatives and planned or future acquisitions or dispositions of properties and other assets, including our option to purchase the minority membership interest in Trilogy REIT Holdings; (ii) statements about the coronavirus, or COVID-19, pandemic, including its duration and potential or expected impact on our business and our view on forward trends as well as the termination of the federally declared public health emergency; and (iii) statements about our future results of operations, capital expenditures and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: changes in economic conditions generally and the real estate market specifically; the continuing adverse effects of the COVID-19 pandemic, including its effects on the healthcare industry, senior housing and skilled nursing facilities, or SNFs, 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; our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due, including our ability to refinance the 2019 Trilogy Credit Facility on acceptable terms, or at all; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; changes in interest rates;rates, including uncertainties about whether and when interest rates will continue to increase, and foreign currency risk; 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 propertiesinvestment strategy; cybersecurity incidents and information technology failures, including unauthorized access to acquire; the availability of financing;our computer systems and/or our vendors’ computer systems, and our ongoing relationship with American Healthcare Investors, LLC, third-party management companies’ computer systems and/or American Healthcare Investors,their vendors’ computer systems; our ability to retain our executive officers and Griffin Capital Company, LLC, or Griffin Capital (formerly known as Griffin Capital Corporation),key employees; and their affiliates.unexpected labor costs and inflationary pressures. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date on which such statements are made, and undue reliance should not be placed on such statements. We undertake no obligation to update any such statements that may become untrue because of subsequent events. Additional information concerning us and our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
44
Table of Contents
Overview and Background
Griffin-AmericanAmerican Healthcare REIT, IV, Inc., a Maryland corporation, was incorporated on January 23, 2015 and therefore we consideris a self-managed REIT that our date of inception. We were initially capitalized on February 6, 2015. We invest inowns a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, hospitals, skilled nursing facilities,or MOBs, senior housing, SNFs, hospitals and other healthcare-related facilities. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). Our healthcare facilities operated under a RIDEA structure include our senior housing operating properties, or SHOP, and our integrated senior health campuses. We have originated and acquired secured loans and may also originate and acquire secured loans andother real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income.income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We qualifiedhave elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code, for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2016,purposes. We believe that we have been organized and operated, and we intend to continue to qualify to be taxedoperate, in conformity with the requirements for qualification and taxation as a REIT.REIT under the Code.
On February 16, 2016, we commenced our initial public offering,October 1, 2021, Griffin-American Healthcare REIT III, Inc., or our offering, in which we were offering to the public up to $3,150,000,000 in sharesGAHR III, merged with and into a wholly owned subsidiary, or Merger Sub, 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 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 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 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,Inc., or GAHR IV, with Merger Sub being the surviving company, which we refer to as the REIT Merger, and our operating partnership, Griffin-American Healthcare REIT IV Advisor,Holdings, LP, merged with and into Griffin-American Healthcare REIT III Holdings, LP, or the Surviving Partnership, with the Surviving Partnership being the surviving entity, which we refer to as the Partnership Merger and, together with the REIT Merger, the Merger. Following the Merger on October 1, 2021, our company was renamed American Healthcare REIT, Inc. and the Surviving Partnership was renamed American Healthcare REIT Holdings, LP, or our advisor. We reserveoperating partnership.
Also on October 1, 2021, immediately prior to the rightconsummation of the Merger, and pursuant to reallocatea contribution and exchange agreement dated June 23, 2021, GAHR III acquired a newly formed entity, American Healthcare Opps Holdings, LLC, or NewCo, which we refer to as the shares of common stock we are offering betweenAHI Acquisition. Following the primary offeringMerger and the DRIP, and among classes of stock. As of September 30, 2017, we had received and accepted subscriptions inAHI Acquisition, our offering for 35,522,410 aggregate shares of our Class T and Class I common stock, or approximately $353,510,000,company became self-managed.

Operating Partnership
36
Table of Contents

excluding shares of our common stock issued pursuant to the DRIP.
We conduct substantially all of our operations through Griffin-American Healthcare REIT IV Holdings, LP, orour operating partnership, and we are the sole general partner of our operating partnership. We are externally advised by our advisor pursuant to an advisory agreement, or the Advisory Agreement, between usAs of both September 30, 2023 and our advisor. The Advisory Agreement was effective as of February 16, 2016 and had a one-year term, subject to successive one-year renewals upon the mutual consentDecember 31, 2022, we owned 95.0% of the parties. The Advisory Agreement was renewed pursuant topartnership units, or OP units, in our operating partnership, and the mutual consent ofremaining 5.0% limited OP units, were owned by AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T. Hanson, the parties on February 13, 2017 and expires on February 16, 2018. Our advisor uses its best efforts, subject to the oversight and reviewnon-executive Chairman of our board of directors, to, among other things, research, identify, reviewor our board, Danny Prosky, our Chief Executive Officer and make investments inPresident, and dispositionsMathieu B. Streiff, one of propertiesour directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; and securities on our behalf consistent with our investment policies and objectives. Our advisor performs its duties and responsibilities under the Advisory Agreement as our fiduciary. Our advisor is 75.0% owned and managed by American Healthcare Investors and 25.0% owned by a wholly owned subsidiary of Griffin Capital Company, LLC, or collectively, the NewCo Sellers. See Note 11, Redeemable Noncontrolling Interests, and Note 12, Equity — Noncontrolling Interests in Total Equity, to our co-sponsors. American Healthcare Investors is 47.1% ownedaccompanying condensed consolidated financial statements for a further discussion of the ownership in our operating partnership.
Public Offerings
As of September 30, 2023, after taking into consideration the Merger and the impact of the reverse stock split as discussed below, we had issued 65,445,557 shares for a total of $2,737,716,000 of common stock since February 26, 2014 in our initial public offerings and our distribution reinvestment plan, or DRIP, offerings (includes historical offering amounts sold by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Colony NorthStar, Inc. (NYSE: CLNS), or Colony NorthStar (formerly known as NorthStar Asset Management Group Inc.GAHR III and GAHR IV prior to its mergerthe Merger).
On September 16, 2022, we filed with Colony Capital, Inc.the SEC a Registration Statement on Form S-11 (File No. 333-267464), which was last amended on November 7, 2023 upon filing with the SEC Amendment No. 2 to the Registration Statement on Form S-11, with respect to a proposed public offering by us of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock Exchange, or the Proposed Listing. Such registration statement and NorthStar Realty Finance Corp. on January 10, 2017), and 7.8% owned by James F. Flaherty III, a former partner of Colony NorthStar. Wecontemplated listing are not affiliatedyet effective.
45
Table of Contents
On November 15, 2022 we effected a one-for-four reverse stock split of our common stock and a corresponding reverse split of the OP units, or the Reverse Splits. All numbers of common shares and per share data, as well as the OP units, in our accompanying condensed consolidated financial statements and related notes have been retroactively adjusted for all periods presented to give effect to the Reverse Splits. See Note 12, Equity, to our accompanying condensed consolidated financial statements, for a further discussion of our public offerings.
On March 15, 2023, our board, at the recommendation of the audit committee of our board, which is comprised solely of independent directors, unanimously approved and established an updated estimated per share net asset value, or NAV, of our common stock of $31.40. We provide this updated estimated per share NAV annually to assist broker-dealers in connection with Griffin Capital, Griffin Capital Securities, LLC,their obligations under Financial Industry Regulatory Authority Rule 2231 with respect to customer account statements. The updated estimated per share NAV is based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding on a fully diluted basis, calculated as of December 31, 2022. 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 Institute for Portfolio Alternatives, or the IPA, in April 2013, in addition to guidance from the SEC. See our dealer manager, Colony NorthStar or Mr. Flaherty; however, we are affiliatedCurrent Report on Form 8-K filed with Griffin-American Healthcare REIT IV Advisor, American Healthcare Investorsthe SEC on March 17, 2023 for more information on the methodologies and AHI Group Holdings.assumptions used to determine, and the limitations and risks of, our updated estimated per share NAV.
Our Real Estate Investments Portfolio
We currently operate through twosix reportable business segmentssegments: integrated senior health campuses, MOBs, SHOP, SNFs, senior housing — medical office buildingsleased and senior housing.hospitals. As of September 30, 2017, we had completed 17 real estate acquisitions whereby2023, we owned 29 properties, comprising 30and/or operated 298 buildings orand integrated senior health campuses, including completed development and expansion projects, representing approximately 1,418,00018,875,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $356,640,000. As$4,485,940,000. In addition, as of September 30, 2017, our 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 projections2023, we also owned a real estate-related debt investment purchased for the expected year one property performance, including any contractual rent increases contained in such leases for year one, divided by the contract purchase price of the total property portfolio, exclusive of any acquisition fees and expenses paid.$60,429,000.
Critical Accounting PoliciesEstimates
Our accompanying condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying footnotes. 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. The complete listing of our Critical Accounting PoliciesEstimates was previously disclosed in our 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017,17, 2023, and there have been no material changes to our Critical Accounting PoliciesEstimates as disclosed therein, except as noted below.included within Note 2, Summary of Significant Accounting Policies, to our accompanying condensed consolidated financial statements.
Interim Unaudited Financial Data
Our accompanying condensed consolidatedFor a discussion of interim unaudited financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulationsdata, see Note 2, Summary of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuantSignificant Accounting Policies — Interim Unaudited Financial Data, to SEC rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017.17, 2023.
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.

37
Table of Contents

Recently Issued or Adopted Accounting PronouncementsDispositions in 2023
For a discussion of recently issued or adopted accounting pronouncements,our acquisitions and dispositions of investments in 2023, see Note 2, Summary of Significant Accounting Policies — Recently Issued or Adopted Accounting Pronouncements,3, Real Estate Investments, Net and Business Combinations, to our accompanying condensed consolidated financial statements.
Acquisitions in 2017
46
For a discussion
Table of our property acquisitions in 2017, see Note 3, Real Estate Investments, Net, and Note 18, Subsequent Events — Property Acquisition, to our accompanying condensed consolidated financial statements.Contents
Factors Which May Influence Results of Operations
WeOther than the effects of inflation and the lasting effects of the COVID-19 pandemic discussed below, as well as other national economic conditions affecting real estate generally, and as otherwise disclosed in our risk factors, we are not aware of any material trends or uncertainties other than national economic conditions affecting real estate generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, disposition, management and operation of propertiesour properties. For a further discussion of these and other than those listed infactors that could impact our future results or performance, see “Forward-Looking Statements” above and Part II, Item 1A.1A, Risk Factors, of this Quarterly Report on Form 10-Q and those Risk Factors previously disclosed in our 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017.17, 2023.
Real Estate RevenueCOVID-19
The amount of revenue generated byOur residents, tenants, operating partners and managers, our properties depends principally on our ability to maintain the occupancy rates of leased space and to lease available space and space available from lease terminations at the then existing rental rates. Negative trends in one or more of these factors could adversely affect our revenue in the future.
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 of properties, resulting in increased exposure to local and regional economic downturnsindustry and the poor performanceU.S. economy have been adversely affected by the impacts of onethe COVID-19 pandemic, including its economic impact. While the immediate effects of the COVID-19 pandemic have subsided, the timing and extent of the economic recovery towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the effectiveness and frequency of booster vaccinations, the duration and implications of ongoing or morefuture restrictions and safety measures, the availability of ongoing government financial support to our tenants, operating partners and managers and the overall pace of economic recovery, among others. As an owner and operator of healthcare facilities, we expect to continue to be adversely affected by the long-term effects of the COVID-19 pandemic for some period of time; however, it is not possible to predict the full extent of its future impact on us, our residents, tenants, operating partners and managers, the operations of our properties or the markets in which they are located, or the overall healthcare industry. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and SNFs, and we continue to work diligently to maintain aggressive protocols at such facilities as well as actively collaborate with our tenants, operating partners and managers to respond and take action to mitigate the impact of the COVID-19 pandemic.
We have evaluated such economic impacts of the COVID-19 pandemic on our business thus far and have incorporated information concerning such impacts into our assessments of liquidity, impairment and collectability from tenants and residents as of September 30, 2023. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information.
The COVID-19 pandemic resulted in a significant decline in resident occupancy at our senior housing — leased facilities, SNFs, SHOP and integrated senior health campuses and an increase in COVID-19-related operating expenses. Among other things, due to the shortage of healthcare personnel, the pandemic caused higher labor costs that continue to adversely affect us, including those related to greater reliance on agency staffing and more costly short-term hires. Expenses also increased due to pandemic-related costs (e.g., heightened cleaning and sanitation protocols) and the ongoing inflationary environment. This has, in general, resulted in decreased net operating income, or NOI, and margin at these properties relative to pre-pandemic levels. Therefore, our focus continues to be on improving occupancy and managing operating expenses. Resident occupancy for our properties has been improving, but labor costs continue to remain elevated, and we have had difficulty filling open positions and retaining existing staff. The timing and extent of any further improvement in occupancy or relief from these labor pressures remains unclear.
As a result of the federal government's COVID-19 public health emergency declaration in January 2020 and its COVID-19 national emergency declaration in March 2020, certain federal and state pandemic-related relief measures, such as funding, procedural waivers and/or reimbursement increases, became available to us and some of our tenants and operators. These declarations expired on May 11, 2023 and April 10, 2023, respectively, and certain relief measures have been wound down and others are being phased out. It is unclear what pandemic related relief measures, including funding, waiver and reimbursement programs, that we and certain of our tenants and operators benefited from will continue to be available or the extent they will be available. The impact on individual skilled nursing facilities’ operators will vary, and therefore exposeit is not possible to predict or quantify the financial impact it will have on resident occupancies.
See the “Results of Operations” and “Liquidity and Capital Resources” sections below, for further discussion.
47
Table of Contents
Inflation
During the nine months ended September 30, 2023 and 2022, inflation has affected our stockholdersoperations. The annual rate of inflation in the United States was 3.7% in September 2023, as measured by the Consumer Price Index. We believe inflation has impacted our operations such that we have experienced, and continue to increased risk. In addition, manyexperience, increases in the cost of labor, services, energy and supplies, and therefore continued inflationary pressures on our expenses are fixed regardless ofintegrated senior health campuses and SHOP could continue to impact our profitability in future periods. However, an inflationary environment has also impacted our operations at such properties in that we have the sizeability to seek increases in rent when relatively short-term resident leases expire (typically one year or less), which will improve our operating performance at such properties, as well as increase rent coverage and the stability of our real estate portfolio. Therefore, depending onrevenue in our senior housing — leased and SNF segments over time.
For properties that are not operated under a RIDEA structure, there are provisions in the amount of proceeds we raise from our offering, we would expend a larger portionmajority of our incometenant leases that help us mitigate the impact of inflation. These provisions include negotiated rental increases, which historically range from 2% to 3% per year, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of existing leases, among other factors, the leases may not reset frequently enough to cover inflation.
In addition, inflation also caused, and may continue to cause, an increase in the cost of our variable-rate debt due to rising interest rates. See Item 3. Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk of this Quarterly Report on operating expenses. This would reduce our profitability and, in turn, the amount of net income availableForm 10Q for distribution to our stockholders.further discussion.
Scheduled Lease Expirations
AsExcluding our SHOP and integrated senior health campuses, as of September 30, 2017,2023, our properties were 95.7%92.6% leased, and during the remainder of 2017, 1.7%2023, 3.5% of the leased GLA is scheduled to expire. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next 12twelve 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, 2017,2023, our remaining weighted average lease term was 8.5 years.6.2 years, excluding our SHOP and integrated senior health campuses.
Our combined SHOP and integrated senior health campuses were 84.4% leased as of September 30, 2023. 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, 20172023 and 20162022
We were incorporated on January 23, 2015, but we did not commence material operations until the commencementOur primary sources of revenue include rent generated by our offering on February 16, 2016. We purchasedleased, non-RIDEA properties, and resident fees and services revenue from our firstRIDEA properties. Our primary expenses include property in June 2016. Accordingly, our results of operations for the threeoperating expenses and nine months ended September 30, 2017 and 2016 are not comparable. In general, we expect all amounts 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.rental expenses.
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, whenAs of September 30, 2023, we acquiredoperated through six reportable business segments: integrated senior health campuses, MOBs, SHOP, SNFs, senior housing — leased and hospitals.
48
Table of Contents
The most significant drivers behind changes in our first medical office buildingconsolidated results of operations for the three and nine months ended September 30, 2023 compared to the corresponding periods in June 20162022 were the adverse effect of inflation, which resulted in increases in the cost of labor, services, energy and supplies; our acquisitions and dispositions of investments subsequent to September 30, 2022; and the transitions of the operations of certain leased skilled nursing and senior housing facilityfacilities to a RIDEA structure. Additional drivers behind the changes in December 2016, we established a new reportable segment at each such time.

38
Table of Contents

Except where otherwise noted, our consolidated results of operations are primarily duediscussed in more detail below. See Note 3, Real Estate Investments, Net and Business Combinations, to owningour accompanying condensed consolidated financial statements for a further discussion of our acquisitions and dispositions during 2023. As of September 30, buildings2023 and 2022, we owned and/or operated the following types of properties (dollars in thousands):
September 30,
 20232022
 Number of
Buildings/
Campuses		Aggregate
Contract
Purchase Price		Leased
%		Number of
Buildings/
Campuses		Aggregate
Contract
Purchase Price		Leased
%
Integrated senior health campuses125 $1,943,134 (1)121 $1,894,235 (1)
MOBs90 1,270,474 89.7 %105 1,378,995 89.6 %
SHOP46 729,767 (2)47 706,871 (2)
Senior housing — leased20 179,285 100 %20 179,285 100 %
SNFs15 223,500 100 %17 249,200 100 %
Hospitals2 139,780 100 %2 139,780 100 %
Total/weighted average(3)298 $4,485,940 92.6 %312 $4,548,366 92.6 %
___________
(1)The leased percentage for the resident units of our integrated senior health campuses was 85.5% and 84.0% as of September 30, 2017, as compared to owning five buildings2023 and 2022, respectively.
(2)The leased percentage for the resident units of our SHOP was 80.7% and 75.3% as of September 30, 2016. As2023 and 2022, respectively.
(3)Leased percentage includes all third-party leased space at our non-RIDEA properties (including master leases), and excludes our SHOP and integrated senior health campuses where leased percentage represents resident occupancy of the available units/beds therein.
49
Table of Contents
Revenues and Grant Income
Our primary sources of revenue include resident fees and services revenue generated by our RIDEA properties and rent from our leased, non-RIDEA properties. For the three and nine months ended September 30, 20172023 and 2016, we owned2022, resident fees and services revenue primarily consisted of rental fees related to resident leases, extended health care fees and other ancillary services, and real estate revenue primarily consisted of base rent and expense recoveries. The amount of revenues generated by our RIDEA properties depends principally on our ability to maintain resident occupancy rates. The amount of revenues generated by our non-RIDEA properties is dependent on our ability to maintain tenant occupancy rates of currently leased space and to lease available space at the then existing rental rates. We also receive grant income. Revenues and grant income by reportable segment consisted of the following typesfor the periods then ended (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Resident Fees and Services Revenue
Integrated senior health campuses$372,291 $328,751 $1,096,917 $897,345 
SHOP43,915 39,555 138,541 116,160 
Total resident fees and services revenue416,206 368,306 1,235,458 1,013,505 
Real Estate Revenue
MOBs35,688 37,128 109,811 111,798 
SNFs6,175 6,633 10,633 19,625 
Senior housing — leased2,684 5,143 13,352 15,703 
Hospitals2,423 2,419 7,338 7,245 
Total real estate revenue46,970 51,323 141,134 154,371 
Grant Income
Integrated senior health campuses1,064 5,796 7,445 21,861 
SHOP— 737 — 855 
Total grant income1,064 6,533 7,445 22,716 
Total revenues and grant income$464,240 $426,162 $1,384,037 $1,190,592 
Resident Fees and Services Revenue
For our integrated senior health campuses segment, we experienced an increase in resident fees and services revenue of properties:$43,540,000 and $199,572,000, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, due to: (i) an increase of $14,053,000 and $97,806,000, respectively, related to our acquisition of the remaining 50.0% interest in a privately held company, RHS Partners, LLC, or RHS, on August 1, 2022, which owns and/or operates 16 integrated senior health campuses located in Indiana; (ii) improved resident occupancy and higher resident fees as a result of an increase in billing rates; and (iii) an increase of $5,897,000 and $33,371,000, respectively, due to the expansion of our customer base, expansion of services offered and an increase in billing rates for such services at an ancillary business unit within Trilogy Investors, LLC, or Trilogy. Such amounts were partially offset by a decrease in total resident fees and services revenue of $3,590,000 and $12,054,000, respectively, due to dispositions within our integrated senior health campuses segment during the third and fourth quarter of 2022.
For our SHOP segment, we experienced an increase in resident fees and services revenue of $4,360,000 and $22,381,000, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, primarily due to: (i) our acquisition of a portfolio of seven senior housing facilities in Texas within our SHOP segment on December 5, 2022, which increased revenue by $6,907,000 and $20,464,000 respectively; and (ii) an increase of $3,656,000 and $8,378,000, respectively, due to transitioning the SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023. The remaining increase in resident fees and services revenue for our SHOP segment was primarily attributable to improved resident occupancy and higher resident fees as a result of an increase in billing rates. Such increases were partially offset by a decrease of $7,169,000 and $11,398,000, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, due to real estate dispositions within our SHOP segment during the three months ended December 31, 2022 and the nine months ended September 30, 2023.
50
 September 30,
 2017 2016
 
Number of
Buildings
 
Aggregate Contract
Purchase Price
 Leased % 
Number of
Buildings
 
Aggregate Contract
Purchase Price
 Leased %
Medical office buildings18
 $262,290,000
 94.0% 5
 $59,670,000
 100%
Senior housing12
 94,350,000
 100% —
 —
 —%
Total/weighted average30
 $356,640,000
 95.7% 5
 $59,670,000
 100%
Table of Contents
Real Estate Revenue
For the three and nine months ended September 30, 2023, we experienced a decrease in real estate revenue for our SNFs of $458,000 and $8,992,000, respectively, as compared to the three and nine months ended September 30, 2022, due to transitioning the SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023, which amount included the full amortization of $8,073,000 of above-market leases. In addition, for the three and nine months ended September 30, 2023, we experienced a decrease in real estate revenue for our senior housing — leased segment of $2,459,000 and $2,351,000, respectively, as compared to the three and nine months ended September 30, 2022, primarily due to transitioning the senior housing — leased facilities within Michigan ALF Portfolio to RIDEA, which amount included the full amortization of $2,756,000 of above-market leases. We also experienced a net decrease in real estate revenue for our MOBs segment for both the three and nine months ended September 30, 2023 of $1,440,000 and $1,987,000, respectively, as compared to the three and nine months ended September 30, 2022, primarily due to real estate dispositions of MOBs during the fourth quarter of 2022 and the nine months ended September 30, 2023, which was partially offset by fixed rent escalations and lease-up activity.
Grant Income
For the three months ended September 30, 20172023 and 2016, real estate revenue was $8,488,0002022, we recognized $1,064,000 and $312,000,$6,533,000, respectively, of grant income at our integrated senior health campuses and wasSHOP primarily comprised of base rent of $6,295,000related to government grants received through the Coronavirus Aid, Relief, and $191,000, respectively, and expense recoveries of $1,579,000 and $88,000, respectively.
Economic Security Act, or the CARES Act, economic stimulus programs. For the nine months ended September 30, 20172023 and 2016,2022, we recognized $7,445,000 and $22,716,000, respectively, of grant income at our integrated senior health campuses and SHOP primarily related to government grants received through the CARES Act economic stimulus programs. As of April 2023, the federal government’s COVID-19 public health emergency declaration expired and certain relief measures have been wound down and others are being phased out.
Property Operating Expenses and Rental Expenses
Property operating expenses and property operating expenses as a percentage of resident fees and services revenue and grant income, as well as rental expenses and rental expenses as a percentage of real estate revenue 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:
ended (dollars in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Medical office buildings$6,330,000
 $312,000
 $15,456,000
 $338,000
Senior housing2,158,000
 —
 3,282,000
 —
Total$8,488,000
 $312,000
 $18,738,000
 $338,000
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Property Operating Expenses
Integrated senior health campuses$335,563 89.9 %$299,197 89.4 %$992,620 89.9 %$811,281 88.3 %
SHOP39,040 88.9 %38,290 95.0 %124,678 90.0 %109,425 93.5 %
Total property operating expenses$374,603 89.8 %$337,487 90.0 %$1,117,298 89.9 %$920,706 88.9 %
Rental Expenses
MOBs$13,690 38.4 %$14,155 38.1 %$42,025 38.3 %$42,259 37.8 %
SNFs352 5.7 %437 6.6 %1,199 11.3 %1,644 8.4 %
Senior housing — leased446 16.6 %160 3.1 %874 6.5 %551 3.5 %
Hospitals86 3.5 %98 4.1 %324 4.4 %346 4.8 %
Total rental expenses$14,574 31.0 %$14,850 28.9 %$44,422 31.5 %$44,800 29.0 %
Rental Expenses
For the three months ended September 30, 2017Integrated senior health campuses and 2016, rental expenses were $2,095,000 and $98,000, respectively. For the nine months ended September 30, 2017 and 2016, rental expenses were $4,893,000 and $121,000, respectively. Rental expenses consisted of the following for the periods then ended:
 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
Utilities552,000
 29,000
 1,267,000
 36,000
Building maintenance467,000
 28,000
 1,327,000
 28,000
Property management fees — third party127,000
 6,000
 320,000
 6,000
Property management fees — affiliates103,000
 5,000
 249,000
 5,000
Administration91,000
 —
 212,000
 —
Insurance23,000
 —
 56,000
 —
Amortization of leasehold interests22,000
 —
 69,000
 —
Other59,000
 6,000
 115,000
 7,000
Total$2,095,000
 $98,000
 $4,893,000
 $121,000

39
Table of Contents

Rental expenses and rental expenses as a percentage of total revenue by reportable segment consisted of the following for the periods then ended:
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Medical office buildings$1,857,000
 29.3% $98,000
 31.4% $4,543,000
 29.4% $121,000
 35.8%
Senior housing238,000
 11.0% —
 —% 350,000
 10.7% —
 —%
Total/weighted average$2,095,000
 24.7% $98,000
 31.4% $4,893,000
 26.1% $121,000
 35.8%
Multi-tenant medical office buildingsSHOP typically have a higher percentage of rentaldirect operating expenses to revenue than MOBs, hospitals, leased senior housing facilities. We anticipate thatand leased SNFs due to the percentagenature of rental expenses to revenue will fluctuate based on the types of propertyRIDEA-type facilities where we acquire in the future.
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,
 2017 2016 2017 2016
Asset management fees — affiliates$700,000
 $—
 $1,505,000
 $—
Professional and legal fees310,000
 141,000
 646,000
 260,000
Restricted stock compensation61,000
 14,000
 100,000
 66,000
Transfer agent services57,000
 40,000
 141,000
 42,000
Board of directors fees53,000
 58,000
 163,000
 141,000
Directors’ and officers’ liability insurance53,000
 59,000
 161,000
 147,000
Franchise taxes31,000
 —
 121,000
 —
Bad debt expense25,000
 —
 94,000
 —
Other6,000
 17,000
 65,000
 69,000
Total$1,296,000
 $329,000
 $2,996,000
 $725,000
The increase in general and administrative expenses forconduct day-to-day operations. For the three and nine months ended September 30, 20172023, as compared to the three and nine months ended September 30, 20162022, the increase in total property operating expenses for our integrated senior health campuses segment was primarilypredominately due to the purchase(i) an increase of additional properties in 2016$14,481,000 and 2017 and thus incurring asset management fees$95,737,000, respectively, attributable to our advisor or its affiliatesacquisition of the 50.0% interest in RHS on August 1, 2022; (ii) increased occupancy at the facilities within such segment; and (iii) an increase of $7,438,000 and $34,636,000, respectively, within Trilogy’s ancillary business unit due to higher professionallabor costs associated with the expansion of services offered and legal fees. We did not incur any asset management fees forinflation impacting the cost of goods sold. Such amounts were partially offset by a decrease in total property operating expenses of $2,851,000 and $9,311,000, respectively, due to real estate dispositions within our integrated senior health campuses segment during the third and fourth quarters of 2022.
51
Table of Contents
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, 20172023, as compared to the three and nine months ended September 30, 20162022, total property operating expenses for our SHOP segment primarily increased due to: (i) an increase of $5,756,000 and $16,645,000, respectively, due to the acquisition of a portfolio of seven senior housing facilities within our SHOP segment in Texas on December 5, 2022; (ii) an increase of $3,962,000 and $9,223,000, respectively, due to transitioning the SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023; (iii) higher operating expenses as a result of increased occupancy; and (iv) higher labor costs due to an increase in employee wages. Such amounts were partially offset by a decrease in total property operating expenses for the numberthree and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, of investors in connection with$8,717,000 and $13,445,000, respectively, due to real estate dispositions within our SHOP segment during the increased equity raise pursuant to our offering throughout 2016three months ended December 31, 2022 and 2017. We expectduring the nine months ended September 30, 2023.
General and Administrative
For the three months ended September 30, 2023, general and administrative expenses were $11,342,000 compared to continue to$9,626,000 for the three months ended September 30, 2022. The increase in 2017 as we acquire additional properties.general and administrative expenses of $1,716,000 was primarily the result of an increase of $1,712,000 in bad debt expense.
For the nine months ended September 30, 2023, general and administrative expenses were $36,169,000 compared to $31,673,000 for the nine months ended September 30, 2022. The increase in general and administrative expenses of $4,496,000 was primarily the result of an increase of: (i) $1,910,000 in bad debt expense; (ii) $1,586,000 in stock compensation expense; and (iii) $890,000 in professional fees and legal fees.
Business Acquisition Related Expenses
For the three and nine months ended September 30, 2017,2023, we recorded business acquisition related expenses were $121,000of $1,024,000 and $334,000,$2,244,000, respectively, and were related primarily to expenses incurred in pursuit of properties that did not result in an acquisition.
real estate-related investment opportunities. For the three and nine months ended September 30, 2016,2022, we recorded business acquisition related expenses of $1,857,000$231,000 and $2,227,000,$2,161,000, 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, depreciation and amortization was $3,442,000 and $7,619,000, respectively, and consisted primarily of depreciation on our operating properties of $2,305,000 and $5,110,000, respectively, and amortization on our identified intangible assets of $1,134,000 and $2,506,000, respectively. For the three and nine months ended September 30, 2016, depreciation and amortization was $64,000 and consisted primarily of depreciation on our operating properties of $40,000 and amortization on our identified intangible assets of $24,000.

40
Table of Contents

Interest Expense
For the three and nine months ended September 30, 2017, interest expense was $780,000 and $1,607,000, respectively, and related primarily to interest expense 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, interest expense 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. See Note 6, Mortgage Loans Payable, Net and Note 7, Line of Credit, to our accompanying condensed consolidated financial statements, for a further discussion.
Liquidity and Capital Resources
Our sources of funds will primarily be the net proceeds of our offering, operating cash flows and borrowings. We believe that these resources 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 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 $938,000 in transaction costs related to the acquisition managementof a pharmaceutical business in April 2022 and operation$61,000 and $780,000, respectively, of our investmentscosts incurred in real estate and real estate-related investments.
Our principal demands for funds are for acquisitionsthe pursuit 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.did not close. See Note 11, Equity3, Real Estate Investments, Net and Business Combinations — Offering Costs, and Note 12, Related Party Transactions,Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion of our paymentsacquisition of a pharmaceutical business in April 2022.
Depreciation and Amortization
For the three months ended September 30, 2023 and 2022, depreciation and amortization was $49,273,000 and $40,422,000, respectively, which primarily consisted of depreciation on our operating properties of $36,929,000 and $35,327,000, respectively, and amortization of our identified intangible assets of $11,778,000 and $4,421,000, respectively. For the nine months ended September 30, 2023 and 2022, depreciation and amortization was $138,644,000 and $122,704,000, respectively, which primarily consisted of depreciation on our operating properties of $109,967,000 and $104,077,000, respectively, and amortization of our identified intangible assets of $26,618,000 and $16,554,000, respectively.
For the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, the increase in depreciation and amortization of $8,851,000 and $15,940,000, respectively, was primarily due to: (i) an increase in depreciation and amortization within our advisorSHOP segment and our dealer manager.
Generally, cash needs for items other thanintegrated senior health campuses segment as a result of acquisitions that occurred subsequent to September 30, 2022, as well as development and capital expenditures since September 30, 2022; (ii) the full amortization of an aggregate $6,635,000 of in-place leases related to the transition of SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023 and the transition of senior housing — leased facilities within the Michigan ALF Portfolio to a RIDEA structure; and (iii) the full amortization of $1,157,000 of depreciable assets as a result of storm damage affecting our properties in Louisiana, Nebraska, North Carolina and Texas. Such amounts were partially offset by a decrease in depreciation and amortization as a result of real estate dispositions within our SHOP segment and our MOBs segment subsequent to September 30, 2022.
52
Table of Contents
Interest Expense
Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods presented (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Interest expense:
Lines of credit and term loan and derivative financial instruments$24,966 $14,806 $72,655 $31,382 
Mortgage loans payable14,215 10,485 41,310 29,637 
Amortization of deferred financing costs:
Lines of credit and term loan686 722 2,491 2,255 
Mortgage loans payable554 530 1,690 1,463 
Amortization of debt discount/premium, net887 134 2,662 464 
Gain in fair value of derivative financial instruments(3,402)— (8,200)(500)
Loss on extinguishments of debt345 628 345 5,038 
Interest on finance lease liabilities82 43 239 183 
Interest expense on financing obligations and other liabilities270 176 614 772 
Total$38,603 $27,524 $113,806 $70,694 
The increase in total interest expense for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, was primarily due to an increase in debt balances since September 30, 2022 and a higher weighted average effective interest rate on our variable debt, which was 7.52% and 5.13% as of September 30, 2023 and 2022, respectively. Such increases in total interest expense for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, were primarily offset by: (i) a $7,700,000 increase in gain in fair value of our derivative financial instruments; (ii) $2,039,000 of net proceeds from our interest rate swaps; and (iii) a $4,693,000 decrease in loss on extinguishments of debt. See Note 7, Mortgage Loans Payable, Net, and Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements for a further discussion of debt extinguishments.
Gain or Loss on Dispositions of Real Estate Investments
For the three months ended September 30, 2023, we recognized an aggregate net gain on dispositions of our real estate-relatedestate investments will be metof $31,981,000 primarily related to the sale of one SHOP within our Central Florida Senior Housing Portfolio and three MOBs. For the nine months ended September 30, 2023, we recognized an aggregate net gain on dispositions of our real estate investments of $29,777,000 primarily related to the sale of six SHOP within our Central Florida Senior Housing Portfolio and 14 MOBs. See Note 3, Real Estate Investments, Net and Business Combinations — Dispositions of Real Estate Investments, to our accompanying condensed consolidated financial statements for further discussion.
For the three and nine months ended September 30, 2022, we recognized an aggregate net gain on dispositions of our real estate investments of $2,113,000 and $2,796,000, respectively, primarily related to the disposition of one integrated senior health campus in Indiana.
Impairment of Real Estate Investments
For both the three and nine months ended September 30, 2023, we recognized an aggregate impairment charge of $12,510,000 for two of our SHOP within the Northern CA Senior Housing Portfolio. For the three and nine months ended September 30, 2022, we recognized an aggregate impairment charge of $21,851,000 and $39,191,000 on our SHOP within the Central Florida Senior Housing Portfolio, respectively. See Note 3, Real Estate Investments, Net and Business Combinations — Impairment of Real Estate Investments, to our accompanying condensed consolidated financial statements for further discussion.
Gain on Re-measurement of Previously Held Equity Interests
For the nine months ended September 30, 2023, we recognized a $726,000 gain on re-measurement of the fair value of our previously held equity interest in Memory Care Partners, LLC, or MCP. For both the three and nine months ended September 30, 2022, we recognized a $19,567,000 gain on re-measurement of the fair value of our previously held equity interest in RHS. See Note 3, Real Estate Investments, Net and Business Combinations — Business Combinations, to our accompanying condensed consolidated financial statements for further discussion.
53
Table of Contents
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations, borrowings under our lines of credit and the net proceeds from dispositions 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 investments. For the next 12 months, our principal liquidity needs are to: (i) fund property operating expenses and real estate-related investments, which could result in a delay in the benefitsgeneral and administrative expenses; (ii) meet our debt service requirements (including principal and interest); (iii) fund development activities and capital expenditures; and (iv) make distributions to our stockholders, if any,as required for us to continue to qualify as a REIT. We believe that the sources of returns generated from our investments.
Our advisor evaluates potential investments and engages in negotiationsliquidity described above, along 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 reviewprobable refinancing of the title insurance commitment, market evaluation, review of leases, review of financing options and an environmental analysis. In some instances,2019 Trilogy Credit Facility, will be sufficient to satisfy our cash requirements for 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 soldnext 12 months and the resulting amount of the net proceeds availablelonger term thereafter. We do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.
Material Cash Requirements
Capital Improvement Expenditures
A capital plan for each investment from our offering as well as our ability to arrange debt financing.
When we acquire a property, our advisor prepares a capital planis established upon acquisition that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also includeinvestment, including costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan will also setsets 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 orand joint venture partners or, when necessary, 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.partners. The capital plan for each investment will beis adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs.
As of September 30, 2023, we had $17,866,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital expenditures. Based on the budget for the properties we ownowned as of September 30, 2017,2023, we estimateestimated that ourunspent discretionary expenditures for capital and tenant improvements will require upas of such date are equal to $1,246,000$52,883,000 for the remaining three months of 2017. 2023, although actual expenditures are dependent on many factors which are not presently known.
Contractual Obligations
The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and lines of credit and term loan; (ii) interest payments on our mortgage loans payable and lines of credit and term loan, excluding the effect of our interest rate swaps; (iii) ground and other lease obligations; and (iv) financing obligations as of September 30, 2023 (in thousands):
 Payments Due by Period
 20232024-20252026-2027ThereafterTotal
Principal payments — fixed-rate debt$4,804 $183,615 $190,619 $528,962 $908,000 
Interest payments — fixed-rate debt7,647 54,339 38,683 248,626 349,295 
Principal payments — variable-rate debt57 660,430 925,443 27,328 1,613,258 
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2023)31,009 167,433 46,801 6,746 251,989 
Ground and other lease obligations8,972 70,936 70,690 202,022 352,620 
Financing obligations1,342 9,910 8,646 35,106 55,004 
Total$53,831 $1,146,663 $1,280,882 $1,048,790 $3,530,166 
Distributions
For information on distributions, see the “Distributions” section below.
Credit Facilities
We are party to a credit agreement, as amended, with an aggregate maximum principal amount up to $1,050,000,000, or the 2022 Credit Facility. In addition, we are party to an agreement, as amended, regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $400,000,000, or the 2019 Trilogy Credit Facility, and an outstanding balance of $367,000,000 as of September 30, 2023, which is scheduled to mature in less than 12 months on September 5, 2024. See Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements for further discussion. We are currently evaluating our options for refinancing the 2019 Trilogy Credit Facility based on current loan-to-value ratios and lending market conditions and believe it is probable that we could extend the maturity date of this facility or obtain a replacement facility that would extend the maturity date beyond 12 months from the filing date of this Quarterly Report on Form 10-Q.
54
Table of Contents
As of September 30, 2017,2023, our aggregate borrowing capacity under the 2022 Credit Facility and the 2019 Trilogy Credit Facility was $1,450,000,000. As of September 30, 2023, our aggregate borrowings outstanding under our credit facilities was $1,277,900,000 and we had $16,000an aggregate of restricted

41
Table of Contents

cash in reserve accounts for$172,100,000 available on such capital expenditures. We cannot provide assurance, however, that we will not exceed these estimated expenditure and distribution levels or be able to obtain additional sources of financing on commercially favorable terms or at all.
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.
If we experience lower occupancy levels, reduced rental rates, reduced revenues as a result of asset sales, or increased capital expenditures and leasing costs compared to historical levels due to competitive market conditions for new and renewed leases, the effect would be a reduction of net cash provided by operating activities. If such a reduction of net cash provided by operating activities is realized, we may have a cash flow deficit in subsequent periods. Our estimate of net cash available is based on various assumptions which are difficult to predict, including the levels of leasing activity and related leasing costs. Any changes in these assumptions could impact our financial results and our ability to fund working capital and unanticipated cash needs.facilities.
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 activities8,849,000
 (2,391,000)
Net cash used in investing activities(222,118,000) (56,637,000)
Net cash provided by financing activities215,429,000
 61,401,000
Cash and cash equivalents — end of period$4,397,000
 $2,575,000
flows (in thousands):
Nine Months Ended September 30,
 20232022
Cash, cash equivalents and restricted cash — beginning of period$111,906 $125,486 
Net cash provided by operating activities72,766 113,441 
Net cash provided by (used in) investing activities20,701 (122,539)
Net cash (used in) provided by financing activities(123,177)7,969 
Effect of foreign currency translation on cash, cash equivalents and restricted cash(40)(59)
Cash, cash equivalents and restricted cash — end of period$82,156 $124,298 
The following summary discussion of our changes in our cash flows is based on our accompanying condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.
Operating Activities
For the nine months ended September 30, 20172023 and 2016,2022, cash flows provided by operating activities were primarily related to the cash flows provided by our property operations, offset by the paymentpayments of general and administrative expenses. See Results of Operations above for a further discussion. We anticipateexpenses and interest payments on our outstanding indebtedness. In general, cash flows from operating activities to increase in 2017 as we acquire additional properties.are affected by the timing of cash receipts and payments. See the “Results of Operations” section above for further discussion.
Investing Activities
For the nine months ended September 30, 2017, cash flows used in investing activities related primarily2023, as compared to our eight property acquisitions in the amount of $215,738,000. For the nine months ended September 30, 2016,2022, the change from net cash flows used in investing activities related primarily to 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 investment of our net offering proceeds in real estate investments. We anticipate cash flows used in investing activities to net cash provided by investing activities was primarily due to a $142,239,000 increase as wein proceeds from dispositions of real estate investments and a $29,743,000 decrease in cash paid to acquire additional propertiesreal estate investments. Such amounts were partially offset by a $23,028,000 increase in development and real estate-related investments.capital expenditures and an $7,563,000 increase in investments in unconsolidated entities. See Note 3, Real Estate Investments, Net and Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion of our acquisitions and dispositions.
Financing Activities
For the nine months ended September 30, 2017, cash flows provided by financing activities related primarily2023, as compared to funds raised from investors in our offering in the amount of $241,647,000, partially offset by the payment of offering costs of $13,673,000 in connection with our offering, net payments on the Line of Credit of $7,900,000 and distributions to our common stockholders of $4,006,000. For the nine months ended September 30, 2016,2022, the change from net cash flows provided by financing activities relatedto net cash used in financing activities was primarily due to funds raisedthe change from investors in our offering in the amount of $52,484,000 andnet borrowings under the Lineour lines 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 Creditcredit and mortgage loanloans payable of $94,296,000 to net payments on our lines of credit and mortgage loans payable of $15,853,000.

Distributions
42
Table of Contents

payable andOur board authorized record date distributions to our common stockholdersholders of $148,000. We anticipate cash flows from financing activities to increase in the future as we raise additional funds from investors and incur debt to purchase properties.
Distributions
On April 13, 2016, our board of directors authorized a daily distribution to our Class T stockholderscommon stock and Class I common stock of record as of each monthly record date from January 2022 through June 2022, equal to $0.133333332 per share of our common stock, which was equal to an annualized distribution rate of $1.60 per share. The distributions were paid in cash or shares of our common stock pursuant to the DRIP offering. Effective beginning with the third quarter of 2022, distributions, if any, were or shall be authorized by our board on a quarterly basis, in such amounts as our board determined or shall determine, and each quarterly record date for the purposes of such distributions was or shall be determined and authorized by our board in the last month of each calendar quarter until such time as our board changes our distribution policy. Our board authorized a quarterly distribution to holders of our Class T common stock and Class I common stock 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 feesSeptember 29, 2022. Such quarterly distribution 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$0.40 per share of our Class T common stock. These distributions were aggregatedstock, which was equal to an annualized distribution rate of $1.60 per share and paid in cash or shares of our common stock pursuant to the DRIP monthly in arrears. We acquiredoffering, only from legally available funds.
55
Table of Contents
On November 14, 2022, our first property on June 28, 2016, and as such, our advisor waived $80,000 in asset management fees equal toboard suspended the amount ofDRIP offering beginning with 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 asdeclared for the quarter ended December 31, 2022. As a result of the waiversuspension of such asset management fees.
On June 28, 2016,the DRIP offering, unless and until our board of directorsreinstates the DRIP offering, stockholders who are current participants in the DRIP will be paid distributions in cash. Our board authorized a dailyquarterly distribution to holders of our Class T stockholderscommon stock and Class I common stock of record as of the close of business on each day of the period commencing on July 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 shareDecember 29, 2022. Such quarterly distribution 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 December 31, 2017. The daily distributions were or will be calculated based on 365 days in the calendar year and are equal to $0.001643836$0.40 per share of our common stock, which was equal to an annualized distribution rate of $1.60 per share and paid in cash, only from legally available funds.
In response to interest rates that have increased drastically since the beginning of 2022, and greater uncertainty surrounding further interest rate movements, our board elected to reduce our quarterly distribution to $0.25 per share in order to preserve our liquidity, better align distributions with available cash flows and position our company for its long-term strategic goals. Therefore, our board authorized a quarterly distribution equal to $0.25 per share to holders of our Class T common stock and Class I common stock which iscommencing with the first quarter of 2023. Such quarterly distributions were equal to an annualized distribution rate of $0.60$1.00 per share. These distributions were or will be aggregatedshare and paid in cash, or shares of our common stock pursuant to our DRIP monthly in arrears, only from legally available funds. See our Current Reports on Form 8-K filed with the SEC on March 17, 2023, June 16, 2023 and September 20, 2023 for more information.
The amount offollowing tables reflect 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 months ended September 30, 20172023 and 2016,2022, along with the amount of distributions reinvested pursuant to the DRIP and the sources of distributions as compared to cash flows from operations were as follows:
or funds from operations attributable to controlling interest, or FFO, a non-GAAP financial measure (dollars in thousands):
Nine Months Ended September 30,Nine Months Ended September 30,
2017 2016 20232022
Distributions paid in cash$4,006,000
   $148,000
  Distributions paid in cash$59,685 $35,391 
Distributions reinvested5,492,000
   222,000
  Distributions reinvested— 26,118 
$9,498,000
   $370,000
  $59,685 $61,509 
Sources of distributions:       Sources of distributions:
Cash flows from operations$8,849,000
 93.2% $—
 —%Cash flows from operations$59,685 100 %$61,509 100 %
Offering proceeds649,000
 6.8
 370,000
 100
Proceeds from borrowingsProceeds from borrowings— — — — 
$9,498,000
 100% $370,000
 100%
$59,685 100 %$61,509 100 %
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.
Nine Months Ended September 30,
 20232022
Distributions paid in cash$59,685 $35,391 
Distributions reinvested— 26,118 
$59,685 $61,509 
Sources of distributions:
FFO attributable to controlling interest$57,075 95.6 %$61,509 100 %
Proceeds from borrowings2,610 4.4 — — 
$59,685 100 %$61,509 100 %
OurAs of September 30, 2023, 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 anysome portion of a distribution to our stockholders may behave been paid from offering proceeds. The payment of distributions from our offering proceeds could reduce the amount of capital we ultimately invest in assets and negatively impact the amount of income available for future distributions.

43
Table of Contents

As of September 30, 2017, we had an amount payable of $8,065,000 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, Related Party Transactions — Acquisition and Development 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 months ended September 30, 2017 and 2016, along with the amount of distributions reinvested pursuant to the DRIP 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,
 2017 2016
Distributions paid in cash$4,006,000
   $148,000
  
Distributions reinvested5,492,000
   222,000
  
 $9,498,000
   $370,000
  
Sources of distributions:       
FFO attributable to controlling interest$8,909,000
 93.8% $—
 —%
Offering proceeds589,000
 6.2
 370,000
 100
 $9,498,000
 100% $370,000
 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.borrowings. For a further discussion of FFO, a non-GAAP financial measure, including a reconciliation of our GAAP net income (loss)loss to FFO, see Funds“Funds from Operations and ModifiedNormalized Funds from Operations,Operations” below.
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 exceedapproximate 50.0% of the combined fair market value of all of our properties, and other real estate-related investments, as determined at the end of each calendar year beginning with our first full year of operations.year. For these purposes, the fair market value of each asset will be equal to the contract purchase price paid for the asset or, if the asset was appraised subsequent to the date of purchase, then the 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, 2017,2023, our aggregate borrowings were 10.6%53.2% 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 and September 30, 2017, our leverage did not exceed 300% of the value of our net assets.

investments.
44
56
Table of Contents

Mortgage Loans Payable, Net
For a discussion of our mortgage loans payable, net, see Note 6,7, Mortgage Loans Payable, Net, to our accompanying condensed consolidated financial statements.
LineLines of Credit and Term Loan
For a discussion of the Lineour lines of credit and term loan, see Note 8, Lines of Credit see Note 7, Line of Credit,and Term Loan, to our accompanying condensed consolidated financial statements.
REIT Requirements
In order to maintain our qualification as a REIT for U.S. federal income tax purposes, we are required to make distributionsdistribute to our stockholders a minimum of at least 90.0% of our annualREIT taxable income, excluding net capital gains.income. Existing Internal Revenue Service, or IRS, guidance includes a safe harbor pursuant to which publicly offered REITs can satisfy the distribution requirement by distributing a combination of cash and stock to stockholders. In general, to qualify under the safe harbor, each stockholder must elect to receive either cash or stock, and the aggregate cash component of the distribution to stockholders must represent at least 20.0% of the total distribution. In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to paymake distributions by means of secured and unsecured debt financing through one or more unaffiliated third parties. We may also paymake distributions fromwith 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, aA significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of September 30, 2017,2023, we had $11,718,000 ($11,639,000, including premium$1,243,358,000 of fixed-rate and deferred financing costs, net) of fixed-ratevariable-rate mortgage loans payable outstanding secured by our properties. As of September 30, 2017,2023, we had $26,000,000$1,277,900,000 outstanding and $74,000,000$172,100,000 remained available under the Lineour lines of Credit.credit. The weighted average effective interest rate on our outstanding debt, factoring in our interest rate swaps, was 5.77% per annum as of September 30, 2023. See Note 6,7, Mortgage Loans Payable, Net, and Note 7, Line8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements.
We are required by the terms of certain loan documents to meet certainvarious financial and non-financial covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ratios and reporting requirements.ratios. As of September 30, 2017,2023, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loan. If any future covenants are violated, we anticipate seeking a waiver or amending the Line of Credit. As of September 30, 2017,debt covenants with the weighted average effective interest rate on our outstanding debt was 4.09% per annum.
Contractual Obligations
The following table provides information with respect to: (i) the maturitylenders when and scheduled principal repayment of our secured mortgage loans payable and the Line of Credit; (ii) interest payments on our mortgage loans payable and the Line of Credit; and (iii) ground and other lease obligations as of September 30, 2017:
 Payments Due by Period
 2017 2018-2019 2020-2021 Thereafter Total
Principal payments — fixed-rate debt$84,000
  $793,000
 $8,349,000
 $2,492,000
 $11,718,000
Interest payments — fixed-rate debt145,000
  1,117,000
 421,000
 455,000
 2,138,000
Principal payments — variable-rate debt—
 26,000,000
 —
 —
 26,000,000
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 obligations24,000
  491,000
 492,000
 11,466,000
 12,473,000
Total$496,000
  $30,022,000
 $9,262,000
 $14,413,000
 $54,193,000
Off-Balance Sheet Arrangements
As of September 30, 2017, we hadif such event should occur. However, there can be no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.
Inflation
During the nine months ended September 30, 2017 and 2016, 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

45
Table of Contents

leasesassurances that management 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. However, dueable 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, Related Party Transactions, to our accompanying condensed consolidated financial statements.effectively achieve such plans.
Funds from Operations and ModifiedNormalized 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 financial 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 financial measure, consistent with the standards established by the White Paper on funds from operations approved by the Board of Governors of NAREIT, as revised in February 2004, or the White Paper. The White Paper defines funds from operations as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of propertycertain real estate assets, gains or losses upon consolidation of a previously held equity interest, 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
57
Table 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.Contents
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 operating performance to investors, industry analysts and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income (loss).
However,We define normalized FFO and modified funds from operations attributable to controlling interest, or MFFO,NFFO, 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.

46
Table of Contents

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 the IPA, an industry trade group, has standardized a measure known as modified funds from operations, which the IPA has recommended as a supplemental performance measure for publicly registered, non-listed REITs, and which we believe to be another appropriate supplemental performance measure to reflect the operating performance of a publicly registered, non-listed REIT having the characteristics described above. MFFO is not equivalent to our net income (loss) as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate with a limited life and targeted exit strategy, as currently intended. We believe that, because MFFO excludes expensed acquisition fees and expenses that affect our operations only in periods in which properties are acquired and that we consider more reflective of investing activities, as well as other non-operating items included in FFO, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring our properties and once our portfolio is in place. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance after our offering stage has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the publicly registered, non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our offering stage and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after our offering stage has been completed and properties have been acquired, as it excludes expensed acquisition fees and expenses that have a negative effect on our operating performance during the periods in which properties are acquired.
We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline defines modified funds from operations as funds from operations further adjusted for the following items included in the determination of GAAP net income (loss): expensed acquisition fees and costs, which we refer to as business acquisition expenses; amounts relating to changes in 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 basisbasis); the non-cash impact of changes to closer to an expected to be received cash basisour equity instruments; non-cash or non-recurring income or expense; the non-cash effect of disclosing the rent and lease payments); accretionincome tax benefits or expenses; capitalized interest; impairment of discounts andgoodwill; amortization of premiumsclosing costs 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 operationsNFFO 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 and the adjustments of such items related to redeemable noncontrolling interest. 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

47
Table of Contents

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. 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.
Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss) in determining cash flows from operations. In addition, we view fair value adjustments of derivatives and gains and losses from dispositions of assets as items which are unrealized and may not ultimately be realized or as items which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance.
Our management uses MFFO and the adjustments used to calculate it in order to evaluate our performance against other publicly registered, non-listed REITs which intend to have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to publicly registered, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence, that the use of such measures may be useful to investors. For example, acquisition fees and expenses are intended to be funded from the proceeds of our 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 andNFFO should not be considered as an alternativeconstrued to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) as an indicationindicator of our operating performance, as an alternative toGAAP cash flows from operations which isas an indicationindicator of our liquidity or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. 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 MFFONFFO measures and the adjustments to GAAP in calculating FFO and NFFO. Presentation of this information is intended to provide useful information to management, investors and industry analysts as they compare the operating performance used by the REIT industry, although it should be noted that not all REITs calculate funds from operations and normalized funds from operations the same way, so comparisons with other REITs may not be meaningful. FFO and NFFO 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 priceNone 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. 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, noror any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO.NFFO. 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.

NFFO.
48
58
Table of Contents

The following is a reconciliation of net income (loss),or loss, which is the most directly comparable GAAP financial measure, to FFO and MFFONFFO for the threeperiods presented below (in thousands except for share and nine months ended September 30, 2017 and 2016:per share amounts):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$754,000
 $(2,092,000) $1,290,000
 $(2,855,000)
Add:       
Depreciation and amortization — consolidated properties3,442,000
 64,000
 7,619,000
 64,000
Less:       
Net income (loss) attributable to redeemable noncontrolling interest—
 —
 —
 —
FFO attributable to controlling interest$4,196,000
 $(2,028,000) $8,909,000
 $(2,791,000)
        
Acquisition related expenses(1)$121,000
 $1,857,000
 $334,000
 $2,227,000
Amortization of above- and below-market leases(2)(30,000) (33,000) (99,000) (33,000)
Change in deferred rent receivables(3)(569,000) —
 (1,124,000) —
Adjustments for redeemable noncontrolling interest(4)—
 —
 —
 —
MFFO attributable to controlling interest$3,718,000

$(204,000) $8,020,000

$(597,000)
Weighted average Class T and Class I common shares outstanding — basic and diluted32,593,321
 3,357,979
 23,827,175
 1,345,578
Net income (loss) per Class T and Class I common share — basic and diluted$0.02
 $(0.62) $0.05
 $(2.12)
FFO attributable to controlling interest per Class T and Class I common share — basic and diluted$0.13
 $(0.60) $0.37
 $(2.07)
MFFO attributable to controlling interest per Class T and Class I common share — basic and diluted$0.11
 $(0.06) $0.34
 $(0.44)
___________
(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, rental revenue or rental expense is recognized on a straight-line basis over the terms of the related lease (including rent holidays). This may result in income or expense recognition that is significantly different than the underlying contract terms. By adjusting for the change in deferred rent receivables, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns results with our analysis of operating performance.
(4)Includes all adjustments to eliminate the redeemable noncontrolling interest’s share of the adjustments described in notes (1) – (3) above to convert our FFO to MFFO.

49
Table of Contents

Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net loss$(6,446)$(7,644)$(45,928)$(24,083)
Depreciation and amortization related to real estate — consolidated properties49,235 40,390 138,530 122,640 
Depreciation and amortization related to real estate — unconsolidated entities96 197 254 1,043 
Impairment of real estate investments — consolidated properties12,510 21,851 12,510 39,191 
Gain on dispositions of real estate investments, net — consolidated properties(31,981)(2,113)(29,777)(2,796)
Net loss (income) attributable to noncontrolling interests457 (5,861)1,884 (9,688)
Gain on re-measurement of previously held equity interests— (19,567)(726)(19,567)
Depreciation, amortization, impairments, net gain on dispositions and gain on re-measurements — noncontrolling interests(6,061)(757)(19,672)(14,910)
FFO attributable to controlling interest$17,810 $26,496 $57,075 $91,830 
Business acquisition expenses$1,024 $231 $2,244 $2,161 
Amortization of above- and below-market leases3,103 700 12,233 1,904 
Amortization of closing costs71 60 204 174 
Change in deferred rent1,478 (1,029)1,238 (3,333)
Non-cash impact of changes to equity instruments1,579 880 4,244 2,659 
Capitalized interest(47)(44)(127)(122)
Loss on debt extinguishments345 628 345 5,038 
Gain in fair value of derivative financial instruments(3,402)— (8,200)(500)
Foreign currency loss (gain)1,704 3,695 (372)8,689 
Adjustments for unconsolidated entities(106)(6)(359)162 
Adjustments for noncontrolling interests(386)(575)(976)(2,078)
NFFO attributable to controlling interest$23,173 $31,036 $67,549 $106,584 
Weighted average Class T and Class I common shares outstanding — basic and diluted66,048,991 65,819,808 66,036,253 65,735,176 
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted$(0.09)$(0.21)$(0.67)$(0.51)
FFO per Class T and Class I common share attributable to controlling interest — basic and diluted$0.27 $0.40 $0.86 $1.40 
NFFO per Class T and Class I common share attributable to controlling interest — basic and diluted$0.35 $0.47 $1.02 $1.62 
Net Operating Income
Net operating income, or NOI is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition related expenses, depreciation and amortization, interest expense, gain or loss on dispositions, income or loss from unconsolidated entities, gain on re-measurement of previously held equity interests, foreign currency gain or loss, other income and interest income. Acquisition fees and expenses are paid in cash by us, and we have not set asideincome 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 operating performance or 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.liquidity. NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or. NOI should be reviewed in its applicability in evaluatingconjunction with other measurements as an indication of our operating performance. Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any business acquisition related expenses.
59
Table of Contents
We believe that NOI is an appropriate supplemental performance measure to reflect the operating performance of our operating assets because NOI excludes certain items that are not associated with the managementoperations of the properties. We believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.
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 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss$(6,446)$(7,644)$(45,928)$(24,083)
General and administrative11,342 9,626 36,169 31,673 
Business acquisition expenses1,024 231 2,244 2,161 
Depreciation and amortization49,273 40,422 138,644 122,704 
Interest expense38,603 27,524 113,806 70,694 
Gain on dispositions of real estate investments, net(31,981)(2,113)(29,777)(2,796)
Impairment of real estate investments12,510 21,851 12,510 39,191 
Loss (income) from unconsolidated entities505 344 924 (1,680)
Gain on re-measurement of previously held equity interests— (19,567)(726)(19,567)
Foreign currency loss (gain)1,704 3,695 (372)8,689 
Other income(1,755)(670)(5,952)(2,399)
Income tax expense284 126 775 499 
Net operating income$75,063 $73,825 $222,317 $225,086 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Net income (loss)$754,000
 $(2,092,000) $1,290,000
 $(2,855,000)
General and administrative1,296,000
 329,000
 2,996,000
 725,000
Acquisition related expenses121,000
 1,857,000
 334,000
 2,227,000
Depreciation and amortization3,442,000
 64,000
 7,619,000
 64,000
Interest expense780,000
 56,000
 1,607,000
 56,000
Interest income—
 —
 (1,000) —
Net operating income$6,393,000

$214,000
 $13,845,000
 $217,000
Subsequent Events
For a discussion of our subsequent events, see Note 18, Subsequent Events, to our accompanying condensed consolidated financial statements.

50
Table of Contents

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 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017.17, 2023.
Interest Rate Risk
We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire and develop 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 changesincreases 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 alsocontinue to enter into, derivative financial instruments such as interest rate swaps and interest rate caps in order to mitigate our interest rate risk on a related financial instrument.instrument, and for which we have not and may not elect hedge accounting treatment. We willdid not enter into derivatives orelect to apply hedge accounting treatment to these derivatives; therefore, changes in the fair value of interest rate transactions for speculative purposes.
derivative financial instruments were recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive loss. As of September 30, 2017,2023, our interest rate swaps are recorded in other assets, net in our accompanying condensed consolidated balance sheet at their fair value of $8,200,000. We do not enter into derivative transactions for speculative purposes. For information on our interest rate swaps, see Note 9, Derivative Financial Instruments, and Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements.
60
Table of Contents
As of September 30, 2023, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.
changes, excluding the effect of our interest rate swaps (dollars in thousands):
Expected Maturity Date
Expected Maturity Date 20232024202520262027ThereafterTotalFair Value
2017 2018 2019 2020 2021 Thereafter Total Fair Value
AssetsAssets
Debt security held-to-maturityDebt security held-to-maturity$— $— $93,433 $— $— $— $93,433 $93,047 
Weighted average interest rate on maturing fixed-rate debt securityWeighted average interest rate on maturing fixed-rate debt security— %— %4.24 %— %— %— %4.24 %— 
LiabilitiesLiabilities
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
Fixed-rate debt — principal payments$4,804 $47,582 $136,033 $155,670 $34,949 $528,962 $908,000 $718,803 
Weighted average interest rate on maturing fixed-rate debt5.14% 5.10% 5.10% 4.79% 5.25% 5.25% 4.92% —
Weighted average interest rate on maturing fixed-rate debt3.24 %3.53 %4.29 %2.99 %3.34 %3.27 %3.39 %— 
Variable-rate debt — principal payments$—
 $—
 $26,000,000
 $—
 $—
 $—
 $26,000,000
 $25,998,000
Variable-rate debt — principal payments$57 $630,277 $30,153 $375,265 $550,178 $27,328 $1,613,258 $1,617,675 
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 September 30, 2023)Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2023)8.18 %8.14 %7.81 %7.15 %7.05 %7.58 %7.52 %— 
Debt Security Investment, Net
As of September 30, 2023, the net carrying value of our debt security investment was $85,922,000. As we expect to hold our debt security investment to maturity and the amounts due under such debt security investment would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our debt security investment, would have a significant impact on our operations. See Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements, for a discussion of the fair value of our investment in a held-to-maturity debt security. The effective interest rate on our debt security investment was 4.24% per annum as of September 30, 2023.
Mortgage Loans Payable, Net and LineLines of Credit and Term Loan
Mortgage loans payable were $11,718,000$1,243,358,000 ($11,639,000, including 1,221,238,000, net of discount/premium and deferred financing costs, net)costs) as of September 30, 2017.2023. As of September 30, 2017,2023, we had two71 fixed-rate mortgage loans payable and 13 variable-rate mortgage loans payable with effective interest rates ranging from 4.77%2.21% to 5.25%8.44% per annum.annum and a weighted average effective interest rate of 4.64%. In addition, as of September 30, 2017,2023, we had $26,000,000$1,277,900,000 ($1,277,076,000, net of deferred financing fees) outstanding under the Lineour lines of Creditcredit and term loan, at a weighted average interest rate of 3.72%7.39% per annum.
As of September 30, 2017,2023, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was 4.09%5.77% per annum. An increase in the variable interest rate on our variable-rate Linemortgage loans payable and lines of Creditcredit and term loan constitutes a market risk. As of September 30, 2017,2023, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on all of our other variable-rate Linemortgage loans payable and lines of Creditcredit and unhedged term loan by $132,000,$5,390,000, or 7.45%3.7% of total annualized interest expense on our mortgage loans payable and the Linelines of Credit.credit and term loan. See Note 6,7, Mortgage Loans Payable, Net and Note 7, Line8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements, for a further discussion.statements.
Other Market Risk
In addition to changes in interest rates and foreign currency exchange rates, the value of our future investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants and residents, which may affect our ability to refinance our debt if necessary.
61
Table of Contents
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 officerChief Executive Officer and chief financial officer,Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only

51
Table of Contents

reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily wereare 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, 20172023 was conducted under the supervision and with the participation of our management, including our chief executive officerChief Executive Officer and chief financial officer,Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officerChief Executive Officer and chief financial officerChief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2017,2023, 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, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

52
62
Table of Contents

PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
None.For a discussion of our legal proceedings, see Note 10, Commitments and Contingencies — Litigation, to our accompanying condensed consolidated financial statements.
Item 1A. Risk Factors.
There were no material changes from the risk factors previously disclosed in our 20162022 Annual Report on Form 10-K, as filed with the SEC on March 1, 2017,17, 2023, except as noted below.
WeThe COVID-19 pandemic and economic impact of the pandemic have not had sufficient cash available from operationsadversely impacted, and continue to pay distributions,adversely impact, our business and therefore, we have paid a portionfinancial results, and the ultimate long-term impact of distributions from the net proceeds of our offering, and in the future, may pay distributions from borrowings in anticipation of future cash flows or from other sources. Any such distributions may reduce the amount of capital we ultimately invest in assets, may negatively impact the value of our stockholders’ investment and may cause subsequent investors to experience dilution.
Distributions payable to our stockholders may include a return of capital, rather than a return on capital, and it is likely that we will use offering proceeds to fund a majority of our initial distributions. We have not established any limit on the amount of proceeds from our offering that may be used to fund distributions, except that, in accordance with our organizational documents and Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business; or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences. The actual amount and timing of distributions will be determined by our board of directors in its sole discretion and typicallypandemic will depend on future developments, which are highly uncertain and cannot be predicted with accuracy.
Our residents, tenants, operating partners and managers, our industry and the amountU.S. economy continue to be adversely affected by the COVID-19 pandemic and related supply chain disruptions, inflation and labor shortages. While the immediate effects of funds available for distribution, which will depend on items such as ourthe COVID-19 pandemic have subsided, the timing and extent of the recovery towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the effectiveness and frequency of booster vaccinations, the duration and implications of ongoing or future restrictions and safety measures, the availability of ongoing government financial condition, current and projected capital expenditure requirements, tax considerations and annual distribution requirements needed to qualify as a REIT. As a result, our distribution rate and payment frequency 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 distributionssupport to our stockholderstenants, operating partners and managers and the overall pace of economic recovery, among others. As an owner and operator of healthcare facilities, we expect to continue to be adversely affected by the long-term effects of the COVID-19 pandemic for some period of time; however, it is not possible to predict the full extent of its future impact on us, our residents, tenants, operating partners and managers, the operations of our properties or the markets in orderwhich they are located, or the overall healthcare industry. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and SNFs, and we continue to work diligently to maintain aggressive protocols at such facilities as well as actively collaborate with our qualification as a REIT, which may reducetenants, operating partners and managers to respond and take action to mitigate 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, our board of directors authorized a daily distribution to our Class T stockholders of record asimpact 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 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 December 31, 2017. The daily distributions were or will be calculated based on 365 days in the calendar year and are equal to $0.001643836 per share of our Class T and Class I common stock, which is equal to an annualized distribution of $0.60 per share. These distributions were or will be aggregated and paid in cash or shares of our common stock pursuant to the DRIP monthly in arrears, only from legally available funds.COVID-19 pandemic.
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

53
Table of Contents

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 months ended September 30, 2017 and 2016, along with the amount of distributions reinvested pursuant to the DRIP and the sources of distributions as compared to cash flows from operations were as follows:
 Nine Months Ended September 30,
 2017 2016
Distributions paid in cash$4,006,000
   $148,000
  
Distributions reinvested5,492,000
   222,000
  
 $9,498,000
   $370,000
  
Sources of distributions:       
Cash flows from operations$8,849,000
 93.2% $—
 —%
Offering proceeds649,000
 6.8
 370,000
 100
 $9,498,000
 100% $370,000
 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 distributions of amounts in excess of our current and accumulated earnings and profits haveCOVID-19 pandemic resulted in a return of capital tosignificant decline in resident occupancy at our stockholders, and all or any portion of a distribution to our stockholders may be paid from offering proceeds. The payment of distributions from our offering proceeds could reduce the amount of capital we ultimately invest in assets and negatively impact the amount of income available for future distributions.
As of September 30, 2017, we had an amount payable of $8,065,000 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.
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 months ended September 30, 2017 and 2016, along with the amount of distributions reinvested pursuant to the DRIP 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 reinvested5,492,000
   222,000
  
 $9,498,000
   $370,000
  
Sources of distributions:       
FFO attributable to controlling interest$8,909,000
 93.8% $—
 —%
Offering proceeds589,000
 6.2
 370,000
 100
 $9,498,000
 100% $370,000
 100%


54
Table of Contents

The payment of distributions from sources other than FFO may reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds. For a further discussion of FFO, a non-GAAP financial measure, including a reconciliation of our GAAP net income (loss) to FFO, see Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds from Operations and Modified Funds from Operations.
A high concentration of our properties in a particular geographic area would magnify the effects of downturns in that geographic area.
To the extent that we have a concentration of properties in any particular geographic area, any adverse situation that disproportionately effects that geographic area would have a magnified adverse effect on our portfolio. As of November 9, 2017, our properties located in Florida, Nevada and Alabama accounted for approximately 20.4%, 13.7% and 12.2%, respectively, of the annualized base rent of our total property portfolio. Accordingly, there is a geographic concentration of risk subject to fluctuations in each state’s economy.
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, rental payments by two of our tenants, Colonial Oaks Master Tenant, LLC and Prime Healthcare Services – Reno, accounted for approximately 12.0% and 11.1%, respectively, of our annualized base rent. 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, termination, default or other failure to meet rental obligations by significant tenants, such as Colonial Oaks Master Tenant, 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 of our tenants and hinder their ability to make rent payments to us.
Sources of revenue for our tenants may include the federal Medicare program, state Medicaid programs, private insurance carriers and health maintenance organizations, among others. Efforts by such payers to reduce healthcare costs will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenants. In addition, the healthcare billing rules and regulations are complex, and the failure of any of our tenants to comply with various laws and regulations could jeopardize their ability to continue participating in Medicare, Medicaid and other government sponsored payment programs. Moreover, the state and federal governmental healthcare 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% increase to the physician fee schedule through December 31, 2014, and a 0% increase for January 1, 2015 through March 31, 2015. The potential 21.0% cut in reimbursement that was to be effective April 1, 2015 was removed by the Medicare Access & CHIP Reauthorization Act of 2015, or MACRA, and replaced with two new methodologies that will focus upon payment based upon quality outcomes. The first model is the Merit-Based Incentive Payment System, or MIPS, which combines the Physician Quality Reporting System, or PQRS, and Meaningful Use program with the Value Based Modifier program to provide for one payment model based upon (i) quality, (ii) resource use, (iii) clinical practice improvement and (iv) advancing care information through the use of certified Electronic Health Record, or EHR, technology. The second model is the Advanced Alternative Payment Models, or APM, which requires the physician to participate in a risk share arrangement for reimbursement related to his or her patients while utilizing a certified health record and reporting on specific quality metrics. There are a number of physicians that will not qualify for the APM payment method. Therefore, this change in reimbursement models may impact our tenants’ payments and create uncertainty in the tenants’ financial condition.
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 insurance

55
Table of Contents

exchange. Therefore, it is possible that our tenants may incur a change 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 the Patient Protection and Affordable Care Act of 2010, or the Patient Protection and Affordable Care Act, and on March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act of 2010, or the Reconciliation Act, which in part modified the Patient Protection and Affordable Care Act. Together, the two acts serve as the primary vehicle for comprehensive healthcare reform in the U.S., or collectively the Healthcare Reform Act. The insurance plans that participated on the health insurance exchanges created by the Healthcare Reform Act were expecting to receive risk corridor payments to address the high risk claims that they paid through the exchange product. However, the federal government currently owes the insurance companies approximately $8.3 billion under the risk corridor payment program that is currently disputed by the federal government. The federal government is currently defending several lawsuits from the insurance plans that participate on the health insurance exchange. If the insurance companies do not receive the payments, the insurance companies may cease to participate on the insurance exchange which limits insurance options for patients. If patients do not have access to insurance coverage, it may adversely impact the tenants’ revenues and the tenants’ ability to pay rent.
In addition, the healthcare legislation passed in 2010 included new payment models with new shared savings programs and demonstration programs that include bundled payment models and payments contingent upon reporting on satisfaction of quality benchmarks. The new payment models will likely change how physicians are paid for services. These changes could have a material adverse effect on the financial condition of some or all of our tenants. The financial impact on our tenants could restrict their ability to make rent payments to us, which would have a material adverse effect on our business, financial condition and results of operations and our ability to pay distributions to our stockholders. 
Furthermore, beginning in 2016, the Centers for Medicare and Medicaid Services has applied a negative payment adjustment to individual eligible professionals, Comprehensive Primary Care practice sites, and group practices participating in the PQRS group practice reporting option (including Accountable Care Organizations) that do not satisfactorily report PQRS in 2014. Program participation during a calendar year will affect payments two years later. Providers can appeal the determination, but if the provider is not successful, the provider’s reimbursement may be adversely impacted, which would adversely impact a tenant’s ability to make rent payments to us.
Moreover, President Trump signed an Executive Order on January 20, 2017 to “ease the burden of Obamacare.” On May 4, 2017, members of the House of Representatives approved legislation to repeal portions of the Healthcare Reform Act, which legislation was submitted to the Senate for approval. On July 25, 2017, the Senate rejected a complete repeal and, further, on July 27, 2017, the Senate rejected a repeal on the Healthcare Reform Act’s individual and employer mandates and a temporary repeal on the medical device tax. Furthermore, on October 12, 2017, President Trump signed an Executive Order the purpose of which was to, among other things, (i) cut healthcare cost-sharing reduction subsidies, (ii) allow more small businesses to join together to purchase insurance coverage, (iii) extend short-term coverage policies, and (iv) expand employers’ ability to provide workers cash to buy coverage elsewhere. The Executive Order required the government agencies to draft regulations for consideration related to Associated Health Plans, short-term limited duration insurance and health reimbursement arrangements. At this time, the proposed legislation has not been drafted. The Trump Administration also ceased to provide the cost-share subsidies to the insurance companies that offered the silver plan benefits on the Health Information Exchange. The termination of the cost-share subsidies would impact the subsidy payments due in 2017 and will likely adversely impact the insurance companies, causing an increase in the premium payments for the individual beneficiaries in 2018. 19 State Attorney 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

56
Table of Contents

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

57
Table of Contents

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, and our future tenants and operators for our skilled nursing, senior housing— leased facilities, SNFs, SHOP and integrated senior health campuses and an increase in COVID-19 related operating expenses. Among other things, due to the shortage of healthcare personnel, the pandemic caused higher labor costs that continue to adversely affect us, including those related to greater reliance on agency staffing and more costly short-term hires. Expenses also increased due to pandemic-related costs (e.g., heightened cleaning and sanitation protocols) and the ongoing inflationary environment. This has, in general, resulted in decreased NOI and margin at these properties relative to pre-pandemic levels. Therefore, our focus continues to be on improving occupancy and managing operating expenses. Resident occupancy for our other properties has been improving, but labor costs continue to remain elevated, and we have had difficulty filling open positions and retaining existing staff. The timing and extent of any further improvement in occupancy or relief from these labor pressures remains unclear. No assurance can be given that recent improvements in our occupancy, margin or NOI will be maintained or will continue at the same pace or at all, or that our occupancy, margin or NOI will ever return to pre-pandemic levels.
As a result of the federal government’s COVID-19 public health emergency declaration in January 2020 and its COVID-19 national emergency declaration in March 2020, certain federal and state pandemic-related relief measures, such as funding, procedural waivers and/or reimbursement increases, became available to us and some of our tenants and operators. These declarations expired on May 11, 2023 and April 10, 2023, respectively, and certain relief measures have been wound-down and others are being phased out. It is unclear what pandemic-related relief measures, including funding, waiver and reimbursement programs, that we and certain of their officers, might face potential criminal

our tenants and operators benefited from will continue to be available or the extent they will be available. The impact on individual skilled nursing facilities’ operators will vary, and therefore it is not possible to predict or quantify the financial impact it will have on resident occupancies.
58
63
Table of Contents

Certain provisions of Maryland law may make it more difficult for us to be acquired and may limit or delay our stockholders’ ability to dispose of their shares of our common stock.
charges and/Certain provisions of the Maryland General Corporation Law, or civil claims, administrative sanctionsMGCL, such as the business combination statute and penaltiesthe control share acquisition statute, are designed to prevent, or have the effect of preventing, someone from acquiring control of us. The MGCL prohibits “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder. An “interested stockholder” is defined generally as:
•any person who beneficially owns, directly or indirectly, 10.0% or more of the voting power of the corporation’s outstanding voting stock; or
•an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was an interested stockholder.
These prohibitions last for amountsfive years after the most recent date on which the interested stockholder became an interested stockholder. Thereafter, any business combination with the interested stockholder or an affiliate of the interested stockholder must be recommended by the corporation’s board and approved by the affirmative vote of at least 80.0% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder. These requirements could have the effect of inhibiting a change in control even if a change in control were in the best interests of our stockholders.
The control share acquisition statute of the MGCL provides that, subject to certain exceptions, holders of “control shares” of a Maryland corporation (defined as voting shares of stock that, if aggregated with all other such shares of stock owned by the acquiror or in respect of which the acquiror can exercise or direct voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within specified ranges of voting power) acquired in a “control share acquisition” (defined as the acquisition of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter. Shares of stock owned by the acquiror, by our officers or by our employees who are also our directors are excluded from shares entitled to vote on the matter.
Pursuant to the MGCL, our bylaws contain a provision exempting from the control share acquisition provisions of the MGCL any and all acquisitions by any person of shares of our stock, which eliminates voting rights for certain levels of shares that could be material toexercise control over us, and our Board has adopted a resolution providing that any business results of operationscombination between us and financial condition. In addition, we and/any other person is exempted from the business combination statute, provided that such business combination is first approved by our Board. However, if the bylaws provision exempting us from the control share acquisition statute or someour Board resolution opting out of the key personnelbusiness combination statute were repealed in whole or in part at any time, these provisions of the MGCL could delay or prevent offers to acquire us and increase the difficulty of consummating any such offers, even if such a transaction would be in the best interests 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.stockholders.
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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered SecuritiesNone.
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.

59
Table of Contents

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 DRIP6,288,000
Total gross offering proceeds359,798,000
Less public offering expenses: 
Selling commissions9,807,000
Dealer manager fees10,380,000
Advisor funding of dealer manager fees(6,963,000)
Other organizational and offering expenses4,343,000
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.

60
Table of Contents

Item 5. Other Information.
None.During the period covered by this report, none of our directors or executive officers has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in item 408 of Regulation S-K under the Securities Exchange Act of 1934 as amended).
64
Table of Contents
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, 20172023 (and are numbered in accordance with Item 601 of Regulation S-K).
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 to our Registration Statement on Form S-11 (File No. 333-205960) filed May 30, 2017 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

61
Table of Contents

101.INS*Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
___________
*104*Filed herewith.Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________
*Filed herewith.
**Furnished herewith. In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

65

62
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.

American Healthcare REIT, Inc.
(Registrant)
November 13, 2023By:
/s/ DANNY PROSKY
DateDanny Prosky
Chief Executive Officer, President and Director
(Principal Executive Officer)
November 13, 2023By:
Griffin-American Healthcare REIT IV, Inc./s/ BRIAN S. PEAY
(Registrant)
Date
November 9, 2017By:
/s/ JEFFREYT. HANSON
DateJeffrey T. Hanson
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
November 9, 2017By:
/s/ BRIAN S. PEAY
DateBrian S. Peay
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)




63
66