UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~September 30, 2021~~March 31, 2022


☐			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

AMERICAN HEALTHCARE REIT, INC.

(Exact name of registrant as specified in its charter)


Maryland						47-2887436
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

18191 Von Karman Avenue, Suite 300 Irvine, California						92612
(Address of principal executive offices)						(Zip Code)

(949) 270-9200

(Registrant’s telephone number, including area code)

~~Griffin-American Healthcare REIT IV, Inc.~~Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~November 12, 2021,~~May 13, 2022, there were ~~77,005,833~~77,678,544 shares of Class T common stock and ~~185,578,806~~186,233,584 shares of Class I common stock of American Healthcare REIT, Inc. outstanding.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

(A Maryland Corporation)

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets as of ~~September~~ ~~30, 2021~~March 31, 2022 and December 31, ~~2020~~2021			3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three ~~and~~ ~~Nine~~Months Ended ~~September~~ ~~30,~~March 31, 2022 and 2021 ~~and 2020~~			5
Condensed Consolidated Statements of Equity for the Three ~~and~~ ~~Nine~~Months Ended ~~September~~ ~~30,~~March 31, 2022 and 2021 ~~and 2020~~			6
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September~~ ~~30,~~March 31, 2022 and 2021 ~~and 2020~~			87
Notes to Condensed Consolidated Financial Statements			109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3637
Item 3. Quantitative and Qualitative Disclosures About Market Risk			5354
Item 4. Controls and Procedures			5456

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			5557
Item 1A. Risk Factors			5557
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5957
Item 3. Defaults Upon Senior Securities			5957
Item 4. Mine Safety Disclosures			5957
Item 5. Other Information			5957
Item 6. Exhibits			6058
Signatures			6259

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021

(Unaudited)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Real estate investments, net	Real estate investments, net	$	907,103,000	$	921,580,000	Real estate investments, net	$	3,475,635,000	$	3,514,686,000
Debt security investment, net						Debt security investment, net	80,239,000		79,315,000
Cash and cash equivalents	Cash and cash equivalents	16,183,000		17,411,000		Cash and cash equivalents	75,115,000		81,597,000
Restricted cash	Restricted cash	986,000		714,000		Restricted cash	44,055,000		43,889,000
Accounts and other receivables, net	Accounts and other receivables, net	2,086,000		2,635,000		Accounts and other receivables, net	130,872,000		122,778,000

Identified intangible assets, net	Identified intangible assets, net	54,752,000		64,101,000		Identified intangible assets, net	241,140,000		248,871,000
Goodwill						Goodwill	211,724,000		209,898,000

Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	14,043,000		14,133,000		Operating lease right-of-use assets, net	154,619,000		158,157,000
Other assets, net	Other assets, net	68,743,000		72,199,000		Other assets, net	142,786,000		121,148,000
Total assets	Total assets	$	1,063,896,000	$	1,092,773,000	Total assets	$	4,556,185,000	$	4,580,339,000

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY					LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Mortgage loans payable, net(1)	Mortgage loans payable, net(1)	$	17,409,000	$	17,827,000	Mortgage loans payable, net(1)	$	1,103,006,000	$	1,095,594,000
Line of credit and term loans(1)		488,900,000		476,900,000
Lines of credit and term loans, net(1)						Lines of credit and term loans, net(1)	1,238,147,000		1,226,634,000
Accounts payable and accrued liabilities(1)	Accounts payable and accrued liabilities(1)	21,897,000		23,057,000		Accounts payable and accrued liabilities(1)	170,757,000		187,254,000
Accounts payable due to affiliates(1)	Accounts payable due to affiliates(1)	324,000		1,046,000		Accounts payable due to affiliates(1)	—		866,000

Identified intangible liabilities, net	Identified intangible liabilities, net	1,115,000		1,295,000		Identified intangible liabilities, net	12,077,000		12,715,000
Financing obligations(1)						Financing obligations(1)	32,921,000		33,653,000
Operating lease liabilities(1)	Operating lease liabilities(1)	10,021,000		9,904,000		Operating lease liabilities(1)	142,615,000		145,485,000
Security deposits, prepaid rent and other liabilities(1)	Security deposits, prepaid rent and other liabilities(1)	6,300,000		10,387,000		Security deposits, prepaid rent and other liabilities(1)	50,574,000		48,567,000
Total liabilities	Total liabilities	545,966,000		540,416,000		Total liabilities	2,750,097,000		2,750,768,000

Commitments and contingencies (Note 10)		0		0
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)	0		0

Redeemable noncontrolling interests (Note 11)		2,592,000		2,618,000
Redeemable noncontrolling interests (Note 13)						Redeemable noncontrolling interests (Note 13)	75,267,000		72,725,000

Equity:	Equity:					Equity:
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding	Preferred stock, $0.01 par value per share; 200,000,000 shares authorized; none issued and outstanding	—		—		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; 76,069,129 and 75,690,838 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		760,000		756,000
Class I common stock, $0.01 par value per share; 100,000,000 shares authorized; 5,662,132 and 5,648,499 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		57,000		57,000
Class T common stock, $0.01 par value per share; 200,000,000 shares authorized; 77,504,480 and 77,176,406 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Class T common stock, $0.01 par value per share; 200,000,000 shares authorized; 77,504,480 and 77,176,406 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	766,000		763,000
Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 186,305,249 and 185,855,625 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 186,305,249 and 185,855,625 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,863,000		1,859,000
Additional paid-in capital	Additional paid-in capital	736,756,000		733,192,000		Additional paid-in capital	2,536,811,000		2,531,940,000
Accumulated deficit	Accumulated deficit	(222,775,000)		(185,047,000)		Accumulated deficit	(980,613,000)		(951,303,000)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(2,160,000)		(1,966,000)
Total stockholders’ equity	Total stockholders’ equity	514,798,000		548,958,000		Total stockholders’ equity	1,556,667,000		1,581,293,000
Noncontrolling interest (Note 12)		540,000		781,000
Noncontrolling interests (Note 14)						Noncontrolling interests (Note 14)	174,154,000		175,553,000
Total equity	Total equity	515,338,000		549,739,000		Total equity	1,730,821,000		1,756,846,000
Total liabilities, redeemable noncontrolling interests and equity	Total liabilities, redeemable noncontrolling interests and equity	$	1,063,896,000	$	1,092,773,000	Total liabilities, redeemable noncontrolling interests and equity	$	4,556,185,000	$	4,580,339,000

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021

(Unaudited)

___________

(1)Such liabilities of American Healthcare REIT, Inc.~~, (formerly known as Griffin-American Healthcare REIT IV, Inc.), as of September 30, 2021 and December 31, 2020~~ represented liabilities of ~~Griffin-American~~American Healthcare REIT IV Holdings, LP or its consolidated ~~subsidiaries. Griffin-American~~subsidiaries as of March 31, 2022 and December 31, 2021. American Healthcare REIT IV Holdings, LP ~~was~~is a variable interest entity, or VIE, and a consolidated subsidiary of American Healthcare REIT, Inc. The creditors of ~~Griffin-American~~American Healthcare REIT IV Holdings, LP or its consolidated subsidiaries do not have recourse against American Healthcare REIT, Inc., except for the ~~2018~~2022 Credit Facility, as defined in Note 7,9, held by ~~Griffin-American~~American Healthcare REIT IV Holdings, LP in the amount of ~~$488,900,000~~$934,400,000 as of March 31, 2022 and ~~$476,900,000~~the 2018 Credit Facility and 2019 Credit Facility, each as defined in Note 9, held by American Healthcare REIT Holdings, LP in the amount of ~~September 30, 2021~~$441,900,000 and $480,000,000, respectively, as of December 31, ~~2020, respectively,~~2021, which iswere guaranteed by American Healthcare REIT, Inc.

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenues and grant income:
Real estate revenue $ 22,120,000 $ 21,519,000 $ 66,054,000 $ 64,824,000
Resident fees and services 15,090,000 18,948,000 46,179,000 51,863,000
Grant income — 864,000 — 864,000
Total revenues and grant income 37,210,000 41,331,000 112,233,000 117,551,000
Expenses:
Rental expenses 6,389,000 5,905,000 18,542,000 17,723,000
Property operating expenses 14,540,000 17,397,000 44,179,000 44,856,000
General and administrative 4,304,000 3,672,000 11,710,000 11,960,000
Business acquisition expenses 3,800,000 57,000 6,552,000 74,000
Depreciation and amortization 10,746,000 12,669,000 33,745,000 37,919,000
Total expenses 39,779,000 39,700,000 114,728,000 112,532,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium) (4,961,000) (4,839,000) (14,556,000) (15,123,000)
Gain (loss) in fair value of derivative financial instruments 1,514,000 1,450,000 4,431,000 (2,302,000)
Impairment of real estate investments — (3,064,000) — (3,064,000)
Gain (loss) on disposition of real estate investments 15,000 — (184,000) —
Income (loss) from unconsolidated entity 70,000 (377,000) (1,027,000) 952,000
Other income 33,000 8,000 49,000 278,000
Total net other expense (3,329,000) (6,822,000) (11,287,000) (19,259,000)
Loss before income taxes (5,898,000) (5,191,000) (13,782,000) (14,240,000)
Income tax benefit — 39,000 — —
Net loss (5,898,000) (5,152,000) (13,782,000) (14,240,000)
Less: net loss attributable to noncontrolling interests 121,000 232,000 489,000 608,000
Net loss attributable to controlling interest $ (5,777,000) $ (4,920,000) $ (13,293,000) $ (13,632,000)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted $ (0.07) $ (0.06) $ (0.16) $ (0.17)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted 81,704,261 80,788,359 81,635,053 80,498,693


	Three Months Ended March 31,
	2022		2021
Revenues and grant income:
Resident fees and services	$	318,974,000	$	253,026,000
Real estate revenue	51,943,000		30,023,000
Grant income	5,214,000		8,229,000
Total revenues and grant income	376,131,000		291,278,000
Expenses:
Property operating expenses	287,160,000		245,142,000
Rental expenses	15,287,000		8,055,000
General and administrative	11,119,000		7,257,000
Business acquisition expenses	173,000		1,248,000
Depreciation and amortization	42,311,000		25,723,000
Total expenses	356,050,000		287,425,000

Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)	(23,325,000)		(20,365,000)
Gain in fair value of derivative financial instruments	500,000		1,821,000
Gain (loss) on dispositions of real estate investments	756,000		(335,000)

Income (loss) from unconsolidated entities	1,386,000		(1,771,000)
Foreign currency (loss) gain	(1,387,000)		415,000
Other income	1,260,000		272,000
Total net other expense	(20,810,000)		(19,963,000)
Loss before income taxes	(729,000)		(16,110,000)
Income tax expense	(168,000)		(163,000)
Net loss	(897,000)		(16,273,000)
Net (income) loss attributable to noncontrolling interests	(2,059,000)		4,426,000
Net loss attributable to controlling interest	$	(2,956,000)	$	(11,847,000)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted	$	(0.01)	$	(0.07)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted	262,516,815		179,627,778

Net loss	$	(897,000)	$	(16,273,000)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(194,000)		69,000
Total other comprehensive (loss) income	(194,000)		69,000
Comprehensive loss	(1,091,000)		(16,204,000)
Comprehensive (income) loss attributable to noncontrolling interests	(2,059,000)		4,426,000
Comprehensive loss attributable to controlling interest	$	(3,150,000)	$	(11,778,000)

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

~~(Unaudited)~~

Three Months Ended September 30, 2021
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 — June 30, 2021 81,731,261 $ 817,000 $ 736,827,000 $ (208,759,000) $ 528,885,000 $ 577,000 $ 529,462,000
Amortization of nonvested common stock compensation — — 21,000 — 21,000 — 21,000
Distributions to noncontrolling interest — — — — — (7,000) (7,000)
Adjustment to value of redeemable noncontrolling interests — — (92,000) — (92,000) — (92,000)
Distributions declared ($0.10 per share) — — — (8,239,000) (8,239,000) — (8,239,000)
Net loss — — — (5,777,000) (5,777,000) (30,000) (5,807,000) (1)
BALANCE — September 30, 2021 81,731,261 $ 817,000 $ 736,756,000 $ (222,775,000) $ 514,798,000 $ 540,000 $ 515,338,000

Three Months Ended September 30, 2020
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 — June 30, 2020 80,599,306 $ 805,000 $ 726,516,000 $ (159,366,000) $ 567,955,000 $ 1,047,000 $ 569,002,000
Offering costs — common stock — — 5,000 — 5,000 — 5,000
Issuance of common stock under the DRIP 445,239 4,000 4,243,000 — 4,247,000 — 4,247,000
Issuance of vested and nonvested restricted common stock 15,000 — 29,000 — 29,000 — 29,000
Amortization of nonvested common stock compensation — — 44,000 — 44,000 — 44,000
Repurchase of common stock (71,551) — (706,000) — (706,000) — (706,000)
Distributions to noncontrolling interest — — — — — (22,000) (22,000)
Adjustment to value of redeemable noncontrolling interests — — (208,000) — (208,000) — (208,000)
Distributions declared ($0.10 per share) — — — (8,150,000) (8,150,000) — (8,150,000)
Net loss — — — (4,920,000) (4,920,000) (105,000) (5,025,000) (1)
BALANCE — September 30, 2020 80,987,994 $ 809,000 $ 729,923,000 $ (172,436,000) $ 558,296,000 $ 920,000 $ 559,216,000

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~For the Three and Nine Months Ended September 30, 2021 and 2020~~

(Unaudited)

Nine Months Ended September 30, 2021
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, 2020 81,339,337 $ 813,000 $ 733,192,000 $ (185,047,000) $ 548,958,000 $ 781,000 $ 549,739,000
Offering costs — common stock — — 5,000 — 5,000 — 5,000
Issuance of common stock under the DRIP 581,491 6,000 5,493,000 — 5,499,000 — 5,499,000
Amortization of nonvested common stock compensation — — 105,000 — 105,000 — 105,000
Repurchase of common stock (189,567) (2,000) (1,872,000) — (1,874,000) — (1,874,000)
Distributions to noncontrolling interest — — — — — (62,000) (62,000)
Adjustment to value of redeemable noncontrolling interests — — (167,000) — (167,000) — (167,000)
Distributions declared ($0.30 per share) — — — (24,435,000) (24,435,000) — (24,435,000)
Net loss — — — (13,293,000) (13,293,000) (179,000) (13,472,000) (1)
BALANCE — September 30, 2021 81,731,261 $ 817,000 $ 736,756,000 $ (222,775,000) $ 514,798,000 $ 540,000 $ 515,338,000



	Stockholders’ Equity
	Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — December 31, 2021	263,032,031	$	2,622,000	$	2,531,940,000	$	(951,303,000)	$	(1,966,000)	$	1,581,293,000	$	175,553,000	$	1,756,846,000

Offering costs — common stock	—	—		(3,000)		—		—		(3,000)		—		(3,000)
Issuance of common stock under the DRIP	1,226,073	12,000		11,292,000		—		—		11,304,000		—		11,304,000

Amortization of nonvested common stock compensation	—	—		811,000		—		—		811,000		—		811,000


Stock based compensation	—	—		—		—		—		—		21,000		21,000
Repurchase of common stock	(448,375)	(5,000)		(4,129,000)		—		—		(4,134,000)		—		(4,134,000)

Distributions to noncontrolling interests	—	—		—		—		—		—		(3,515,000)		(3,515,000)

Adjustment to noncontrolling interest in connection with the Merger	—	—		(1,173,000)		—		—		(1,173,000)		1,173,000		—
Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(21,000)		(21,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(1,927,000)		—		—		(1,927,000)		(929,000)		(2,856,000)
Distributions declared ($0.10 per share)	—	—		—		(26,354,000)		—		(26,354,000)		—		(26,354,000)
Net (loss) income	—	—		—		(2,956,000)		—		(2,956,000)		1,872,000		(1,084,000)		(1)
Other comprehensive loss	—	—		—		—		(194,000)		(194,000)		—		(194,000)
BALANCE — March 31, 2022	263,809,729	$	2,629,000	$	2,536,811,000	$	(980,613,000)	$	(2,160,000)	$	1,556,667,000	$	174,154,000	$	1,730,821,000

Nine Months Ended September 30, 2020
Stockholders’ Equity
Class T and Class I Common Stock
Number
of Shares Amount Additional
Paid-In Capital Accumulated
Deficit Total
Stockholders’
Equity Noncontrolling
Interest Total Equity
BALANCE — December 31, 2019 79,899,874 $ 798,000 $ 719,894,000 $ (130,613,000) $ 590,079,000 $ — $ 590,079,000
Offering costs — common stock — — 67,000 — 67,000 — 67,000
Issuance of common stock under the DRIP 1,643,731 16,000 15,665,000 — 15,681,000 — 15,681,000
Issuance of vested and nonvested restricted common stock 22,500 — 43,000 — 43,000 — 43,000
Amortization of nonvested common stock compensation — — 128,000 — 128,000 — 128,000
Repurchase of common stock (578,111) (5,000) (5,344,000) — (5,349,000) — (5,349,000)
Contribution from noncontrolling interest — — — — — 1,250,000 1,250,000
Distributions to noncontrolling interest — — — — — (54,000) (54,000)
Adjustment to value of redeemable noncontrolling interests — — (530,000) — (530,000) — (530,000)
Distributions declared ($0.35 per share) — — — (28,191,000) (28,191,000) — (28,191,000)
Net loss — — — (13,632,000) (13,632,000) (276,000) (13,908,000) (1)
BALANCE — September 30, 2020 80,987,994 $ 809,000 $ 729,923,000 $ (172,436,000) $ 558,296,000 $ 920,000 $ 559,216,000



	Stockholders’ Equity
	Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — December 31, 2020	179,658,367	$	1,798,000	$	1,730,589,000	$	(864,271,000)	$	(2,008,000)	$	866,108,000	$	168,375,000	$	1,034,483,000

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


Amortization of nonvested common stock compensation	—	—		27,000		—		—		27,000		—		27,000
Stock based compensation	—	—		—		—		—		—		(14,000)		(14,000)




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


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

Net loss	—	—		—		(11,847,000)		—		(11,847,000)		(3,942,000)		(15,789,000)		(1)
Other comprehensive income	—	—		—		—		69,000		69,000		—		69,000
BALANCE — March 31, 2021	179,658,367	$	1,798,000	$	1,730,237,000	$	(876,118,000)	$	(1,939,000)	$	853,978,000	$	164,095,000	$	1,018,073,000

___________

(1)~~Amount excludes $91,000 and $127,000 for~~For the three months ended ~~September 30,~~March 31, 2022 and 2021, amounts exclude $187,000 and ~~2020, respectively, and $310,000 and $332,000 for the nine months ended September 30, 2021 and 2020,~~$(484,000), respectively, of net ~~loss~~income (loss) attributable to redeemable noncontrolling interests. See Note ~~11,~~13, Redeemable Noncontrolling Interests, for a further discussion.

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	Net loss	$	(13,782,000)	$	(14,240,000)	Net loss	$	(897,000)	$	(16,273,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:						Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	33,745,000		37,919,000		Depreciation and amortization	42,311,000		25,723,000
Other amortization	Other amortization	2,099,000		2,084,000		Other amortization	6,166,000		5,955,000
Deferred rent	Deferred rent	(2,707,000)		(3,440,000)		Deferred rent	(1,695,000)		(1,023,000)
Stock based compensation	Stock based compensation	105,000		171,000		Stock based compensation	(32,000)		(14,000)
Loss on disposition of real estate investments		184,000		—
Loss (income) from unconsolidated entity		1,027,000		(952,000)
Stock based compensation — nonvested restricted common stock						Stock based compensation — nonvested restricted common stock	811,000		27,000

(Gain) loss from unconsolidated entities						(Gain) loss from unconsolidated entities	(1,386,000)		1,771,000

(Gain) loss on dispositions of real estate investments						(Gain) loss on dispositions of real estate investments	(756,000)		335,000
Foreign currency loss (gain)						Foreign currency loss (gain)	1,335,000		(416,000)

Loss on extinguishments of debt						Loss on extinguishments of debt	4,591,000		2,288,000

Change in fair value of derivative financial instruments	Change in fair value of derivative financial instruments	(4,431,000)		2,302,000		Change in fair value of derivative financial instruments	(500,000)		(1,821,000)
Impairment of real estate investments		—		3,064,000

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts and other receivables	Accounts and other receivables	533,000		1,347,000		Accounts and other receivables	(8,300,000)		3,203,000
Other assets	Other assets	(2,829,000)		(1,654,000)		Other assets	(1,432,000)		(4,440,000)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	3,805,000		3,436,000		Accounts payable and accrued liabilities	(7,878,000)		(10,891,000)
Accounts payable due to affiliates	Accounts payable due to affiliates	(921,000)		27,000		Accounts payable due to affiliates	(184,000)		(5,160,000)
Operating lease liabilities	Operating lease liabilities	(309,000)		(306,000)		Operating lease liabilities	(4,602,000)		(4,358,000)
Security deposits, prepaid rent and other liabilities	Security deposits, prepaid rent and other liabilities	37,000		185,000		Security deposits, prepaid rent and other liabilities	(5,192,000)		(161,000)
Net cash provided by operating activities		16,556,000		29,943,000
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	22,360,000		(5,255,000)
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Developments and capital expenditures						Developments and capital expenditures	(20,856,000)		(29,196,000)
Acquisitions of real estate investments	Acquisitions of real estate investments	(3,385,000)		(68,032,000)		Acquisitions of real estate investments	(19,878,000)		(78,542,000)
Proceeds from disposition of real estate investments		6,196,000		—
Capital expenditures		(4,384,000)		(6,729,000)
Proceeds from dispositions of real estate investments						Proceeds from dispositions of real estate investments	14,074,000		1,248,000

Investments in unconsolidated entities						Investments in unconsolidated entities	(200,000)		(325,000)

Real estate and other deposits						Real estate and other deposits	(507,000)		(26,000)

Net cash used in investing activities	Net cash used in investing activities	(1,573,000)		(74,761,000)		Net cash used in investing activities	(27,367,000)		(106,841,000)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under mortgage loans payable						Borrowings under mortgage loans payable	22,489,000		104,092,000
Payments on mortgage loans payable	Payments on mortgage loans payable	(475,000)		(8,166,000)		Payments on mortgage loans payable	(4,538,000)		(3,480,000)
Borrowings under the line of credit and term loans		17,000,000		140,800,000
Payments on the line of credit and term loans		(5,000,000)		(58,100,000)

Borrowings under the lines of credit and term loan						Borrowings under the lines of credit and term loan	941,400,000		16,600,000
Payments on the lines of credit and term loan						Payments on the lines of credit and term loan	(928,900,000)		(18,000,000)
Deferred financing costs	Deferred financing costs	—		(43,000)		Deferred financing costs	(4,796,000)		(799,000)
Payment of offering costs		(3,940,000)		(4,876,000)
Debt extinguishment costs						Debt extinguishment costs	(2,790,000)		(125,000)

Payments on financing obligations						Payments on financing obligations	(787,000)		(8,481,000)

Distributions paid to common stockholders	Distributions paid to common stockholders	(21,700,000)		(13,932,000)		Distributions paid to common stockholders	(15,010,000)		—
Repurchase of common stock	Repurchase of common stock	(1,874,000)		(5,349,000)		Repurchase of common stock	(4,134,000)		—
Contribution from noncontrolling interest		—		1,250,000
Distributions to noncontrolling interest		(62,000)		(54,000)
Contributions from redeemable noncontrolling interest		125,000		1,118,000

Distributions to noncontrolling interests in total equity						Distributions to noncontrolling interests in total equity	(3,511,000)		(172,000)
Contribution from redeemable noncontrolling interest						Contribution from redeemable noncontrolling interest	173,000		—
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	(8,000)		(81,000)		Distributions to redeemable noncontrolling interests	(695,000)		—
Security deposits		(5,000)		(199,000)

Security deposits and other						Security deposits and other	(208,000)		(30,000)
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(15,939,000)		52,368,000		Net cash (used in) provided by financing activities	(1,307,000)		89,605,000
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(956,000)		7,550,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period		18,125,000		15,846,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period		$	17,169,000	$	23,396,000

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

(Unaudited)

Nine Months Ended September 30,
2021 2020
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:
Cash and cash equivalents $ 17,411,000 $ 15,290,000
Restricted cash 714,000 556,000
Cash, cash equivalents and restricted cash $ 18,125,000 $ 15,846,000
End of period:
Cash and cash equivalents $ 16,183,000 $ 22,690,000
Restricted cash 986,000 706,000
Cash, cash equivalents and restricted cash $ 17,169,000 $ 23,396,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest $ 13,116,000 $ 13,777,000
Income taxes $ 51,000 $ 88,000
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
Investing Activities:
Accrued capital expenditures $ 3,720,000 $ 2,182,000
Tenant improvement overage $ 303,000 $ 636,000
The following represents the increase (decrease) in certain assets and liabilities in connection with our acquisitions and disposition of real estate investments:
Other assets $ (16,000) $ 196,000
Accounts payable and accrued liabilities $ (50,000) $ 201,000
Prepaid rent $ 10,000 $ 11,000
Financing Activities:
Issuance of common stock under the DRIP $ 5,499,000 $ 15,681,000
Distributions declared but not paid to common stockholders $ — $ 2,664,000
Accrued stockholder servicing fee $ 2,157,000 $ 7,667,000


	Three Months Ended March 31,
	2022		2021
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(6,314,000)	$	(22,491,000)
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2,000)		7,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	125,486,000		152,190,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	119,170,000	$	129,706,000

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:
Cash and cash equivalents	$	81,597,000	$	113,212,000
Restricted cash	43,889,000		38,978,000
Cash, cash equivalents and restricted cash	$	125,486,000	$	152,190,000

End of period:
Cash and cash equivalents	$	75,115,000	$	89,995,000
Restricted cash	44,055,000		39,711,000
Cash, cash equivalents and restricted cash	$	119,170,000	$	129,706,000

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest	$	18,916,000	$	16,079,000
Income taxes	$	191,000	$	169,000
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued developments and capital expenditures	$	14,750,000	$	16,020,000


Tenant improvement overage	$	223,000	$	41,000









Issuance of common stock under the DRIP	$	11,304,000	$	—
Distributions declared but not paid — common stockholders	$	8,794,000	$	—
Distributions declared but not paid — limited partnership units	$	467,000	$	—


Capital expenditures from financing obligations	$	—	$	136,000
The following represents the net (decrease) increase in certain assets and liabilities in connection with our acquisitions and dispositions of real estate investments:
Accounts and other receivables	$	(173,000)	$	4,000
Other assets, net	$	5,023,000	$	(190,000)
Mortgage loan payable, net	$	(12,059,000)	$	—

Accounts payable and accrued liabilities	$	(21,000)	$	—

Financing obligations	$	56,000	$	—
Security deposits	$	7,746,000	$	—

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

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AMERICAN HEALTHCARE REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

The use of the words “we,” “us” or “our” refers to Griffin-American Healthcare REIT III, Inc., or GAHR III, and its subsidiaries, including Griffin-American Healthcare REIT III Holdings, LP, for periods prior to the Merger, as defined below, and American Healthcare REIT, Inc. (formerly known as Griffin-American Healthcare REIT IV, Inc.) , or GAHR IV) and its subsidiaries, including American Healthcare REIT Holdings, LP (formerly known as Griffin-American Healthcare REIT IVIII Holdings, ~~LP,~~LP), for periods following the Merger, except where otherwise noted. Certain historical information of GAHR IV is included for background purposes.

1. Organization and Description of Business

Overview and Background

American Healthcare REIT, Inc. ~~(formerly known as Griffin-American Healthcare REIT IV, Inc.)~~, a Maryland corporation, ~~invests in~~owns a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, skilled nursing facilities, ~~and~~ senior housing, ~~facilities that produce current income.~~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 (formerly known as senior housing — RIDEA), and our integrated senior health campuses. We have originated and acquired secured loans and may also originate and acquire other real estate-related investments on an infrequent and opportunistic basis. We generally seek investments that produce current income; however, we have selectively developed, and may continue to selectively develop, healthcare real estate properties. We qualified to be taxed as a real estate investment trust, or REIT, under the Code for federal income tax purposes, ~~beginning with our taxable year ended December 31, 2016,~~ and we intend to continue to qualify to be taxed as a REIT.

On October 1, 2021, pursuant to ~~our distribution reinvestment plan, as amended,~~an Agreement and Plan of Merger dated June 23, 2021, or the ~~DRIP, for~~Merger Agreement, GAHR III merged with and into Continental Merger Sub, LLC, a ~~total~~Maryland limited liability company and newly formed wholly owned subsidiary of ~~$31,021,000 in distributions reinvested. Following~~GAHR IV, or Merger Sub, with Merger Sub being the ~~termination of our initial offering on February 15, 2019, we continued issuing shares of our common stock~~surviving company, or the REIT Merger. On October 1, 2021, also pursuant to the DRIP through a subsequent offering, or the 2019 DRIP Offering, which commenced on March 1, 2019. On March 18, 2021, our board of directors, or our board, authorized the suspension of the DRIP, effective as of April 1, 2021. As of September 30, 2021, a total of $46,970,000 in distributions were reinvested that resulted in 4,923,550 shares of our common stock being issued pursuant to the 2019 DRIP Offering. We collectively refer to the DRIP portion of our initial offering and the 2019 DRIP Offering as our DRIP Offerings. See Note 12, Equity — Distribution Reinvestment Plan, for a further discussion. On October 4, 2021, our board authorized the reinstatement of the DRIP. See Note 20, Subsequent Events —~~Reinstatement of the DRIP, for a further discussion.~~

~~Until October 1, 2021, we conducted substantially all of our operations through~~Merger Agreement, Griffin-American Healthcare REIT IV Holdings, LP, a Delaware limited partnership and subsidiary and operating partnership of GAHR IV, or GAHR IV Operating Partnership, merged with and into Griffin-American Healthcare REIT III Holdings, LP, a Delaware limited partnership, or our operating partnership. Through September 30, 2021, we were externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, or our advisor, pursuant to an advisory agreement, as amended, or the Advisory Agreement, between us,partnership, with our operating partnership being the surviving entity, or the Partnership Merger. We collectively refer to the REIT Merger and the Partnership Merger as the Merger. Following the Merger on October 1, 2021, our company, or the Combined Company, was renamed American Healthcare REIT, Inc. and our ~~advisor.~~operating partnership, also referred to as the surviving partnership, was renamed American Healthcare REIT Holdings, LP. The ~~Advisory Agreement was~~REIT Merger qualified as a reorganization under, and within the meaning of, Section 368(a) of the Code. As a result of and at the effective time of the Merger, the separate corporate existence of GAHR III and GAHR IV Operating Partnership ceased.

At the effective time of the REIT Merger, each issued and outstanding share of GAHR III’s common stock, $0.01 par value per share, converted into the right to receive 0.9266 shares of GAHR IV’s Class I common stock, $0.01 par value per share. At the effective time of the Partnership Merger, (i) each unit of limited partnership interest in our operating partnership outstanding as of ~~February 16, 2016 and had a one-year initial term, subject~~immediately prior to ~~successive one-year renewals upon~~ the ~~mutual consent~~effective time of the ~~parties. The Advisory Agreement~~Partnership Merger was ~~last renewed~~converted automatically into the right to receive 0.9266 of a Partnership Class I Unit, as defined in the agreement of limited partnership, as amended, of the surviving partnership and (ii) each unit of limited partnership interest in GAHR IV Operating Partnership outstanding as of immediately prior to the effective time of the Partnership Merger was converted automatically into the right to receive one unit of limited partnership interest of the surviving partnership of like class.

AHI Acquisition

Also on October 1, 2021, immediately prior to the consummation of the Merger, GAHR III acquired a newly formed entity, American Healthcare Opps Holdings, LLC, or NewCo, which we refer to as the AHI Acquisition, pursuant to ~~the mutual consent of the parties on February 11, 2021. On~~a contribution and exchange agreement dated June 23, 2021, ~~in anticipation of~~or the ~~Merger, as defined and discussed below, we entered into an amendment to the Advisory~~Contribution Agreement, ~~whereby it was agreed that any acquisition fee due to~~between GAHR III; our advisor is to be waived in connection with the REIT Merger, as defined and discussed below. Except as set forth in such amendment to the Advisory Agreement, the terms of the Advisory Agreement continued in full force and effect. Our advisor used its best efforts, subject to the oversight and review of our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives. Our advisor performed its duties and responsibilities under the Advisory Agreement as our fiduciary. Prior to the Merger, our advisor was 75.0% owned and managed by wholly owned subsidiaries ofoperating partnership; American Healthcare Investors, LLC, or ~~American Healthcare Investors, and 25.0% owned by a wholly owned subsidiary of~~AHI; Griffin Capital Company, LLC, or Griffin ~~Capital, or collectively,~~Capital; Platform Healthcare Investor T-II, LLC; Flaherty Trust; and Jeffrey T. Hanson, our co-sponsors. American Healthcare Investors was 47.1% owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Digital Bridge Group, Inc. (NYSE: DBRG) (formerly known as Colony Capital, Inc.), or Digital Bridge,former Chief Executive Officer and ~~7.8% owned by James F. Flaherty III, a~~current Executive Chairman of the Board of Directors, Danny Prosky, our former ~~partner of Colony Capital, Inc. We were not affiliated with Griffin Capital, Griffin Capital Securities, LLC, or~~Chief Operating Officer and current Chief Executive Officer and President, and Mathieu B. Streiff, our ~~dealer manager, Digital Bridge or Mr. Flaherty; however, we were affiliated with our advisor, American Healthcare Investors~~former Executive Vice President, General Counsel and AHI Group Holdings. Please see the “Merger with Griffin-American Healthcare REIT III, Inc.” and “AHI Acquisition” sections below for a further discussion of our operations effective October 1, 2021.

We operate through 4 reportable business segments: medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities. As of September 30, 2021, we owned 87 properties, comprising 92 buildings, or approximately 4,799,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $1,080,381,000. As of September 30, 2021, we also owned a 6.0% interest in a joint venture which owned a portfolio of integrated senior health campuses and ancillary businesses.

Due to the ongoing coronavirus, or COVID-19, pandemic in the United States and globally, since March 2020, our residents, tenants, operating partners and managers have been materially impacted, and the prolonged economic impact remainscurrent Chief

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AMERICAN HEALTHCARE REIT, INC.

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

uncertain. As the COVID-19 pandemic is still impacting the healthcare system to a degree, it continues to present challenges for us as an owner and operator of healthcare facilities. Since its outset, the impacts of the COVID-19 pandemic have been significant, rapidly and continuously evolving and may continue into the future, especially due to the emergence of the Delta variant which has caused COVID-19 cases and deaths to increase significantly in recent months, making it difficult to ascertain the long-term impact the COVID-19 pandemic will have on real estate markets in which we own and/or operate properties and our portfolio of investments. We have evaluated the impacts of the COVID-19 pandemic on our business thus far and incorporated information concerning the impact of COVID-19 into our assessments of liquidity, impairment and collectability from tenants and residents as of September 30, 2021. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information.

~~Merger with Griffin-American Healthcare REIT III, Inc.~~

~~AHI Acquisition~~

Also on June 23, 2021, the surviving partnership, our co-sponsors, Platform Healthcare Investor T-II, LLC, Flaherty Trust, Jeffrey T. Hanson, our former Chief Executive Officer and Chairman of the Board of Directors, Danny Prosky, our President and former Chief Operating Officer, ~~and Mathieu B. Streiff, our former Executive Vice President, General Counsel, entered into a contribution and exchange agreement,~~ or ~~the Contribution Agreement, pursuant to which, among other things, the surviving partnership agreed to acquire a newly formed entity, or NewCo, which we refer to as~~collectively, the AHI ~~Acquisition, that~~Principals. NewCo owned substantially all of the business and operations of ~~one of our co-sponsors, American Healthcare Investors,~~AHI, as well as all of the equity interests in (i) Griffin-American Healthcare REIT ~~III~~IV Advisor, LLC, or GAHR ~~III~~IV Advisor, a subsidiary of ~~American Healthcare Investors~~AHI that served as the external advisor of GAHR ~~III,~~IV, and (ii) Griffin-American Healthcare REIT III Advisor, LLC, or GAHR III Advisor, also referred to as our ~~advisor. On October 1, 2021,~~former advisor, a subsidiary of AHI that served as the ~~AHI Acquisition closed immediately prior~~external advisor of GAHR III. See “Operating Partnership and Former Advisor” below for a further discussion.

Pursuant to the Contribution Agreement, AHI contributed substantially all of its business and operations to the surviving partnership, including its interest in GAHR III Advisor and GAHR IV Advisor, and Griffin Capital contributed its then-current ownership interest in GAHR III Advisor and GAHR IV Advisor to the surviving partnership. In exchange for these contributions, the surviving partnership issued limited partnership units, or surviving partnership OP units. Subject to working capital and other customary adjustments, the total approximate value of these surviving partnership OP units at the time of consummation of the ~~Merger.~~transactions contemplated by the Contribution Agreement was approximately $131,674,000, with a reference value for purposes thereof of $8.71 per unit, such that the surviving partnership issued 15,117,529 surviving partnership OP units as consideration, or the Closing Date Consideration. Following the consummation of the Merger and the AHI Acquisition, the Combined Company ~~has become~~became self-managed. As of March 31, 2022 and December 31, 2021, such surviving partnership OP units are owned by AHI Group Holdings, LLC, or AHI Group Holdings, which is owned and controlled by the AHI Principals, Platform Healthcare Investor T-II, LLC, Flaherty Trust and a ~~self-managed company.~~wholly owned subsidiary of Griffin Capital, or collectively, the NewCo Sellers.

The AHI Acquisition ~~will be~~was treated as a business combination for accounting purposes, with GAHR III as both the legal and accounting acquiror of NewCo. While ~~we are~~GAHR IV was the legal acquiror of GAHR III in the REIT Merger, GAHR III was determined to be the accounting acquiror in the REIT Merger ~~transaction~~ in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, after considering the relative share ownership and the composition of the governing body of the Combined Company. ~~As a result of~~Thus, the ~~completion~~financial information set forth herein subsequent to the consummation of the Merger and the AHI Acquisition reflects results of the ~~historical information regarding our company’s structure, agreements~~Combined Company, and the financial information ~~presented within~~set forth herein prior to the Merger and the AHI Acquisition reflects GAHR III’s results. For this ~~Note 1~~reason, period to period comparisons may not be meaningful.

Operating Partnership and ~~throughout the rest~~Former Advisor

We conduct substantially all of ~~the Notes to Condensed Consolidated Financial Statements has materially changed; however, such information did apply to us as of~~our operations through our operating partnership. Through September 30, ~~2021. See Note 20, Subsequent Events —~~2021, we were externally advised by our former advisor pursuant to an advisory agreement, as amended, or the Advisory Agreement, between us and our former advisor. Our former advisor used its best efforts, subject to the oversight and review of our board of directors, or our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives.Following the Merger and the AHI Acquisition, we became self-managed and are no longer externally advised. As a result, any fees that would have otherwise been payable to our former advisor are no longer being paid. Also, on October 1, 2021 and in connection with the AHI Acquisition, our operating partnership redeemed all 22,222 shares of our common stock owned by our former advisor and the 20,833 shares of our Class T common stock owned by GAHR IV Advisor in GAHR IV.

Prior to the Merger and the AHI Acquisition, our former advisor was 75.0% owned and managed by wholly owned subsidiaries of AHI, and 25.0% owned by a wholly owned subsidiary of Griffin Capital, or collectively, our former co-sponsors. Prior to the AHI Acquisition, AHI was 47.1% owned by AHI Group Holdings, 45.1% indirectly owned by Digital Bridge Group, Inc. (NYSE: DBRG), or Digital Bridge, and 7.8% owned by James F. Flaherty III. We were not affiliated with Griffin Capital, Digital Bridge or Mr. Flaherty; however, we were affiliated with our former advisor, AHI and AHI Group Holdings. Please see the “Merger of Griffin-American Healthcare REIT III, Inc. and ~~AHI Acquisition,~~Griffin-American Healthcare REIT IV, Inc.” and “AHI Acquisition” sections above for a further discussion ~~about~~of our operations effective October 1, 2021. See Note 13, Redeemable Noncontrolling Interests, and Note 14, Equity — Noncontrolling Interests in Total Equity, for a further discussion of the ownership in our operating partnership.

Public Offering

Prior to the Merger, we raised $1,842,618,000 through a best efforts initial public offering that commenced on February 26, 2014, or the GAHR III initial offering, and issued 184,930,598 shares of our common stock. In addition, during the GAHR III initial offering, we issued 1,948,563 shares of our common stock pursuant to our initial distribution reinvestment plan, or the Initial DRIP, for a total of $18,511,000 in distributions reinvested. Following the deregistration of the GAHR III initial offering on April 22, 2015, we continued issuing shares of our common stock pursuant to subsequent distribution reinvestment plan offerings.

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AMERICAN HEALTHCARE REIT, INC.

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

See Note 14, Equity — Common Stock, and Note 14, Equity — Distribution Reinvestment Plan, for a further discussion of our public offerings.

Our Real Estate Investments Portfolio

We currently operate through 6 reportable business segments: medical office buildings, integrated senior health campuses, skilled nursing facilities, SHOP, senior housing and hospitals. As of March 31, 2022, we owned and/or operated 182 properties, comprising 191 buildings, and 122 integrated senior health campuses including completed development projects, or approximately 19,461,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $4,299,872,000, including the fair value of the properties acquired in the Merger. In addition, as of March 31, 2022, we also owned a real estate-related debt investment purchased for $60,429,000.

COVID-19

Our residents, tenants, operating partners and managers, our industry and the ~~AHI Acquisition.~~U.S. economy continue to be disrupted by the COVID-19 pandemic and related supply chain disruptions and labor shortages. The timing and extent of the economic recovery from the COVID-19 pandemic is dependent upon many factors, including the rate of vaccination, the emergence and severity of COVID-19 variants, the continued effectiveness of the vaccines against those variants, the frequency of booster vaccinations and the duration and implications of continued restrictions and safety measures. As the COVID-19 pandemic is still impacting the healthcare system to a certain extent, it continues to present challenges for us as an owner and operator of healthcare facilities, making it difficult to ascertain the long-term impact the COVID-19 pandemic will have on real estate markets in which we own and/or operate properties and our portfolio of investments.

We have evaluated the impacts of the COVID-19 pandemic on our business thus far and incorporated information concerning such impacts into our assessments of liquidity, impairment and collectability from tenants and residents as of March 31, 2022. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information.

2. Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding our accompanying condensed consolidated financial statements. Such condensed consolidated financial statements and the accompanying notes thereto are the representations of our management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, or GAAP, in all material respects, and have been consistently applied in preparing our accompanying condensed consolidated financial statements.

Basis of Presentation

Our accompanying condensed consolidated financial statements include our accounts and those of our operating partnership, the wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries in which we have control, as well as any VIEs, in which we are the primary beneficiary. The portion of equity in any subsidiary that is not

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~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~wholly-owned~~ 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 performance.

We operate and intend to continue to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries of which we have control, will own substantially all of the interests in properties acquired on our behalf. We areare the sole general partner of our operating partnership and as of ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we owned an approximately 95.0% and 94.9% general partnership interest therein, respectively, and the remaining 5.0% and 5.1%, respectively, was owned by the NewCo Sellers. Prior to the Merger on October 1, 2021, we owned greater than a 99.99% general partnership interest ~~therein. Our~~in our operating partnership and our former advisor was a limited partner ~~and as of both September 30, 2021 and December 31, 2020,~~that owned less than a 0.01% noncontrolling limited partnership interest in our operating partnership. On October 1, 2021, in connection with the AHI Acquisition, we repurchased our former advisor’s 222 limited partnership units in our operating partnership.

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AMERICAN HEALTHCARE REIT, INC.

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

The accounts of our operating partnership are consolidated in our accompanying 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 accompanying condensed consolidated financial statements.~~. All intercompany accounts and transactions are eliminated in consolidation.

Interim Unaudited Financial Data

Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the rules and regulations of the United States Securities and Exchange Commission, or ~~the~~ SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to the SEC’s rules and regulations. Accordingly, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results ~~that may~~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 ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021.~~25, 2022.

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.

Revenue Recognition — Resident Fees and Services Revenue

Disaggregation of Resident Fees and Services Revenue

The following tables disaggregate our resident fees and services revenue by line of business, according to whether such revenue is recognized at a point in time or over time:

Three Months Ended September 30,
2021 2020
Point in Time Over Time Total Point in Time Over Time Total
Senior housing — RIDEA $ 150,000 $ 14,940,000 $ 15,090,000 $ 174,000 $ 18,774,000 $ 18,948,000


	Three Months Ended March 31,
	2022						2021
	Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Over time	$	230,534,000	$	37,216,000	$	267,750,000	$	188,258,000	$	19,459,000	$	207,717,000
Point in time	50,478,000		746,000		51,224,000		44,968,000		341,000		45,309,000
Total resident fees and services	$	281,012,000	$	37,962,000	$	318,974,000	$	233,226,000	$	19,800,000	$	253,026,000

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

Nine Months Ended September 30,
2021 2020
Point in Time Over Time Total Point in Time Over Time Total
Senior housing — RIDEA $ 473,000 $ 45,706,000 $ 46,179,000 $ 746,000 $ 51,117,000 $ 51,863,000

The following tables disaggregate our resident fees and services revenue by payor class:


											Three Months Ended March 31,
		Three Months Ended September 30,				Nine Months Ended September 30,					2022						2021
		2021		2020		2021		2020			Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Private and other payors	Private and other payors	$	13,556,000	$	17,300,000	$	41,326,000	$	46,766,000	Private and other payors	$	131,803,000	$	35,037,000	$	166,840,000	$	106,110,000	$	19,419,000	$	125,529,000
Medicare										Medicare	94,517,000		—		94,517,000		84,283,000		—		84,283,000
Medicaid	Medicaid	1,534,000		1,648,000		4,853,000		5,097,000		Medicaid	54,692,000		2,925,000		57,617,000		42,833,000		381,000		43,214,000
Total resident fees and services	Total resident fees and services	$	15,090,000	$	18,948,000	$	46,179,000	$	51,863,000	Total resident fees and services	$	281,012,000	$	37,962,000	$	318,974,000	$	233,226,000	$	19,800,000	$	253,026,000

___________

(1)Includes fees for basic housing and assisted living care. We record revenue when services are rendered at amounts billable to individual residents. Residency agreements are generally for a term of 30 days, with resident fees billed monthly in advance. For patients under reimbursement arrangements with Medicaid, revenue is recorded based on contractually agreed-upon amounts or rates on a per resident, daily basis or as services are rendered.

Accounts Receivable, Net — Resident Fees and Services Revenue

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


	Private and Other Payors		Medicare		Medicaid		Total
Beginning balance — January 1, 2022	$	42,056,000	$	35,953,000	$	16,922,000	$	94,931,000
Ending balance — March 31, 2022	44,032,000		39,469,000		18,448,000		101,949,000
Increase	$	1,976,000	$	3,516,000	$	1,526,000	$	7,018,000

Medicaid Private
and
Other Payors Total
Beginning balance — January 1, 2021
$ 1,123,000 $ 358,000 $ 1,481,000
Ending balance — September 30, 2021
257,000 900,000 1,157,000
(Decrease)/increase $ (866,000) $ 542,000 $ (324,000)
Deferred Revenue — Resident Fees and Services Revenue

The beginning and ending balances of deferred revenue— resident fees and services, almost all of which relates to private and other payors, are as follows:


	Total
Beginning balance — January 1, 2022	$	14,673,000
Ending balance — March 31, 2022	16,087,000
Increase	$	1,414,000

In addition to the deferred revenue above, as of March 31, 2022, we had approximately $2,069,000 remaining in Medicare advance payments that were received during 2020 through an expanded program of the Centers for Medicare & Medicaid Services. Such amounts were deferred and included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets, and are applied to future Medicare claims. Our recoupment period commenced in the second quarter of 2021, and for the three months ended March 31, 2022, we recognized $10,899,000 of resident fees and services revenue pertaining to such Medicare advance payments.

Tenant and Resident Receivables and Allowances

Resident receivables, which are related to resident fees and services, are carried net of an allowance for credit losses. An allowance is maintained for estimated losses resulting from the inability of residents and payors to meet the contractual obligations under their lease or service agreements. Substantially all of such allowances are recorded as direct reductions of resident fees and services revenue as contractual adjustments provided to third-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 residents’ financial condition, security deposits, cash collection patterns by payor and by state, current economic conditions, future expectations in estimating credit losses and other relevant factors. Tenant receivables, which are related to real estate revenue, and unbilled deferred rent receivables are reduced for uncollectible amounts, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of ~~operations.~~

~~As of September 30, 2021~~operations and December 31, 2020, we had $2,219,000 and $2,086,000, respectively, in allowances, which were determined necessary to reduce receivables by our expected future credit losses. For the nine months ended September 30, 2021 and 2020, we increased allowances by $839,000 and $937,000, respectively, and reduced allowances for collections or adjustments by $350,000 and $126,000, respectively. For the nine months ended September 30, 2021 and 2020, $356,000 and $60,000, respectively, of our receivables were written off against the related allowances.

~~3. Real Estate Investments, Net~~

~~Our real estate investments, net consisted of the following as of September 30, 2021 and~~ ~~December 31, 2020:~~

September 30,
2021 December 31,
2020
Building and improvements $ 892,743,000 $ 884,816,000
Land 109,771,000 109,444,000
Furniture, fixtures and equipment 9,315,000 8,599,000
1,011,829,000 1,002,859,000
Less: accumulated depreciation (104,726,000) (81,279,000)
Total $ 907,103,000 $ 921,580,000
comprehensive loss.

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

As of March 31, 2022 and December 31, 2021, we had $13,872,000 and $12,378,000, respectively, in allowances, which were determined necessary to reduce receivables by our expected future credit losses. For the three months ended March 31, 2022 and 2021, we increased allowances by $5,223,000 and $2,478,000, respectively, and reduced allowances for collections or adjustments by $2,099,000 and $1,505,000, respectively. For the three months ended March 31, 2022 and 2021, $1,630,000 and $1,606,000, respectively, of our receivables were written off against the related allowances.

Accounts Payable and Accrued Liabilities

As of March 31, 2022 and December 31, 2021, accounts payable and accrued liabilities primarily include reimbursement of payroll-related costs to the managers of our SHOP and integrated senior health campuses of $28,456,000 and $31,101,000, respectively, insurance reserves of $35,294,000 and $36,440,000, respectively, accrued property taxes of $21,654,000 and $22,102,000, respectively, accrued developments and capital expenditures to unaffiliated third parties of $14,750,000 and $22,852,000, respectively, and accrued distributions to common stockholders of $8,794,000 and $8,768,000, respectively.

Statement of Cash Flows

For the three months ended March 31, 2021, amounts totaling $101,734,000 have been removed from borrowings under mortgage loans payable and early payoff of mortgage loans payable to properly reflect only actual cash flows resulting from borrowings and payments of mortgage loans compared to amounts previously presented. There was no net change in previously disclosed net cash provided by financing activities.

3. Real Estate Investments, Net

Our real estate investments, net consisted of the following as of March 31, 2022 and December 31, 2021:


	March 31, 2022		December 31, 2021
Building, improvements and construction in process	$	3,495,979,000	$	3,505,786,000
Land and improvements	332,486,000		334,562,000
Furniture, fixtures and equipment	202,965,000		198,224,000
	4,031,430,000		4,038,572,000
Less: accumulated depreciation	(555,795,000)		(523,886,000)
	$	3,475,635,000	$	3,514,686,000

Depreciation expense for the three months ended ~~September 30,~~March 31, 2022 and 2021 was $34,422,000 and ~~2020 was $8,181,000 and $7,966,000, respectively, and for the nine months ended September 30, 2021 and 2020 was $24,025,000 and $23,698,000,~~$24,190,000, respectively. For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, we incurred capital expenditures of ~~$1,959,000 and $4,875,000, respectively,~~$8,248,000 for our integrated senior health campuses, $2,434,000 for our medical office buildings ~~$827,000~~ and ~~$1,885,000, respectively,~~$1,454,000 for our ~~senior housing — RIDEA facilities and $31,000 and $31,000, respectively, for our skilled nursing facilities.~~SHOP. We did not incur any capital expenditures for our skilled nursing facilities, senior housing facilities ~~during~~or hospitals for the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

~~On February 12, 2021, we acquired a previously unowned unit within one~~Acquisition of our buildings at our existing Athens MOB Portfolio, originally purchased in May 2017, for a contract purchase price of $2,950,000. Our advisor was paid, as compensation for services rendered in connection withReal Estate Investment

For the investigation, selection and acquisition of such unit, a base acquisition fee of 2.25% of the contract purchase price paid by us, or $66,000. We acquired such unit using cash on hand and borrowed $2,000,000 under the 2018 Credit Facility, as defined in Note 7, Line of Credit and Term Loans, at the time of acquisition.

~~We accounted for our acquisition completed during the nine~~three months ended ~~September 30, 2021 as an asset acquisition. We incurred and capitalized the base acquisition fee and direct acquisition related expenses~~March 31, 2022, we, through a majority-owned subsidiary of ~~$94,000. The following table summarizes the purchase price~~Trilogy Investors, LLC, or Trilogy, of ~~the assets acquired~~which we owned 72.9% at the time of acquisition, ~~based on their relative fair values:~~

2021
Acquisition

~~Building and improvements~~

~~2,429,000~~

~~Land~~

~~327,000~~

~~In-place lease~~

~~288,000~~

~~Total assets acquired~~

~~3,044,000~~

~~On April 1, 2021, we disposed of two~~acquired an integrated senior ~~housing facilities~~health campus located in ~~Fairfield and Sacramento, California~~Kentucky. See Note 4, Business Combination, for a contract sales price of $6,800,000. Such facilities were part of our existing Northern California Senior Housing Portfolio and were included within our senior housing – RIDEA reporting segment. We recognizedfurther discussion. The following is a total net loss on such disposition of $184,000. Our advisor agreed to waive the $136,000 disposition fee and any expense reimbursements for such disposition that may otherwise have been due to our advisor pursuant to the Advisory Agreement. Our advisor did not receive any additional securities, shares of our stock or any other form of consideration or any repayment as a result of the waiversummary of such ~~disposition fee and expense reimbursements.~~

~~4. Identified Intangible Assets, Net~~

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

September 30,
2021 December 31,
2020
Amortized intangible assets:
In-place leases, net of accumulated amortization of $30,663,000 and $32,134,000 as of September 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.8 years as of both September 30, 2021 and December 31, 2020) $ 52,112,000 $ 61,166,000
Above-market leases, net of accumulated amortization of $1,252,000 and $1,009,000 as of September 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.5 years and 9.1 years as of September 30, 2021 and December 31, 2020, respectively) 2,292,000 2,587,000
Unamortized intangible assets:
Certificates of need 348,000 348,000
Total $ 54,752,000 $ 64,101,000

~~Amortization expense on identified intangible assets~~property acquisition for the three months ended ~~September 30, 2021 and 2020 was $2,358,000 and $4,728,000, respectively, which included $97,000 and $109,000, respectively,~~March 31, 2022:


Location	Date Acquired	Contract Purchase Price		Mortgage Loan Payable(1)
Louisville, KY	01/03/22	$	27,790,000	$	20,800,000

___________

(1)Represents the principal balance of ~~amortization recorded as a decrease to~~the mortgage loan payable placed on the campus at the time of acquisition.

Sale of Controlling Interests in Real Estate Investments

On February 8, 2022, we sold approximately 77.0% ownership interests in several real estate ~~revenue for above-market leases in our accompanying condensed consolidated statements of operations. Amortization expense on identified intangible~~ assets for ~~the nine months ended September 30, 2021~~development within our integrated senior health campuses segment for an aggregate sales price of $19,622,000 and ~~2020 was $9,495,000 and $14,361,000, respectively, which included $296,000 and $329,000, respectively,~~a gain on sale of ~~amortization recorded as a decrease to~~$756,000. We retained approximately 23.0% ownership interests in such real estate ~~revenue for above-market leases in our accompanying condensed consolidated statements of operations.~~development assets, which interests are

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

~~The aggregate weighted average remaining life of the identified intangible~~accounted for as investments in unconsolidated entities within other assets, ~~was 8.8 years~~net in our accompanying condensed consolidated balance sheet as of ~~both September 30, 2021 and December~~March 31, ~~2020. As~~2022. From February 8, 2022 through March 31, 2022, 23.0% interest in the net earnings or losses of September 30, 2021, estimated amortization expense on the identified intangible assets for the three months ending December 31, 2021 and for each of the next four years ending December 31 and thereafter was as follows:

Year Amount
2021 $ 2,396,000
2022 8,647,000
2023 7,390,000
2024 6,195,000
2025 5,017,000
Thereafter 24,759,000
Total $ 54,404,000

~~5. Other Assets, Net~~

~~Other assets,~~such unconsolidated entities were included in net ~~consisted of the following as of September 30, 2021 and December 31, 2020:~~

September 30,
2021 December 31,
2020
Investment in unconsolidated entity $ 45,627,000 $ 46,653,000
Deferred rent receivables 15,101,000 12,395,000
Prepaid expenses, deposits and other assets 3,939,000 9,028,000
Lease commissions, net of accumulated amortization of $687,000 and $426,000 as of September 30, 2021 and December 31, 2020, respectively 3,763,000 2,399,000
Deferred financing costs, net of accumulated amortization of $4,808,000 and $3,397,000 as of September 30, 2021 and December 31, 2020, respectively(1) 313,000 1,724,000
Total $ 68,743,000 $ 72,199,000

~~___________~~

~~(1)~~Deferred financing costs only include costs related to our line of credit and term loans. Amortization expense on deferred financing costs of our line of credit and term loans for the three months ended September 30, 2021 and 2020 was $470,000 and $471,000, respectively, and for the nine months ended September 30, 2021 and 2020 was $1,411,000 and $1,410,000, respectively, which is recorded to interest expenseloss from unconsolidated entities in our accompanying condensed consolidated statements of ~~operations.~~operations and comprehensive loss.

4. Business Combination

For the three months ended March 31, 2022, using cash on hand and debt financing, we completed the acquisition of an integrated senior healthcare campus, which was accounted for as a business combination. The contract purchase price for such property acquisition was $27,790,000 plus immaterial transaction costs. See Note ~~7, Line of Credit and Term Loans,~~3, Real Estate Investments, Net, for a further discussion. Based on quantitative and qualitative considerations, such business combination was not material to us and, therefore, pro forma financial information is not provided. We did not complete any property acquisitions accounted for as business combinations for the three months ended March 31, 2021.

The fair values of the assets acquired and liabilities assumed during 2022 were preliminary estimates. Any necessary adjustments will be finalized within one year from the date of acquisition. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed of our 2022 property acquisition.


	2022 Acquisition
Building and improvements	$	17,235,000
Land	3,060,000
In-place leases	3,420,000
Goodwill	1,827,000
Furniture, fixtures and equipment	1,558,000
Certificates of need	690,000
Cash	588,000
Total assets acquired	28,378,000
Security deposits	(7,747,000)
Accounts payable and accrued liabilities	(109,000)
Financing obligations	(56,000)
Total liabilities assumed	(7,912,000)
Net assets acquired	$	20,466,000

5. Debt Security Investment, Net

On October 15, 2015, we acquired a commercial mortgage-backed debt security, or debt security, from an unaffiliated third party. The debt security bears an interest rate on the stated principal amount thereof equal to 4.24% per annum, the terms of which security provide for monthly interest-only payments. The debt security matures on August 25, 2025 at a stated amount of $93,433,000, resulting in ~~unconsolidated entity~~an anticipated yield-to-maturity of 10.0% per annum. The debt security was issued by an unaffiliated mortgage trust and represents ~~our~~a 10.0% beneficial ownership interest in ~~Trilogy REIT Holdings, LLC, or Trilogy, pursuant~~such mortgage trust. The debt security is subordinate to ~~an amended joint venture agreement with an indirect, wholly-owned subsidiary of NorthStar Healthcare Income, Inc.~~all other interests in the mortgage trust and is not guaranteed by a ~~wholly-owned subsidiary of the surviving partnership. Trilogy owns a portfolio of integrated senior health campuses and ancillary businesses.~~ government-sponsored entity.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020, we owned a 6.0% interest in such joint venture and~~2021, the ~~unamortized basis difference of our investment in Trilogy of $16,448,000 and $16,791,000, respectively, was primarily attributable to the difference between the~~carrying amount ~~for which we purchased our interest in such joint venture, including transaction costs, and the historical carrying value~~ of the debt security investment was $80,239,000 and $79,315,000, respectively, net ~~assets~~ of ~~such joint venture. This difference~~unamortized closing costs of $948,000 and $1,004,000, respectively. Accretion on the debt security for the three months ended March 31, 2022 and 2021 was ~~being amortized over the remaining useful life of the related assets~~$980,000 and ~~included in income or loss from unconsolidated entity~~$881,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of ~~operations.~~operations and comprehensive loss. Amortization expense of closing costs for the three months ended March 31, 2022 and 2021 was $56,000 and $47,000, 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. No credit loss was recorded for the three months ended March 31, 2022 and 2021.

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

6. ~~Mortgage Loans Payable,~~Identified Intangible Assets, Net

AsIdentified intangible assets, net consisted of ~~September 30, 2021~~the following as of March 31, 2022 and December 31, ~~2020, mortgage loans payable were $18,291,000 ($17,409,000, net~~2021:


	March 31, 2022		December 31, 2021
Intangible assets subject to amortization:
In-place leases, net of accumulated amortization of $28,703,000 and $28,120,000 as of March 31, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 8.1 years and 8.2 years as of March 31, 2022 and December 31, 2021, respectively)	$	77,597,000	$	81,538,000
Above-market leases, net of accumulated amortization of $3,193,000 and $2,082,000 as of March 31, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 9.6 years and 9.7 years as of March 31, 2022 and December 31, 2021, respectively)	33,962,000		35,106,000
Customer relationships, net of accumulated amortization of $673,000 and $635,000 as of March 31, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 14.4 years and 14.7 years as of March 31, 2022 and December 31, 2021, respectively)	2,167,000		2,205,000
Internally developed technology and software, net of accumulated amortization of $423,000 and $399,000 as of March 31, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 0.4 years and 0.7 years as of March 31, 2022 and December 31, 2021, respectively)	47,000		70,000
Intangible assets not subject to amortization:
Certificates of need	96,580,000		99,165,000
Trade names	30,787,000		30,787,000
	$	241,140,000	$	248,871,000

Amortization expense on identified intangible assets for the three months ended March 31, 2022 and 2021 was $8,239,000 and $1,196,000, respectively, which included $1,114,000 and $83,000, respectively, of ~~discount/premium~~amortization recorded as a decrease to real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and ~~deferred financing costs)~~comprehensive loss.

The aggregate weighted average remaining life of the identified intangible assets was 8.7 years and ~~$18,766,000 ($17,827,000, net~~8.8 years as of ~~discount/premium~~March 31, 2022 and ~~deferred financing costs),~~December 31, 2021, respectively. As of September 30, 2021, we had 3 fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2025 to February 1, 2051 and a weighted average effective interest rate of 3.91%. As of DecemberMarch 31, 2020, we had 3 fixed-rate mortgage loans with interest rates ranging from 3.67% to 5.25% per annum, maturity dates ranging from April 1, 2025 to February 1, 2051 and a weighted average effective interest rate of 3.93%.

In January 2020, we paid off a mortgage loan payable with a principal balance of $7,738,000, which had an original maturity date of April 1, 2020. We did not incur any prepayment penalties or fees in connection with such payoff. The following table reflects2022, estimated amortization expense on the ~~changes in the carrying amount of mortgage loans payable, net~~identified intangible assets for the nine months ~~ended September 30, 2021 and 2020:~~

Nine Months Ended September 30,
2021 2020
Beginning balance $ 17,827,000 $ 26,070,000
Additions:
Amortization of deferred financing costs 20,000 33,000
Amortization of discount/premium on mortgage loans payable 37,000 37,000
Deductions:
Scheduled principal payments on mortgage loans payable (475,000) (8,166,000)
Ending balance $ 17,409,000 $ 17,974,000

~~As of September 30, 2021, the principal payments due on our mortgage loans payable for the three months~~ ending December 31, ~~2021~~2022 and for each of the next four years ending December 31 and thereafter ~~were~~was as follows:


Year	Year	Amount		Year	Amount
2021		$	132,000
2022	2022	651,000		2022	$	16,985,000
2023	2023	680,000		2023	17,202,000
2024	2024	711,000		2024	13,673,000
2025	2025	5,878,000		2025	11,034,000
2026				2026	9,864,000
Thereafter	Thereafter	10,239,000		Thereafter	45,015,000
Total		$	18,291,000
					$	113,773,000

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7. ~~Line~~Other Assets, Net

Other assets, net consisted of ~~Credit~~the following as of March 31, 2022 and ~~Term Loans~~December 31, 2021:

~~We, through our operating partnership, as borrower, entered into a credit agreement, or~~


	March 31, 2022		December 31, 2021
Deferred rent receivables	$	42,672,000	$	41,061,000
Prepaid expenses, deposits, other assets and deferred tax assets, net	33,818,000		22,484,000
Investments in unconsolidated entities	22,726,000		15,615,000
Inventory	18,087,000		18,929,000
Lease commissions, net of accumulated amortization of $5,100,000 and $4,911,000 as of March 31, 2022 and December 31, 2021, respectively	16,283,000		16,120,000

Deferred financing costs, net of accumulated amortization of $3,668,000 and $8,469,000 as of March 31, 2022 and December 31, 2021, respectively	6,130,000		3,781,000
Lease inducement, net of accumulated amortization of $1,930,000 and $1,842,000 as of March 31, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 8.7 years and 8.9 years as of March 31, 2022 and December 31, 2021, respectively)	3,070,000		3,158,000
	$	142,786,000	$	121,148,000

Deferred financing costs included in other assets were related to the 2018 Credit Agreement, as amended, with Bank of America, N.A., or Bank of America; KeyBank, National Association, or KeyBank; Citizens Bank, National Association; Merrill Lynch, Pierce, Fenner & Smith Incorporated; KeyBanc Capital Markets, Inc., or KeyBanc Capital Markets; and the lenders named therein, to obtain a credit facility with an aggregate maximum principal amount of $530,000,000, or the 2018 Credit Facility. The 20182019 Trilogy Credit Facility ~~consists of a~~and the senior unsecured revolving credit facility ~~in the amount of $235,000,000 and senior unsecured term loan facilities in the aggregate amount of $295,000,000. The maximum principal amount~~portion of the ~~2018~~2022 Credit Facility, ~~may be increased by up~~each as defined at Note 9, Lines of Credit and Term Loans. Amortization expense on lease inducement for both the three months ended March 31, 2022 and 2021 was $88,000, and is recorded as a decrease to ~~$120,000,000, for~~real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss.

8. Mortgage Loans Payable, Net

As of March 31, 2022 and December 31, 2021, mortgage loans payable were $1,121,901,000 ($1,103,006,000, net of discount/premium and deferred financing costs) and $1,116,216,000 ($1,095,594,000, net of discount/premium and deferred financing costs), respectively. As of March 31, 2022, we had 67 fixed-rate mortgage loans payable and 11 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.25% per annum based on interest rates in effect as of March 31, 2022 and a ~~total principal amount~~weighted average effective interest rate of ~~$650,000,000, subject~~3.16%. As of December 31, 2021, we had 66 fixed-rate mortgage loans payable and 12 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to ~~certain conditions. The 2018 Credit Facility matures~~5.25% per annum based on ~~November 19,~~interest rates in effect as of December 31, 2021 and ~~we intend to extend the maturity for 1 12-month period pursuant to~~a weighted average effective interest rate of 3.21%. We are required by the terms of certain loan documents to meet certain reporting requirements and covenants, such as net worth ratios, fixed charge coverage ratios and leverage ratios.

Mortgage loans payable, net consisted of the ~~2018 Credit Agreement,~~following as ~~amended, subject to the satisfaction~~ of ~~certain conditions, including payment of an extension fee.~~March 31, 2022 and December 31, 2021:


	March 31, 2022		December 31, 2021
Total fixed-rate debt	$	862,480,000	$	845,504,000
Total variable-rate debt	259,421,000		270,712,000
Total fixed- and variable-rate debt	1,121,901,000		1,116,216,000
Less: deferred financing costs, net	(8,314,000)		(8,680,000)
Add: premium	356,000		397,000
Less: discount	(10,937,000)		(12,339,000)
Mortgage loans payable, net	$	1,103,006,000	$	1,095,594,000

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The following table reflects the changes in the carrying amount of mortgage loans payable, net for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022		2021
Beginning balance	$	1,095,594,000	$	810,478,000
Additions:
Borrowings under mortgage loans payable	88,659,000		205,826,000
Amortization of deferred financing costs	2,078,000		2,627,000
Deductions:
Scheduled principal payments on mortgage loans payable	(4,538,000)		(3,480,000)
Early payoff of mortgage loans payable	(78,437,000)		(101,734,000)
Deferred financing costs	(333,000)		(1,037,000)
Amortization of discount/premium on mortgage loans payable, net	(17,000)		203,000
Ending balance	$	1,103,006,000	$	912,883,000

For the three months ended March 31, 2022, we incurred an aggregate loss on the extinguishment of mortgage loans payable of $1,430,000, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. Such loss was primarily related to the write-off of unamortized loan discount related to 8 mortgage loans payable that we refinanced on January 1, 2022 that were due to mature in 2044 through 2052.

For the three months ended March 31, 2021, we incurred an aggregate loss on the extinguishment of mortgage loans payable of $2,288,000, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. Such loss was primarily related to the write-off of unamortized deferred financing costs of 10 mortgage loans payable that we refinanced on January 29, 2021 that were due to mature in 2053.

As of March 31, 2022, the principal payments due on our mortgage loans payable for the nine months ending December 31, 2022 and for each of the next four years ending December 31 and thereafter were as follows:


Year	Amount
2022	$	121,952,000
2023	121,130,000
2024	163,974,000
2025	29,571,000
2026	155,402,000
Thereafter	529,872,000
	$	1,121,901,000

Some of our mortgage loan agreements include a standard loan term requiring lender approval for a change of control event, which was triggered upon the closing of the Merger. All of our mortgage lenders and loan servicers approved such event as of March 31, 2022, except for the servicers of 2 of our mortgage loans with an aggregate principal balance of $14,137,000, for which approvals were received in April 2022.

9. Lines of Credit and Term Loans

2018 Credit Facility

In order to accommodate the Merger, we amended GAHR IV and its operating partnership's credit agreement, as amended, or the 2018 Credit Agreement, with Bank of America, N.A., or Bank of America; KeyBank, National Association, or KeyBank; Citizens Bank, National Association, or Citizens Bank; Merrill Lynch, Pierce, Fenner & Smith Incorporated; KeyBanc Capital Markets, Inc., or KeyBanc Capital Markets; and the lenders named therein, for a credit facility with an aggregate maximum principal amount of $530,000,000, or the 2018 Credit Facility. The 2018 Credit Facility, which was further amended on October 1, 2021 to provide for updates regarding the Combined Company subsequent to the Merger, consisted of a senior unsecured revolving credit facility in the amount of $235,000,000 and senior unsecured term loan facilities in the aggregate amount of $295,000,000. At our option, the 2018 Credit Facility ~~bears~~bore interest at per annum rates equal to (a)(i) the

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Eurodollar Rate, as defined in the 2018 Credit Agreement, ~~as amended,~~ plus (ii) a margin ranging from 1.70% to 2.20% based on our Consolidated Leverage Ratio, as defined in the 2018 Credit Agreement, ~~as amended,~~ or (b)(i) the greater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate, as defined in the 2018 Credit Agreement, ~~as amended,~~ plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from 0.70% to 1.20% based on our Consolidated Leverage Ratio.

~~As of both September 30, 2021 and December 31, 2020, our aggregate borrowing capacity under the~~The 2018 Credit Facility was ~~$530,000,000.~~due to mature on November 19, 2021; however, pursuant to the terms of the 2018 Credit Agreement, at such time we extended the maturity date for an additional 12 months and paid an extension fee of $795,000. As of ~~September 30, 2021 and~~ December 31, ~~2020,~~2021, borrowings outstanding totaled ~~$488,900,000 and $476,900,000, respectively,~~$441,900,000 and the weighted average interest rate on such borrowings outstanding was ~~2.05%~~2.27% per annum. On January 19, 2022, we terminated the 2018 Credit Agreement and ~~2.12%, respectively, per annum.~~entered into the 2022 Credit Agreement, as defined and discussed below under “2022 Credit Facility.”

2019 Credit Facility

On October 1, 2021, upon consummation of the Merger, we, through the surviving partnership, were subject to GAHR III’s credit agreement, as amended, or the 2019 Corporate Credit Agreement, with Bank of America; KeyBank; Citizens Bank; and a syndicate of other banks, as lenders, for a credit facility with an aggregate maximum principal amount of $630,000,000, or the 2019 Credit Facility. The 2019 Credit Facility consisted of a senior unsecured revolving credit facility in an aggregate amount of $150,000,000 and a senior unsecured term loan facility in an aggregate amount of $480,000,000. On October 1, 2021, upon consummation of the Merger, the previously available $150,000,000 senior unsecured revolving credit facility was cancelled and a ratable amendment to certain financial covenants was made to account for the Combined Company.

At our option, the 2019 Credit Facility bore interest at per annum rates equal to (a) (i) the Eurodollar Rate, as defined in the 2019 Corporate Credit Agreement, plus (ii) a margin ranging from 1.85% to 2.80% based on our Consolidated Leverage Ratio, as defined in the 2019 Corporate Credit Agreement, or (b) (i) the greater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate, as defined in the 2019 Corporate Credit Agreement, plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from 0.85% to 1.80% based on our Consolidated Leverage Ratio.

As of December 31, 2021, borrowings outstanding under the 2019 Credit Facility totaled $480,000,000 and the weighted average interest rate on such borrowings outstanding was 2.60% per annum. The 2019 Corporate Credit Agreement was due to mature on January 25, 2022. On January 19, 2022, we, through our operating partnership, entered into an agreement that amended and restated the 2019 Corporate Credit Agreement in its entirety, or the 2022 Credit Agreement. See below for a ~~Second Amendment to~~further discussion.

2022 Credit Facility

On January 19, 2022, we, through our operating partnership, as borrower, and certain of our subsidiaries, or the subsidiary guarantors, collectively as guarantors, entered into the 2022 Credit Agreement that amended, restated, superseded and replaced the 2019 Corporate Credit Agreement and the 2018 Credit Agreement for a credit facility with an aggregate maximum principal amount up to $1,050,000,000,or the ~~Amendment. See Note 20, Subsequent Events — Lines of~~2022 Credit ~~and Term Loans — Amendment to 2018~~Facility. The 2022 Credit Facility consists of a senior unsecured revolving credit facility in the initial aggregate amount of $500,000,000 and a senior unsecured term loan facility in the initial aggregate amount of $550,000,000. The proceeds of loans made under the 2022 Credit Facility may be used for ~~a further discussion.~~

~~8. Derivative Financial Instruments~~

~~We use derivative financial instruments to manage interest rate risk associated with our variable-rate term loans~~refinancing existing indebtedness 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. The following table lists the derivative financial instruments held by us as of September 30, 2021 and December 31, 2020, which are included in security deposits, prepaid rentfor general corporate purposes including for working capital, capital expenditures and other ~~liabilities~~corporate purposes not inconsistent with obligations under the 2022 Credit Agreement. We may also obtain up to $25,000,000 in ~~our accompanying condensed consolidated balance sheets:~~

Fair Value
Instrument Notional Amount Index Interest Rate Maturity Date September 30,
2021 December 31,
2020
Swap $ 139,500,000 one month LIBOR 2.49% 11/19/21 $ (455,000) $ (2,915,000)
Swap 58,800,000 one month LIBOR 2.49% 11/19/21 (192,000) (1,229,000)
Swap 45,000,000 one month LIBOR 0.20% 11/19/21 (7,000) (27,000)
Swap 36,700,000 one month LIBOR 2.49% 11/19/21 (120,000) (766,000)
Swap 15,000,000 one month LIBOR 2.53% 11/19/21 (50,000) (318,000)
$ 295,000,000 $ (824,000) $ (5,255,000)

Asthe form of ~~both September 30, 2021 and December 31, 2020, none~~standby letters of our derivative financial instruments were designated as hedges. For the three months ended September 30, 2021 and 2020, we recorded $1,514,000 and $1,450,000, respectively, and for the nine months ended September 30, 2021 and 2020, we recorded $4,431,000 and $(2,302,000), respectively, as a decrease (increase) to interest expense in our accompanying condensed consolidated statements of operations relatedcredit pursuant to the ~~change~~2022 Credit Facility. Unless defined herein, all capitalized terms under this “2022 Credit Facility” subsection are defined in the ~~fair value of our derivative financial instruments.~~2022 Credit Agreement.

~~See Note 14, Fair Value Measurements, for a further discussion~~Under the terms of the ~~fair value~~2022 Credit Agreement, the revolving loans mature on January 19, 2026, and may be extended for 1 12-month period, 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 Facility may be increased by an aggregate incremental amount of $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.

The 2022 Credit Facility bears interest at varying rates based upon, at our ~~derivative financial instruments.~~

~~9. Identified Intangible Liabilities, Net~~

Asoption, (i) the Daily Simple Secured Overnight Financing Rate, or Daily SOFR, plus the Applicable Rate for Daily SOFR Rate Loans or (ii) the Term Secured Overnight Financing Rate, or the Term SOFR, plus the Applicable Rate for Term SOFR Rate Loans. If, under the terms of September 30, 2021 and December 31, 2020, identified intangible liabilities, net consisted of below-market leases of $1,115,000 and $1,295,000, respectively, net of accumulated amortization of $730,000 and $608,000, respectively. Amortization expense on below-market leases for the ~~three months ended September 30, 2021 and 2020 was $59,000 and $78,000, respectively, and for~~2022 Credit Agreement, there is an inability to determine the nine months ended September 30, 2021 and 2020 was $181,000 and $239,000, respectively, which was recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations.Daily SOFR or the Term SOFR then the 2022 Credit Facility will

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bear interest at a rate per annum equal to the Base Rate plus the 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.

The 2022 Credit Agreement requires us to add additional subsidiaries as 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 the 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, and to accelerate the payment on any unpaid principal amount of all outstanding loans and interest thereon.

As of March 31, 2022, our aggregate borrowing capacity under the 2022 Credit Facility was $1,050,000,000, excluding the $25,000,000 in standby letters of credit described above. As of March 31, 2022, borrowings outstanding under the 2022 Credit Facility totaled $934,400,000 ($933,413,000, net of deferred financing costs related to the senior unsecured term loan facility portion of the 2022 Credit Facility) and the weighted average interest rate on such borrowings outstanding was 2.04% per annum.

For the three months ended March 31, 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 loans which formed part of the 2018 Credit Facility and the 2019 Credit Facility. 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

On October 1, 2021, upon consummation of the Merger, through Trilogy RER, LLC, we are subject 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 with an aggregate maximum principal amount of $360,000,000, consisting of: (i) a $325,000,000 secured revolver supported by real estate assets and ancillary business cash flow and (ii) a $35,000,000 accounts receivable revolving credit facility supported by eligible accounts receivable, or the 2019 Trilogy Credit Facility. 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 may be increased by up to $140,000,000, for a total principal amount of $500,000,000, subject to certain conditions. The 2019 Trilogy Credit Facility matures on September 5, 2023 and may be extended for 1 12-month period during the term of the 2019 Trilogy Credit Agreement, subject to the satisfaction of certain conditions, including payment of an extension fee.

At our option, the 2019 Trilogy Credit Facility bears interest at per annum rates equal to (a) the London Inter-bank Offered Rate, or LIBOR, plus 2.75% for LIBOR Rate Loans, as defined in the 2019 Trilogy Credit Agreement, and (b) for Base Rate Loans, as defined in the 2019 Trilogy Credit Agreement, 1.75% plus the greater of: (i) the fluctuating annual rate of interest announced from time to time by KeyBank as its prime rate, (ii) 0.50% above the Federal Funds Effective Rate, as defined in the 2019 Trilogy Credit Agreement, and (iii) 1.00% above the one-month LIBOR.

As of both March 31, 2022 and December 31, 2021, our aggregate borrowing capacity under the 2019 Trilogy Credit Facility was $360,000,000. As of both March 31, 2022 and December 31, 2021, borrowings outstanding under the 2019 Trilogy Credit Facility totaled $304,734,000, and the weighted average interest rate on such borrowings outstanding was 3.20% and 2.85% per annum, respectively.

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

10. Derivative Financial Instruments

We have used derivative financial instruments to manage interest rate risk associated with variable-rate debt. We recorded 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 March 31, 2022. The following table lists the derivative financial instruments held by us as of December 31, 2021, which were included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets:


Instrument	Notional Amount		Index	Interest Rate	Maturity Date	Fair Value December 31, 2021
Swap	$	250,000,000	one month LIBOR	2.10%	01/25/22	$	332,000
Swap	$	130,000,000	one month LIBOR	1.98%	01/25/22	162,000
Swap	$	100,000,000	one month LIBOR	0.20%	01/25/22	6,000
						$	500,000

As of December 31, 2021, none of our derivative financial instruments were 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 ended March 31, 2022 and 2021, we recorded $500,000 and $1,821,000, respectively, as a decrease to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss related to the change in the fair value of our derivative financial instruments.

See Note 16, Fair Value Measurements, for a further discussion of the fair value of our derivative financial instruments.

11. Identified Intangible Liabilities, Net

As of March 31, 2022 and December 31, 2021, identified intangible liabilities, net consisted of below-market leases of $12,077,000 and $12,715,000, respectively, net of accumulated amortization of $1,335,000 and $1,047,000, respectively. Amortization expense on below-market leases for the three months ended March 31, 2022 and 2021 was $609,000 and $47,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss.

The weighted average remaining life of below-market leases was ~~12.0~~9.0 years and ~~11.6~~9.1 years as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. As of ~~September 30, 2021,~~March 31, 2022, estimated amortization expense on below-market leases for the ~~three~~nine months ending December 31, ~~2021~~2022 and for each of the next four years ending December 31 and thereafter was as follows:


Year	Year	Amount		Year	Amount
2021		$	55,000
2022	2022	217,000		2022	$	1,239,000
2023	2023	207,000		2023	1,596,000
2024	2024	161,000		2024	1,475,000
2025	2025	123,000		2025	1,347,000
2026				2026	1,198,000
Thereafter	Thereafter	352,000		Thereafter	5,222,000
Total		$	1,115,000
					$	12,077,000

~~10.~~12. 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

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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.

~~11.~~13. Redeemable Noncontrolling Interests

As a result of ~~both September 30, 2021~~the Merger and the AHI Acquisition, as of March 31, 2022 and December 31, ~~2020,~~2021, we, through our ~~advisor owned all of the 208 limited partnership units outstanding in our operating partnership. As of both September 30, 2021~~direct and ~~December 31, 2020, we owned greater than a 99.99%~~indirect subsidiaries, own an approximately 95.0% and 94.9% general partnership interest, respectively, in our operating partnership and ~~our advisor owned less than a 0.01%~~the remaining approximate 5.0% and 5.1% limited partnership interest, ~~in our operating partnership. Our advisor was entitled to special redemption rights of its limited partnership units. The noncontrolling interest of our advisor~~respectively, in our operating partnership is owned by the NewCo Sellers. Some of the limited partnership units outstanding, which ~~had~~account for approximately 1.0% of our total operating partnership units outstanding, have redemption features outside of our control ~~was~~and are accounted for as a redeemable noncontrolling ~~interest and was~~interests presented outside of permanent equity in our accompanying condensed consolidated balance ~~sheets as~~sheets.

As of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020. In connection with~~2021, we, through Trilogy REIT Holdings LLC, or Trilogy REIT Holdings, in which we indirectly hold a 76.0% ownership interest, owned 95.9% of the ~~AHI Acquisition, on October 1,~~outstanding equity interests of Trilogy. As of both March 31, 2022 and December 31, 2021, ~~GAHR III redeemed all 208 limited partnership units~~certain members of Trilogy’s management and certain members of an advisory committee to Trilogy’s board of directors owned approximately 4.1% of the outstanding equity interests of Trilogy. The noncontrolling interests held by such members have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets.

As a result of the Merger and through our operating partnership, ~~owned by our advisor for approximately $2,000.~~

~~In connection with our acquisitions~~as of ~~Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF~~March 31, 2022 and ~~Pinnacle Warrenton ALF,~~December 31, 2021, we own approximately 98.0% of the joint ventures with an affiliate of Meridian Senior Living, LLC, or ~~Meridian. In connection with our acquisitions of Catalina West Haven~~Meridian, that own Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF and ~~Catalina Madera ALF,~~Pinnacle Warrenton ALF. Also as a result of the Merger, as of March 31, 2022 and December 31, 2021, we also own approximately 90.0% of the joint venture with Avalon Health Care, Inc., or ~~Avalon.~~Avalon, that owns Catalina West Haven ALF and Catalina Madera ALF. The noncontrolling interests held by Meridian and Avalon have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets.

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~~AMERICAN HEALTHCARE REIT, INC.~~

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

our joint ventures with an affiliate of Meridian and with Avalon described above were acquired on October 1, 2021, upon consummation of the Merger.

We record the carrying amount of redeemable noncontrolling interests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and ~~distributions;~~distributions or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the ~~nine months~~years ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Beginning balance	Beginning balance	$	2,618,000	$	1,462,000	Beginning balance	$	72,725,000	$	40,340,000
Additions		125,000		1,118,000
Additional redeemable noncontrolling interest						Additional redeemable noncontrolling interest	173,000		—
Reclassification from equity						Reclassification from equity	21,000		—
Distributions	Distributions	(8,000)		(81,000)		Distributions	(695,000)		—

Adjustment to redemption value	Adjustment to redemption value	167,000		530,000		Adjustment to redemption value	2,856,000		526,000
Net loss attributable to redeemable noncontrolling interests		(310,000)		(332,000)
Net income (loss) attributable to redeemable noncontrolling interests						Net income (loss) attributable to redeemable noncontrolling interests	187,000		(484,000)
Ending balance	Ending balance	$	2,592,000	$	2,697,000	Ending balance	$	75,267,000	$	40,382,000

~~12.~~

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

14. Equity

Preferred Stock

~~As of September 30, 2021, pursuant~~Pursuant to ~~our Third Articles of Amendment and Restatement, as supplemented, or~~ our charter, we ~~were~~are authorized to issue 200,000,000 shares of our preferred stock, par value $0.01 per share. As of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, no shares of ~~our~~ preferred stock were issued and outstanding.

Common Stock

On March 12, 2015, we terminated the primary portion of our initial public offering. We continued to offer shares of our common stock in the GAHR III initial offering pursuant to the Initial DRIP, until the termination of the distribution reinvestment plan portion of the GAHR III initial offering and deregistration of the GAHR III initial offering on April 22, 2015. On March 25, 2015, we filed a Registration Statement on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act, to register a maximum of $250,000,000 of additional shares of our common stock pursuant to the Initial DRIP through a subsequent offering, or the 2015 GAHR III DRIP Offering, and we commenced offering shares following the deregistration of the GAHR III initial offering until the termination and deregistration of the 2015 GAHR III DRIP Offering on March 29, 2019. Effective October 5, 2016, we amended and restated the Initial DRIP, or the GAHR III Amended and Restated DRIP, to amend the price at which shares of our common stock were issued pursuant to the 2015 GAHR III DRIP Offering.

On January 30, 2019, we filed a Registration Statement on Form S-3 under the Securities Act to register a maximum of $200,000,000 of additional shares of our common stock to be issued pursuant to the GAHR III Amended and Restated DRIP, or the 2019 GAHR III DRIP Offering, which we commenced offering on April 1, 2019, following the deregistration of the 2015 GAHR III DRIP Offering. On May 29, 2020, our board authorized the suspension of the 2019 GAHR III DRIP Offering, and consequently, ceased issuing shares pursuant to such offering following the distributions paid in June 2020 to stockholders of record on or prior to the close of business on May 31, 2020. As a result of ~~September 30,~~the Merger, we deregistered the 2019 GAHR III DRIP Offering on October 4, 2021. Further, on October 4, 2021, our board authorized the reinstatement of our distribution reinvestment plan, as amended, or the AHR DRIP. We continue to offer up to $100,000,000 of shares of our common stock to be issued pursuant to the AHR DRIP under an existing Registration Statement on Form S-3 under the Securities Act filed by GAHR IV, or the AHR DRIP Offering. We collectively refer to the Initial DRIP portion of the GAHR III initial offering, the 2015 GAHR III DRIP Offering, the 2019 GAHR III DRIP Offering and the AHR DRIP Offering as our DRIP Offerings. See Note 1, Organization and Description of Business — Public Offering and the “Distribution Reinvestment Plan” section below for a further discussion.

At the effective time of the REIT Merger, on October 1, 2021, each issued and outstanding share of GAHR III’s common stock, $0.01 par value per share, was converted into the right to receive 0.9266 shares of GAHR IV’s Class I common stock, $0.01 par value per share, resulting in the issuance of 179,637,776 shares of Class I common stock to GAHR III’s stockholders. Also, on October 1, 2021, we filed the Fourth Articles of Amendment and Restatement to our charter, or the Charter Amendment, which among other things, amended the common stock we are authorized to issue. The Charter Amendment authorized us to issue 1,000,000,000 shares of our common stock, par value $0.01 per share, whereby ~~900,000,000~~200,000,000 shares ~~were~~are classified as Class T common stock and ~~100,000,000~~800,000,000 shares ~~were~~are classified as Class I common stock. ~~See Note 20, Subsequent Events — Amendments to Articles~~

Distribution Reinvestment Plan

Following the deregistration of ~~Incorporation, for a discussion of an amendment to our charter filed~~the Initial DRIP on October 1, 2021. 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. As of both September 30, 2021 and December 31, 2020, our advisor owned 20,833 shares of our Class T common stock. In connection with the AHI Acquisition, on October 1, 2021, GAHR III redeemed all 20,833 shares of our Class T common stock owned by our advisor for approximately $192,000.

~~On February 15, 2019, we terminated our initial offering and~~April 22, 2015, we continued to offer shares of our common stock pursuant to the 2015 GAHR III DRIP Offering and 2019 GAHR III DRIP ~~Offering. On March 18, 2021, our board authorized the suspension~~Offering which resulted in a total of $308,501,000 in distributions being reinvested that resulted in 33,110,893 shares of common stock being issued.

As a result of the Merger, we deregistered the 2019 GAHR III DRIP ~~effective with distributions declared for the month of April 2021; however,~~Offering on October 4, 2021. Further, on October 4, 2021, our board reinstated distributions and authorized the ~~DRIP. See~~reinstatement of the ~~“Distribution Reinvestment Plan” section below for a further discussion. Through September 30, 2021, we had issued 75,639,681 aggregate shares~~AHR DRIP Offering. We continue to offer up to $100,000,000 of our Class T and Class I common stock in connection with the primary portion of our initial offering and 8,177,085 aggregate shares of our Class T and Class I common stock pursuant to our DRIP Offerings. We also granted an aggregate of 105,000 shares of our restricted Class T common stock to our independent directors and repurchased 2,211,338 shares of our common stock under our share repurchase plan through September 30, 2021. As of September 30, 2021 and December 31, 2020, we had 81,731,261 and 81,339,337 aggregate shares of our Class T and Class I common stock, respectively,to be issued ~~and outstanding.~~

~~Distribution Reinvestment Plan~~

~~We had registered and reserved $150,000,000 in shares of our common stock for sale~~ pursuant to the AHR DRIP under the AHR DRIP Offering. As a result, beginning with the October 2021 distribution, which was paid in ~~our initial offering. The~~November 2021, stockholders who previously enrolled as participants in the AHR DRIP ~~allowed stockholders to purchase additional Class T shares and Class I shares of our common stock through the reinvestment of~~received or will receive distributions during our initial offering. Pursuant to the DRIP, distributions with respect to Class T shares were reinvested in Class T shares and distributions with respect to Class I shares were reinvested in Class I shares. On February 15, 2019, we terminated our initial offering and continued to offer up to $100,000,000 in shares of our common stock pursuant to the 2019 DRIP Offering. In connection with our special committee’s strategic alternative review process and in order to facilitate a strategic transaction, on March 18, 2021, our board authorized the suspensionterms of the AHR DRIP, ~~effective as~~instead of ~~April 1, 2021.~~cash distributions. As of March 31, 2022, a ~~consequence~~total of ~~the suspension~~$65,941,000 in distributions were reinvested that resulted in 6,981,086 shares of ~~the DRIP, beginning with the April 2021 distributions, which were paid in May 2021, there were no further issuances of shares~~common stock being issued pursuant to the AHR DRIP Offering.

Since October 5, 2016, our board had approved and established an estimated per share NAV annually. Commencing with the distribution payment to stockholders ~~who are participants~~paid in the ~~DRIP received or will receive cash distributions instead. On October 4, 2021,~~month following such board approval, shares of our common stock issued pursuant to our distribution reinvestment plan are issued at the current estimated per share NAV until such time as our board ~~authorized the reinstatement of the DRIP. See Note 20, Subsequent Events — Reinstatement of the DRIP, for a further discussion.~~determined an updated estimated per share NAV.

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


Approval Date by our Board	Estimated Per Share NAV (Unaudited)



10/03/19	$	9.40
03/18/21	$	8.55
03/24/22	$	9.29

For the three months ended ~~September 30,~~March 31, 2022, and 2021, ~~there were no distributions reinvested or shares issued due to the suspension of the DRIP. For the three months ended September 30, 2020, $4,247,000 in distributions were reinvested~~$11,304,000 and ~~445,239 shares of our common stock were issued pursuant to our DRIP Offerings. For the nine months ended September 30, 2021 and 2020, $5,499,000 and $15,681,000,~~$0, respectively, in distributions were reinvested and ~~581,491~~1,226,073 and ~~1,643,731~~0 shares of our common stock, respectively, were issued pursuant to our DRIP Offerings. As of September 30, 2021 and December 31, 2020, a total of $77,991,000 and $72,492,000, respectively, in distributions were cumulatively reinvested that resulted in 8,177,085 and 7,595,594 shares of our common stock, respectively, being issued pursuant to our DRIP Offerings.

Share Repurchase Plan

Due to the impact the COVID-19 pandemic has had on the United States and globally, and the ongoing uncertainty of the severity and duration of the COVID-19 pandemic and its effects, beginning in March 2020, our board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects. As a result, on March 31, 2020, our board suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchase requests submitted for repurchase during the second quarter of 2020. Repurchase requests resulting from the death or qualifying disability of stockholders were not suspended, but remained subject to all terms and conditions of our share repurchase plan, including our board’s discretion to determine whether we have sufficient funds available to repurchase any shares. In connection with our special committee’s strategic alternative review process and in order to facilitate a strategic transaction, on March 18, 2021, our board approved the suspension of our share repurchase plan with respect to all repurchase requests received by us after February 28, 2021, including repurchases resulting from the death or qualifying disability of stockholders. On October 4, 2021, our board authorized the partial reinstatement of our share repurchase plan. See Note 20, Subsequent Events — Amendments to and Partial Reinstatement of Share Repurchase Plan, for a further discussion.

Our share repurchase plan allows for repurchases of shares of our common stock by us when certain criteria are met. Share repurchases ~~will be~~are made at the sole discretion of our board. Subject to the availability of the funds for share repurchases and other certain conditions, we ~~will~~generally limit the number of shares of our common stock repurchased during any calendar year to 5.0% of the weighted average number of shares of our common stock outstanding during the prior calendar year; provided however, that shares subject to a repurchase requested upon the death or “qualifying disability,” as defined in our share repurchase plan, of a stockholder are not subject to this cap. Funds for the repurchase of shares of our common stock come ~~exclusively~~ from the cumulative proceeds we receive from the sale of shares of our common stock pursuant to our DRIP Offerings.

~~During our initial offering and with respect~~Pursuant to ~~shares repurchased for the quarter ended March 31, 2019, the repurchase amount for shares repurchased under~~ our share repurchase plan, ~~was~~the repurchase price is equal to the lesser of (i) the amount per share that a stockholder paid for their shares of our common stock, or (ii) the per share offering price in our initial offering. Commencing with shares repurchased for the quarter ended June 30, 2019, the repurchase amount for shares repurchased under our share repurchase plan is the lesser of (i) the amount per share the stockholder paid for their shares of our common stock, or (ii) the most recent estimated value of one share of ~~the applicable class of~~our common stock, as determined by our board. However, if shares of our common stock were repurchased in connection with a stockholder’s death or qualifying disability, the repurchase price was no less than 100% of the price paid to acquire the shares of our common stock from us. On October 4, 2021, we amended and restated our share repurchase plan to changeboard, except that the repurchase price with respect to repurchases resulting from the death or qualifying disability of ~~stockholders. See Note 20, Subsequent Events — Amendments~~stockholders is equal to the most recently published estimated per share NAV. On October 4, 2021, as a result of the Merger, our board authorized the partial reinstatement of our share repurchase plan with respect to requests to repurchase shares resulting from the death or qualifying disability of stockholders, 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 and ~~Partial Reinstatement of Share Repurchase Plan, for a further discussion.~~shall be rejected.

For the three months ended ~~September 30, 2021, we did not repurchase any shares of our common stock due to the suspension of our share repurchase plan. For the three months ended September 30, 2020,~~March 31, 2022, we repurchased ~~71,551~~448,375 shares of our common stock, for an aggregate of ~~$706,000~~$4,134,000, at ~~an average~~a repurchase price of ~~$9.87~~$9.22 per share. For the ~~nine~~three months ended ~~September 30,~~March 31, 2021, ~~and 2020,~~we did not repurchase any shares of common stock. In April 2022, we repurchased ~~189,567 and 578,111~~699,460 shares of our common stock, ~~respectively,~~ for an aggregate of ~~$1,874,000 and $5,349,000, respectively,~~$6,449,000, at ~~an average~~a repurchase price of ~~$9.88 and $9.25~~$9.22 per share, respectively. As of September 30, 2021 and December 31, 2020, we cumulatively repurchased 2,211,338 and 2,021,771 shares of our common stock, respectively, for an aggregate of $20,744,000 and $18,870,000, respectively, at an average repurchase price of $9.38 and $9.33 per share, respectively.share. All shares were repurchased using the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP Offerings.

Noncontrolling Interests in Total Equity

As of both March 31, 2022 and December 31, 2021, Trilogy REIT Holdings owned approximately 95.9% of Trilogy. Prior to October 1, 2021, we were the indirect owner of a 70.0% interest in Trilogy REIT Holdings pursuant to an amended joint venture agreement with an indirect, wholly owned subsidiary of NorthStar Healthcare Income, Inc., or NHI, and a wholly owned subsidiary of GAHR IV Operating Partnership. We serve as the managing member of Trilogy REIT Holdings. As part of the Merger on October 1, 2021, the wholly owned subsidiary of GAHR IV Operating Partnership sold its 6.0% interest in Trilogy REIT Holdings to GAHR III, thereby increasing our indirect ownership in Trilogy REIT Holdings to 76.0%. Through September 30, 2021, 30.0% of the net earnings of Trilogy REIT Holdings were allocated to noncontrolling interests, and since October 1, 2021, 24.0% of the net earnings of Trilogy REIT Holdings were allocated to a noncontrolling interest.

In connection with our acquisition and operation of Trilogy, profit interest units in Trilogy, or the Profit Interests, were issued to Trilogy Management Services, LLC and an independent director of Trilogy, both unaffiliated third parties that manage or direct the day-to-day operations of Trilogy. The Profit Interests consisted of time-based or performance-based commitments. The time-based Profit Interests were measured at their grant date fair value and vest in increments of 20.0% on each anniversary of the respective grant date over a five year period. We amortized the time-based Profit Interests on a straight-line basis over the vesting periods, which are recorded to general and administrative in our accompanying condensed consolidated statements of operations and comprehensive loss. The performance-based Profit Interests were subject to a performance commitment and would have vested upon liquidity events as defined in the Profit Interests agreements. The performance-based Profit Interests were measured at their fair value on the adoption date of Accounting Standards Update 2018-07, ~~Offerings.~~Improvements to Nonemployee Share-Based Payment Accounting, using a modified retrospective approach. The nonvested awards were presented as noncontrolling interests in total equity in our accompanying condensed consolidated balance sheets, and were re-classified to

2024

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

redeemable noncontrolling interests upon vesting as they had redemption features outside of our control similar to the common stock units held by Trilogy’s management. See Note 13, Redeemable Noncontrolling ~~Interest~~Interests, for a further discussion.

In ~~connection with~~December 2021, we redeemed a part of the time-based Profit Interests, and all of the performance-based Profit Interests that were included in noncontrolling interests in total equity. We redeemed such Profit Interests in cash and through the issuance of additional equity interests in Trilogy that are classified as redeemable noncontrolling interests in our ~~acquisition~~consolidated balance sheets. There were no canceled, expired or exercised Profit Interests during the three months ended March 31, 2022 and 2021. For the three months ended March 31, 2022 and 2021, we recognized stock compensation expense related to the Profit Interests of ~~Louisiana Senior Housing Portfolio~~$21,000 and $(14,000), respectively.

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 the subsidiary’s preferred shares of beneficial interests as noncontrolling interests in our accompanying condensed consolidated balance sheets and the dividends of the preferred shares of beneficial interests in net income or loss attributable to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss.

As of both March 31, 2022 and December 31, 2021, we owned an 86.0% interest in a consolidated limited liability company that owns Lakeview IN Medical Plaza, which we acquired on January 3,21, 2016. As such, 14.0% of the net earnings of Lakeview IN Medical Plaza were allocated to noncontrolling interests for the three months ended March 31, 2022 and 2021.

On April 7, 2020, we sold a 9.4% membership interest in a consolidated limited liability company that owns Southlake TX Hospital to an unaffiliated third party for a contract purchase price of $11,000,000 and therefore as of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we owned a 90.6% membership interest in such consolidated limited liability company. For the three months ended March 31, 2022 and 2021, 9.4% of the net earnings of Southlake TX Hospital were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss.

On October 1, 2021, upon consummation of the Merger, through our operating partnership, we acquired an approximate 90.0% interest in ~~our consolidated~~a joint venture that owns ~~such properties.~~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 ~~for~~and comprehensive loss during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022.

As discussed in Note 1, Organization and ~~for~~Description of Business, as a result of the ~~period from January 3, 2020 through September 30, 2020,~~Merger and the ~~carrying amount~~AHI Acquisition, as of ~~such noncontrolling~~March 31, 2022 and December 31, 2021, we, through our direct and indirect subsidiaries, own an approximately 95.0% and 94.9% general partnership interest, respectively, in our operating partnership and the remaining approximately 5.0% and 5.1% limited partnership interest, respectively, in our operating partnership is owned by the NewCo Sellers. As of March 31, 2022 and December 31, 2021, approximately 4.0% and 4.1% of our total operating partnership units outstanding, respectively, is presented in total equity in our accompanying condensed consolidated balance ~~sheets~~sheet. See Note 13, Redeemable Noncontrolling Interests, for a further discussion.

2015 Incentive Plan

Upon consummation of the Merger, we adopted the 2015 Incentive Plan, as amended and restated, or our incentive plan, pursuant to which our board (with respect to options and restricted shares of ~~September 30,~~common stock granted to independent directors), or our compensation committee (with respect to any other award), may make grants of options, restricted shares of common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, officers, employees and consultants. The maximum number of shares of our common stock that may be issued pursuant to our incentive plan is 4,000,000 shares.

Through March 31, 2022, we granted an aggregate of 1,082,455 shares of our restricted common stock under our incentive plan. Such amount includes: (i) 160,314 shares of our restricted Class T common stock, at a weighted average grant date fair value of $9.61 per share, to our independent directors; (ii) 477,901 time-based shares of our restricted Class T common stock, at a grant date fair value of $9.22 per share, to certain executive officers and key employees; and (iii) 319,149 shares of our restricted Class T common stock, at a grant date fair value of $9.22 per share, to certain of our key employees. Also, through March 31, 2022, we granted 159,301 performance-based restricted units under our incentive plan to certain executive officers representing the right to receive shares of our Class T common stock upon vesting. Prior to the Merger, GAHR III granted an aggregate of 135,000 shares of its restricted common stock, which is equal to 125,091 shares of our restricted Class I common stock, using the conversion ratio of 0.9266 shares of GAHR IV Class I common stock for each share of GAHR III restricted common stock, as determined in the Merger.

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

On April 1, 2022, we granted 76,800 time-based restricted units under our incentive plan to certain employees representing the right to receive shares of our Class T common stock upon vesting. Such time-based restricted units vest in three equal annual installments on April 1, 2023, April 1, 2024 and April 1, 2025.

For the three months ended March 31, 2022 and 2021, we recognized stock compensation expense related to the restricted stock grants to our independent directors, executive officers and ~~December 31, 2020.~~key employees of $811,000 and $27,000, respectively. Such stock compensation expense is included in general and administrative in our accompanying consolidated statements of operations and comprehensive loss.

~~13.~~15. Related Party Transactions

Fees and Expenses Paid to Affiliates

AsPrior to the closing of the AHI Acquisition on October 1, 2021, our former advisor used its best efforts, subject to the oversight and review of our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives. Our former advisor performed its duties and responsibilities under the Advisory Agreement as our fiduciary. Until September 30, 2021, all of our executive officers were officers of our former advisor and officers, limited partners and/or members of one of our ~~non-independent directors were also executive officers~~former co-sponsors and ~~employees and/or holders of a direct or indirect interest in our advisor, one~~other affiliates of our co-sponsors or other affiliated entities. We were affiliated with our advisor, American Healthcare Investors and AHI Group Holdings; however, we were not affiliated with Griffin Capital, our dealer manager, Digital Bridge or Mr. Flaherty. We entered intoformer advisor.

On December 20, 2021, the Advisory Agreement was assigned to NewCo and as ~~amended, which entitled~~a result, any fees that would have otherwise been payable to our former advisor are now eliminated in consolidation. Following the consummation of the Merger, we became self-managed and as a result, we no longer incur to our former advisor and its affiliates ~~to specified compensation for certain services, as well as reimbursement of certain expenses. Our board, including a majority of our independent directors, reviewed~~any fees or expense reimbursements arising from the material transactions between our affiliates and us during the nine months ended September 30, 2021. We believe that we have executed all of the transactions set forth below on terms that are fair and reasonable to us and on terms no less favorable to us than those available from unaffiliated third parties.Advisory Agreement.

Fees and expenses incurred to our former advisor or its affiliates ~~incurred~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 ~~and 2020~~ were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Asset management fees(1) $ 2,454,000 $ 2,446,000 $ 7,359,000 $ 7,292,000
Property management fees(2) 383,000 376,000 1,124,000 1,100,000
Lease fees(3) 211,000 117,000 632,000 254,000
Construction management fees(4) 36,000 12,000 98,000 76,000
Operating expenses(5) 24,000 37,000 103,000 122,000
Development fees(6) 19,000 22,000 74,000 24,000
Base acquisition fees and reimbursement of acquisition expenses(7) 2,000 35,000 184,000 1,476,000
Total $ 3,129,000 $ 3,045,000 $ 9,574,000 $ 10,344,000


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

~~__________~~___________

(1)Asset management fees were included in general and administrative in our accompanying condensed consolidated statements of ~~operations.~~operations and comprehensive loss.

(2)Acquisition fees in connection with the acquisition of properties accounted for as asset acquisitions or the acquisition of real estate-related investments were capitalized as part of the associated investments in our accompanying condensed consolidated balance sheets.

(3)Property management fees were included in rental expenses or general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive loss, depending on the property type from which the fee was incurred.

~~(3)~~(4)Development fees were capitalized as part of the associated investments in our accompanying condensed consolidated balance sheets.

(5)Lease fees were capitalized as costs of entering into new leases and included in other assets, net in our accompanying condensed consolidated balance ~~sheets, and amortized over the term of the lease.~~sheets.

~~(4)~~(6)We reimbursed our former advisor or its affiliates for operating expenses incurred in rendering services to us, subject to certain limitations. For the 12 months ended March 31, 2021, our operating expenses did not exceed such limitations.

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

Operating expenses were generally included in general and administrative in our accompanying condensed consolidated statements of operations and comprehensive loss.

(7)Construction management fees were capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets.

~~(5)~~Accounts Payable Due to Affiliates

We ~~reimbursed~~did not have any amounts outstanding to our ~~advisor or its~~ affiliates ~~for operating expenses incurred~~as of March 31, 2022. The following amounts were outstanding to our affiliates as of December 31, 2021:


Fee	December 31, 2021
Lease commissions	$	245,000
Development fees	229,000
Construction management fees	152,000
Operating expenses	100,000
Asset and property management fees	83,000
Acquisition fees	57,000



	$	866,000

16. Fair Value Measurements

Assets and Liabilities Reported at Fair Value

The table below presents our assets and liabilities measured at fair value on a recurring basis as of March 31, 2022, aggregated by the level in ~~rendering services to us, subject to certain limitations. For~~ the 12fair value hierarchy within which those measurements fall:


	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total



Liabilities:
Warrants	$	—	$	—	$	733,000	$	733,000
Total liabilities at fair value	$	—	$	—	$	733,000	$	733,000

The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall.


	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total




Liabilities:
Derivative financial instruments	$	—	$	500,000	$	—	$	500,000

Warrants	—		—		786,000		786,000
Total liabilities at fair value	$	—	$	500,000	$	786,000	$	1,286,000

There were no transfers into and out of fair value measurement levels during the three months ended ~~September 30,~~March 31, 2022 and 2021.

Warrants

As of March 31, 2022 and December 31, 2021, we have recorded $733,000 and ~~2020,~~$786,000, respectively, related to warrants in Trilogy common units held by certain members of Trilogy’s management, which is included in security deposits, prepaid rent and other liabilities in our ~~operating expenses did not exceed such~~accompanying condensed consolidated balance sheets. Once exercised, these warrants have redemption features similar to the common units held by members of Trilogy’s management.See Note 13, Redeemable

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~~limitations. Operating expenses were generally included in general and administrative in our accompanying condensed consolidated statements~~Noncontrolling Interests, for a further discussion. As of ~~operations.~~

~~(6)Development fees were expensed as incurred and included in business acquisition expenses in our accompanying condensed consolidated statements of operations.~~

~~(7)~~Such amounts were capitalized as part of the associated asset and included in real estate investments, net in our accompanying condensed consolidated balance sheets or were expensed as incurred and included in business acquisition expenses in our accompanying condensed consolidated statements of operations, as applicable.

~~Accounts Payable Due to Affiliates~~

~~The following amounts were outstanding to our affiliates as of September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~

Fee September 30,
2021 December 31,
2020
Lease commissions $ 210,000 $ 8,000
Operating expenses 34,000 10,000
Property management fees 32,000 117,000
Construction management fees 31,000 33,000
Development fees 16,000 64,000
Asset management fees 1,000 814,000
Total $ 324,000 $ 1,046,000

~~14. Fair Value Measurements~~

~~Assets and Liabilities Reported at Fair Value~~

~~The table below presents our assets and liabilities measured at fair~~2021, the carrying value onis a ~~recurring basis as of September 30, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall:~~

Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Liabilities:
Derivative financial instruments $ — $ 824,000 $ — $ 824,000

The table below presents our assets and liabilities measured at fair value on a recurring basis as of December 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall:

~~There were no transfers into or out~~reasonable estimate of fair ~~value measurement levels during the nine months ended September 30, 2021 and 2020.~~value.

Derivative Financial Instruments

We ~~use~~used interest rate swaps and interest rate caps to manage interest rate risk associated with variable-rate debt. The valuation of these instruments iswas determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. This analysis ~~reflects~~reflected the contractual terms of the derivatives, including the period to maturity, and ~~uses~~used observable market-based inputs, including interest rate curves, as well as option volatility. The fair values of interest rate swaps ~~are~~were determined by netting the discounted future fixed cash payments and the discounted expected variable

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

cash receipts. The variable cash receipts ~~are~~were based on an expectation of future interest rates derived from observable market interest rate curves.

We ~~incorporate~~incorporated credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we ~~have~~ considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although we ~~have~~ determined that the majority of the inputs used to value our derivative financial instruments ~~fall~~fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these instruments ~~utilize~~utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparty. However, as of ~~September 30,~~December 31, 2021, we ~~have~~ assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and ~~have~~ determined that the credit valuation adjustments ~~are~~were not significant to the overall valuation of our derivatives. As a result, we ~~have~~ determined that our derivative valuations in their entirety ~~are~~were classified in Level 2 of the fair value hierarchy. As of March 31, 2022, we did not have any derivative financial instruments.

Financial Instruments Disclosed at Fair Value

Our accompanying condensed consolidated balance sheets include the following financial instruments: debt security investment, cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and accrued liabilities, accounts payable due to affiliates, mortgage loans payable and borrowings under ~~the 2018 Credit Facility.~~our lines of credit and term loans.

We consider the carrying values of cash and cash equivalents, restricted cash, accounts and other receivables and accounts payable and accrued liabilities to approximate the fair ~~values~~value for these financial instruments based upon an evaluation of the underlying characteristics, market data and because of the short period of time between origination of the instruments and their expected realization. The fair value of accounts payable due to affiliates is not determinable due to the related party nature of the accounts payable. ~~These~~The fair values of the other financial ~~assets and liabilities are measured at fair value on a recurring basis based on quoted prices in active markets for identical assets and liabilities, and therefore~~instruments are classified asin Level ~~1 in~~2 of the fair value hierarchy.

The fair value of our debt 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 ~~the 2018 Credit Facility~~our lines of credit and term loans are estimated using discounted cash flow analyses using borrowing rates available to us for debt instruments with similar terms and maturities. We have determined that the valuations of our debt security investment, mortgage loans payable and ~~the 2018 Credit Facility~~lines of credit and term loans are classified in Level 2 within the fair value ~~hierarchy as reliance is placed on inputs other than quoted prices that are observable, such as interest rates and yield curves.~~hierarchy. The carrying amounts and estimated fair values of such financial instruments as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value			Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value
Financial Assets:										Financial Assets:

Debt security investment										Debt security investment	$	80,239,000	$	93,859,000	$	79,315,000	$	93,920,000
Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Mortgage loans payable	Mortgage loans payable	$	17,409,000	$	20,891,000	$	17,827,000	$	22,052,000	Mortgage loans payable	$	1,103,006,000	$	1,039,112,000	$	1,095,594,000	$	1,075,729,000
Line of credit and term loans		$	488,587,000	$	488,995,000	$	475,176,000	$	477,651,000
Lines of credit and term loans										Lines of credit and term loans	$	1,232,017,000	$	1,243,616,000	$	1,222,853,000	$	1,226,636,000

___________

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

~~15.~~

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

17. Income Taxes

As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our consolidated subsidiaries as taxable REIT subsidiaries, or TRS, pursuant to the Code. TRS may participate in services that would otherwise be considered impermissible for REITs and are subject to federal and state income tax at regular corporate tax rates.

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~~AMERICAN HEALTHCARE REIT, INC.~~

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

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

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Federal deferred $ (914,000) $ (863,000) $ (2,717,000) $ (2,134,000)
State deferred (232,000) (327,000) (791,000) (721,000)
Federal current — (37,000) — —
State current — (2,000) — —
Valuation allowance 1,146,000 1,190,000 3,508,000 2,855,000
Total income tax benefit $ — $ (39,000) $ — $ —

Current Income Tax

Federal and state income taxes are generally a function of the level of income recognized by our TRS. Foreign income taxes are generally a function of our income 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 real estate assets and equity investments) and generation of tax net operating ~~losses~~loss that may be realized in future periods depending on sufficient taxable income.

We recognize the financial statement effects of an uncertain tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on our estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. As of both ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we did not have any tax benefits or liabilities for uncertain tax positions that we believe should be recognized in our accompanying condensed consolidated financial statements.

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A valuation allowance is established if we believe it is more likely than not that all or a portion of the deferred tax assets are not realizable. As of ~~both September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, our valuation allowance fully reserves the net deferred tax ~~asset~~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 the future.

18. Leases

Lessor

We have operating leases with tenants that expire at various dates through 2050. For the three months ended March 31, 2022 and 2021, we recognized $50,731,000 and $28,667,000, respectively, of revenues related to operating lease payments, of which $10,413,000 and $4,350,000, respectively, was for variable lease payments. As of March 31, 2022, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the nine months ending December 31, 2022 and for each of the next four years ending December 31 and thereafter for properties that we wholly own:


Year	Amount
2022	$	111,923,000
2023	143,369,000
2024	132,178,000
2025	119,475,000
2026	109,477,000
Thereafter	612,203,000
Total	$	1,228,625,000

Lessee

We lease certain land, buildings, furniture, fixtures, campus equipment, office equipment and automobiles. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Most leases include one or more options to renew, with renewal terms that generally can extend at various dates through 2107, excluding extension options. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the

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~~16. Leases~~

~~Lessor~~

~~We have operating leases with tenants that expire at various dates through 2040. For the three months ended September 30, 2021 and 2020,~~leased property. As of March 31, 2022, we ~~recognized $22,120,000 and $21,519,000 of real estate revenue, respectively, related to operating~~had future lease payments of ~~which $5,013,000 and $4,592,000, respectively, was~~$27,229,000 for ~~variable lease payments. For the nine months ended September 30, 2021 and 2020, we recognized $66,054,000 and $64,824,000 of real estate revenue, respectively, related to~~an operating lease ~~payments,~~that had not yet commenced. Such operating lease will commence in fiscal year 2022 with a lease term of ~~which $14,817,000~~15 years.

The depreciable life of assets and ~~$13,861,000, respectively, was for variable~~leasehold improvements are limited by the expected lease ~~payments. As~~term, unless there is a transfer of ~~September 30, 2021, 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, 2021 and for each~~title or purchase option reasonably certain of ~~the next four years ending December 31 and thereafter for the properties that we wholly own:~~
Year Amount
2021 $ 16,361,000
2022 64,121,000
2023 60,213,000
2024 54,662,000
2025 49,138,000
Thereafter 283,142,000
Total $ 527,637,000

~~Lessee~~

We have ground lease obligations that generally require fixed annual rental payments and may also include escalation clauses and renewal options. These leases expire at various dates through 2107, excluding extension options.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.

~~For the three months ended September 30, 2021 and 2020, operating~~The components of lease costs were ~~$226,000~~as follows:


		Three Months Ended March 31,
Lease Cost	Classification	2022		2021
Operating lease cost(1)	Property operating expenses, rental expenses or general and administrative expenses	$	6,356,000	$	6,337,000
Finance lease cost
Amortization of leased assets	Depreciation and amortization	312,000		412,000
Interest on lease liabilities	Interest expense	74,000		118,000
Sublease income	Resident fees and services revenue or other income	(147,000)		—
Total lease cost		$	6,595,000	$	6,867,000

___________

(1)Includes short-term leases and $206,000, respectively, and for the nine months ended September 30, 2021 and 2020, operating lease costs were $644,000 and $643,000, respectively, which are included in rental expenses in our accompanying condensed consolidated statements of operations. Such costs also include variable lease costs, which are immaterial.

Additional information related to our ~~operating~~ leases for the periods presented below was as follows:


		September 30, 2021		December 31, 2020
Lease Term and Discount Rate						Lease Term and Discount Rate	March 31, 2022		December 31, 2021
Weighted average remaining lease term (in years)	Weighted average remaining lease term (in years)	78.7		79.5		Weighted average remaining lease term (in years)
Operating leases						Operating leases	16.9		16.9
Finance leases						Finance leases	4.4		3.6
Weighted average discount rate	Weighted average discount rate	5.74	%	5.74	%	Weighted average discount rate
Operating leases						Operating leases	5.53	%	5.52	%
Finance leases						Finance leases	7.57	%	7.68	%


	Three Months Ended March 31,
Supplemental Disclosure of Cash Flows Information	2022		2021

Operating cash outflows related to finance leases	$	74,000	$	118,000
Financing cash outflows related to finance leases	$	13,000	$	60,000
Leased assets obtained in exchange for finance lease liabilities	$	56,000	$	138,000

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

Operating Leases

As of ~~September 30, 2021,~~March 31, 2022, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the ~~three~~nine months ending December 31, ~~2021~~2022 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:


Year	Year	Amount		Year	Amount
2021		$	213,000
2022	2022	526,000		2022	$	14,522,000
2023	2023	530,000		2023	19,275,000
2024	2024	534,000		2024	18,245,000
2025	2025	538,000		2025	17,190,000
2026				2026	16,851,000
Thereafter	Thereafter	46,565,000		Thereafter	163,815,000
Total undiscounted operating lease payments	Total undiscounted operating lease payments	48,906,000		Total undiscounted operating lease payments	249,898,000
Less: interest	Less: interest	38,885,000		Less: interest	107,283,000
Present value of operating lease liabilities	Present value of operating lease liabilities	$	10,021,000	Present value of operating lease liabilities	$	142,615,000

Finance Leases

As of March 31, 2022, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the nine months ending December 31, 2022 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:


Year	Amount
2022	$	51,000
2023	61,000
2024	75,000
2025	31,000
2026	—
Thereafter	—
Total undiscounted finance lease payments	218,000
Less: interest	27,000
Present value of finance lease liabilities	$	191,000

~~17.~~19. Segment Reporting

As of ~~September 30, 2021,~~March 31, 2022, we evaluated our business and made resource allocations based on 46 reportable business ~~segments —~~segments: medical office buildings, integrated senior health campuses, skilled nursing facilities, SHOP, senior housing ~~senior housing — RIDEA~~ and ~~skilled nursing facilities.~~hospitals. Our medical office buildings are typically leased to multiple tenants under separate leases, thus requiring active management and responsibility for many of the associated operating expenses (much of which are, or can effectively be, passed through to the tenants). Our integrated senior health campuses include a range of assisted living, memory care, independent living, skilled nursing services and certain ancillary businesses that are owned and operated utilizing a RIDEA structure. Our skilled nursing and senior housing ~~and skilled nursing~~ facilities are primarily single-tenant properties for which we lease the facilities to unaffiliated tenants under triple-net and generally master leases that transfer the obligation for all facility operating costs (including maintenance, repairs, taxes, insurance and capital expenditures) to the tenant. ~~Our~~In addition, our senior housing ~~— RIDEA properties~~segment includes our debt security investment. Our SHOP include senior housing facilities that are owned and operated utilizing a RIDEA structure. Our hospital investments are similarly structured to our skilled nursing and senior housing facilities.

While we believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement, we evaluate our segments’ performance based upon segment net operating income, or NOI. We define segment NOI as total revenues and grant income, less ~~rental~~property operating expenses and ~~property operating~~rental expenses, which excludes depreciation and amortization, general and administrative expenses, business acquisition expenses, interest expense, gain or loss on ~~disposition~~dispositions of real estate investments, impairment of real estate investments, income or loss from unconsolidated ~~entity,~~entities, foreign currency

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AMERICAN HEALTHCARE REIT, INC.

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

gain or loss, other income and income tax benefit or expense for each segment. We believe that segment NOI serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis.

Interest expense, depreciation and amortization and other expenses not attributable to individual properties are not allocated to individual segments for purposes of assessing segment performance. Non-segment assets primarily consist of corporate assets including ~~our joint venture investment in an unconsolidated entity,~~ cash and cash equivalents, other receivables, deferred financing costs and other assets not attributable to individual properties.

On October 1, 2021, as part of the Merger, we acquired 87 properties, comprising 92 buildings, or approximately 4,799,000 square feet of GLA, which expanded our portfolio of real estate properties and SHOP within the segments as outlined above.

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

Summary information for the reportable segments during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was as follows:


		Medical Office Buildings		Senior Housing — RIDEA		Skilled Nursing Facilities		Senior Housing		Three Months Ended September 30, 2021			Integrated Senior Health Campuses		SHOP		Medical Office Buildings		Senior Housing		Skilled Nursing Facilities		Hospitals		Three Months Ended March 31, 2022
Revenues:
Revenues and grant income:												Revenues and grant income:
Resident fees and services												Resident fees and services	$	281,012,000	$	37,962,000	$	—	$	—	$	—	$	—	$	318,974,000
Real estate revenue	Real estate revenue	$	16,921,000	$	—	$	2,996,000	$	2,203,000	$	22,120,000	Real estate revenue	—		—		37,837,000		5,298,000		6,393,000		2,415,000		51,943,000
Resident fees and services		—		15,090,000		—		—		15,090,000
Total revenues		16,921,000		15,090,000		2,996,000		2,203,000		37,210,000
Grant income												Grant income	5,096,000		118,000		—		—		—		—		5,214,000
Total revenues and grant income												Total revenues and grant income	286,108,000		38,080,000		37,837,000		5,298,000		6,393,000		2,415,000		376,131,000
Expenses:	Expenses:											Expenses:
Property operating expenses												Property operating expenses	253,150,000		34,010,000		—		—		—		—		287,160,000
Rental expenses	Rental expenses	6,072,000		—		145,000		172,000		6,389,000		Rental expenses	—		—		14,313,000		179,000		686,000		109,000		15,287,000
Property operating expenses		—		14,540,000		—		—		14,540,000
Segment net operating income	Segment net operating income	$	10,849,000	$	550,000	$	2,851,000	$	2,031,000	$	16,281,000	Segment net operating income	$	32,958,000	$	4,070,000	$	23,524,000	$	5,119,000	$	5,707,000	$	2,306,000	$	73,684,000
Expenses:	Expenses:											Expenses:
General and administrative	General and administrative									$	4,304,000	General and administrative													$	11,119,000
Business acquisition expenses	Business acquisition expenses									3,800,000		Business acquisition expenses													173,000
Depreciation and amortization	Depreciation and amortization									10,746,000		Depreciation and amortization													42,311,000
Other income (expense):	Other income (expense):											Other income (expense):
Interest expense:	Interest expense:											Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)										(4,961,000)
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)												Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)													(23,325,000)
Gain in fair value of derivative financial instruments	Gain in fair value of derivative financial instruments									1,514,000		Gain in fair value of derivative financial instruments													500,000
Gain on disposition of real estate investments										15,000
Income from unconsolidated entity										70,000
Gain on dispositions of real estate investments												Gain on dispositions of real estate investments													756,000

Income from unconsolidated entities												Income from unconsolidated entities													1,386,000
Foreign currency loss												Foreign currency loss													(1,387,000)
Other income	Other income									33,000		Other income													1,260,000
Total net other expense	Total net other expense									(3,329,000)		Total net other expense													(20,810,000)
Loss before income taxes												Loss before income taxes													(729,000)
Income tax expense												Income tax expense													(168,000)

Net loss	Net loss									$	(5,898,000)	Net loss													$	(897,000)

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		Medical Office Buildings		Senior Housing — RIDEA		Skilled Nursing Facilities		Senior Housing		Three Months Ended September 30, 2020			Integrated Senior Health Campuses		SHOP		Medical Office Buildings		Senior Housing		Skilled Nursing Facilities		Hospitals		Three Months Ended March 31, 2021
Revenues and grant income:	Revenues and grant income:											Revenues and grant income:
Resident fees and services												Resident fees and services	$	233,226,000	$	19,800,000	$	—	$	—	$	—	$	—	$	253,026,000
Real estate revenue	Real estate revenue	$	16,338,000	$	—	$	2,979,000	$	2,202,000	$	21,519,000	Real estate revenue	—		—		20,023,000		3,570,000		3,667,000		2,763,000		30,023,000
Resident fees and services		—		18,948,000		—		—		18,948,000
Grant income	Grant income	—		864,000		—		—		864,000		Grant income	8,229,000		—		—		—		—		—		8,229,000
Total revenues and grant income	Total revenues and grant income	16,338,000		19,812,000		2,979,000		2,202,000		41,331,000		Total revenues and grant income	241,455,000		19,800,000		20,023,000		3,570,000		3,667,000		2,763,000		291,278,000
Expenses:	Expenses:											Expenses:
Property operating expenses												Property operating expenses	228,639,000		16,503,000		—		—		—		—		245,142,000
Rental expenses	Rental expenses	5,607,000		—		125,000		173,000		5,905,000		Rental expenses	—		—		7,537,000		15,000		369,000		134,000		8,055,000
Property operating expenses		—		17,397,000		—		—		17,397,000
Segment net operating income	Segment net operating income	$	10,731,000	$	2,415,000	$	2,854,000	$	2,029,000	$	18,029,000	Segment net operating income	$	12,816,000	$	3,297,000	$	12,486,000	$	3,555,000	$	3,298,000	$	2,629,000	$	38,081,000
Expenses:	Expenses:											Expenses:
General and administrative	General and administrative									$	3,672,000	General and administrative													$	7,257,000
Business acquisition expenses	Business acquisition expenses									57,000		Business acquisition expenses													1,248,000
Depreciation and amortization	Depreciation and amortization									12,669,000		Depreciation and amortization													25,723,000
Other income (expense):	Other income (expense):											Other income (expense):
Interest expense:	Interest expense:											Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium)										(4,839,000)
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)												Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment)													(20,365,000)
Gain in fair value of derivative financial instruments	Gain in fair value of derivative financial instruments									1,450,000		Gain in fair value of derivative financial instruments													1,821,000
Impairment of real estate investments										(3,064,000)
Loss from unconsolidated entity										(377,000)
Loss on disposition of real estate investment												Loss on disposition of real estate investment													(335,000)

Loss from unconsolidated entities												Loss from unconsolidated entities													(1,771,000)
Foreign currency gain												Foreign currency gain													415,000
Other income	Other income									8,000		Other income													272,000
Total net other expense	Total net other expense									(6,822,000)		Total net other expense													(19,963,000)
Loss before income taxes	Loss before income taxes									(5,191,000)		Loss before income taxes													(16,110,000)
Income tax benefit										39,000
Income tax expense												Income tax expense													(163,000)

Net loss	Net loss									$	(5,152,000)	Net loss													$	(16,273,000)

Total assets by reportable segment as of March 31, 2022 and December 31, 2021 were as follows:


	March 31, 2022		December 31, 2021
Integrated senior health campuses	$	1,898,886,000	$	1,896,608,000
Medical office buildings	1,396,556,000		1,412,247,000
SHOP	621,835,000		625,164,000
Senior housing	253,850,000		255,555,000
Skilled nursing facilities	251,058,000		252,869,000
Hospitals	108,602,000		109,834,000
Other	25,398,000		28,062,000
Total assets	$	4,556,185,000	$	4,580,339,000

In connection with the AHI Acquisition, we recorded goodwill of $134,589,000, which was allocated across our reporting segments. As discussed in Note 4, Business Combination, in connection with the acquisition of Springhurst, we recorded goodwill of $1,827,000, which was allocated to our integrated senior health campuses segment. As of March 31, 2022, goodwill of $47,812,000, $8,640,000, $4,389,000, $23,277,000, $5,924,000 and $121,684,000 was allocated to our medical office buildings, skilled nursing facilities, hospitals, SHOP, senior housing facilities and integrated senior health campuses,

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

Medical
Office
Buildings Senior
Housing —
RIDEA Skilled
Nursing
Facilities Senior
Housing Nine Months
Ended
September 30, 2021
Revenues:
Real estate revenue $ 50,478,000 $ — $ 8,987,000 $ 6,589,000 $ 66,054,000
Resident fees and services — 46,179,000 — — 46,179,000
Total revenues 50,478,000 46,179,000 8,987,000 6,589,000 112,233,000
Expenses:
Rental expenses 17,503,000 — 470,000 569,000 18,542,000
Property operating expenses — 44,179,000 — — 44,179,000
Segment net operating income $ 32,975,000 $ 2,000,000 $ 8,517,000 $ 6,020,000 $ 49,512,000
Expenses:
General and administrative $ 11,710,000
Business acquisition expenses 6,552,000
Depreciation and amortization 33,745,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium) (14,556,000)
Gain in fair value of derivative financial instruments 4,431,000
Loss on disposition of real estate investments (184,000)
Loss from unconsolidated entity (1,027,000)
Other income 49,000
Total net other expense (11,287,000)
Net loss $ (13,782,000)
respectively. As of December 31, 2021, goodwill of $47,812,000, $8,640,000, $4,389,000, $23,277,000, $5,924,000 and $119,856,000 was allocated to our medical office buildings, skilled nursing facilities, hospitals, SHOP, senior housing facilities and integrated senior health campuses, respectively.

~~Table~~Our portfolio of ~~Contents~~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:


	Three Months Ended March 31,
	2022		2021
Revenues and grant income:
United States	$	374,879,000	$	289,986,000
International	1,252,000		1,292,000
	$	376,131,000	$	291,278,000

~~AMERICAN HEALTHCARE REIT, INC.~~

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

Medical
Office
Buildings Senior
Housing —
RIDEA Skilled
Nursing
Facilities Senior
Housing Nine Months
Ended
September 30, 2020
Revenues and grant income:
Real estate revenue $ 49,184,000 $ — $ 8,984,000 $ 6,656,000 $ 64,824,000
Resident fees and services — 51,863,000 — — 51,863,000
Grant income — 864,000 — — 864,000
Total revenues and grant income 49,184,000 52,727,000 8,984,000 6,656,000 117,551,000
Expenses:
Rental expenses 16,616,000 — 459,000 648,000 17,723,000
Property operating expenses — 44,856,000 — — 44,856,000
Segment net operating income $ 32,568,000 $ 7,871,000 $ 8,525,000 $ 6,008,000 $ 54,972,000
Expenses:
General and administrative $ 11,960,000
Business acquisition expenses 74,000
Depreciation and amortization 37,919,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs and debt discount/premium) (15,123,000)
Loss in fair value of derivative financial instruments (2,302,000)
Impairment of real estate investments (3,064,000)
Income from unconsolidated entity 952,000
Other income 278,000
Total net other expense (19,259,000)
Net loss $ (14,240,000)

~~Assets~~The following is a summary of real estate investments, net by ~~reportable segment~~geographic regions as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020 were as follows:~~2021:

September 30,
2021 December 31,
2020
Medical office buildings $ 570,415,000 $ 583,131,000
Senior housing — RIDEA 227,978,000 238,910,000
Skilled nursing facilities 115,565,000 119,247,000
Senior housing 97,243,000 100,370,000
Other 52,695,000 51,115,000
Total assets $ 1,063,896,000 $ 1,092,773,000


	March 31, 2022		December 31, 2021
Real estate investments, net:
United States	$	3,428,705,000	$	3,466,019,000
International	46,930,000		48,667,000
	$	3,475,635,000	$	3,514,686,000

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~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~18.~~20. 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. 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, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had cash and cash equivalents in excess of FDIC insured limits. We believe this risk is not significant. Concentration of credit risk with respect to accounts receivable from tenants is limited. ~~In general, we~~We perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.

Based on leases in effect as of ~~September 30, 2021, 2 states~~March 31, 2022, properties in 1 state in the United States accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized NOI. ~~Our properties~~Properties located in ~~Missouri and Michigan~~Indiana accounted for ~~approximately 12.4% and 10.6%, respectively,~~31.4% of our total property portfolio’s annualized base rent or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in ~~each~~such state’s economy.

Based on leases in effect as of ~~September 30, 2021,~~March 31, 2022, our 46 reportable business segments, medical office buildings, integrated senior health campuses, skilled nursing facilities, SHOP, senior housing and ~~senior housing — RIDEA,~~hospitals accounted for ~~68.9%~~39.3%, ~~14.9%~~39.1%, ~~10.7%~~8.4%, 5.7%, 4.3% and ~~5.5%~~3.2%, respectively, of our total property portfolio’s annualized base rent or annualized NOI.

As of ~~September 30, 2021, we had 1 tenant that~~March 31, 2022, none of our tenants at our properties accounted for 10.0% or more of our total property portfolio’s annualized base rent or annualized NOI, ~~as follows:~~

Tenant Annualized
Base Rent/
NOI(1) Percentage of
Annualized
Base Rent/NOI Real Estate Investment Reportable
Segment GLA
(Sq Ft) Lease Expiration
Date
RC Tier Properties, LLC $ 7,937,000 11.3% Missouri SNF Portfolio Skilled Nursing 385,000 09/30/33

~~___________~~

~~(1)Amount~~which is based on contractual base rent from leases in effect ~~as of September 30, 2021~~ for our ~~non–RIDEA~~non-RIDEA properties and annualized NOI for our SHOP and integrated senior ~~housing — RIDEA facilities. The loss~~health campuses operations as of ~~this tenant or its inability to pay rent could have a material adverse effect on our business and results~~March 31, 2022.

Table of ~~operations.~~Contents

~~19.~~AMERICAN HEALTHCARE REIT, INC.

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

21. Per Share Data

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 ~~$3,000~~$1,490,000 and ~~$4,000,~~$0, respectively, for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020 and $12,000 and $15,000, respectively, for the nine months ended September 30, 2021 and 2020.~~2021. Diluted earnings (loss) per share are computed based on the weighted average number of shares of our common stock and all potentially dilutive securities, if any. Nonvested shares of our restricted common stock and ~~redeemable~~ limited partnership units of our operating partnership are participating securities and give rise to potentially dilutive shares of our common stock.

As of ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were ~~27,000~~891,543 and ~~45,000~~33,000 nonvested shares, respectively, of our restricted common stock outstanding, but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during these periods. As of ~~both September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were ~~208 redeemable~~14,007,903 and 222 limited partnership units, respectively, of our operating partnership outstanding, but such units were also excluded from the computation of diluted earnings per share because such units were anti-dilutive during these periods.

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

~~20. Subsequent Events~~

~~Merger with Griffin-American Healthcare REIT III, Inc. and AHI Acquisition~~

As discussed in Note 1, Organization and Description of Business, on October 1, 2021, we completed the REIT Merger pursuant to the Merger Agreement with GAHR III. At the effective time of the REIT Merger, each issued and outstanding share of GAHR III’s common stock, $0.01 par value per share, converted into the right to receive 0.9266 shares of our Class I common stock, $0.01 par value per share. Further, at the effective time of the Partnership Merger, (i) each unit of limited partnership interest in the surviving partnership outstanding as of immediately prior to the effective time of the Partnership Merger was converted automatically into the right to receive 0.9266 of a Partnership Class I Unit, as defined in the agreement of limited partnership, as amended, of the surviving partnership and (ii) each unit of limited partnership interest in our operating partnership outstanding as of immediately prior to the effective time of the Partnership Merger was converted automatically into the right to receive one unit of limited partnership interest of the surviving partnership of like class.

Also on October 1, 2021, the AHI Acquisition closed immediately prior to the consummation of the Merger and pursuant to the Contribution Agreement, American Healthcare Investors contributed substantially all of its business and operations to the surviving partnership, including its interest in GAHR III Advisor and our advisor, and Griffin Capital contributed its current ownership interest in GAHR III Advisor and our advisor to the surviving partnership. In exchange for these contributions, the surviving partnership issued limited partnership units, or Surviving Partnership OP Units. Subject to working capital and other customary adjustments, the total approximate value of these Surviving Partnership OP Units at the time of consummation of the transactions contemplated by the Contribution Agreement was approximately $131,674,000, with a reference value for purposes thereof of $8.71 per unit, such that the surviving partnership issued 15,117,529 Surviving Partnership OP Units as consideration, or the Closing Date Consideration. The Combined Company following the Merger has become self-managed and was named “American Healthcare REIT, Inc.”

In addition to the Closing Date Consideration, we may in the future pay cash “earnout” consideration to American Healthcare Investors based on the fees that we may earn from our potential sponsorship of, and investment advisory services rendered to, American Healthcare RE Fund, L.P., a healthcare-related, real-estate-focused, private investment fund currently under consideration by American Healthcare Investors, or the Earnout Consideration. The Earnout Consideration is uncapped in amount and, if ever payable by us to American Healthcare Investors, will be due on the seventh anniversary of the closing of the AHI Acquisition (subject to acceleration in certain events, including if we achieve certain fee-generation milestones from our sponsorship of the private investment fund). American Healthcare Investors’ ability to receive the Earnout Consideration is also subject to vesting conditions relating to the private investment fund’s deployed equity capital and the continuous employment of at least two of its principals throughout the vesting period.

~~Amendments to Articles of Incorporation~~

On October 1, 2021, we filed the Fourth Articles of Amendment and Restatement to our charter, or the Charter Amendment, with the State Department of Assessments and Taxation of Maryland, and the Charter Amendment became effective upon filing. The changes to the Charter Amendment include, among other things, the following: (i) the removal of certain limitations relating to (a) suitability of stockholders and (b) collection of an internalization fee; (ii) the removal or revision of certain limitations required by the North American Securities Administrators Association and making other conforming and ministerial changes; (iii) revisions in order to bring our charter more in line with those of publicly-listed companies; and (iv) the change in common stock we are authorized to issue from 900,000,000 shares classified as Class T common stock and 100,000,000 shares classified as Class I common stock to 200,000,000 shares classified as Class T common stock and 800,000,000 shares classified as Class I common stock.

~~Second Amended and Restated Agreement of Limited Partnership~~

On October 1, 2021, in connection with the Partnership Merger, merger sub entered into the Second Amended and Restated Agreement of Limited Partnership of American Healthcare REIT, Inc., which amends and supersedes the Amended and Restated Agreement of Limited Partnership of the surviving partnership, or the Operating Partnership Agreement. The Operating Partnership Agreement reflects, among other things, the following: (i) the change of the surviving partnership’s name to “American Healthcare REIT Holdings, LP,” (ii) the change of the general partner of the surviving partnership to merger sub, (iii) the conversion of units of partnership interest in the surviving partnership outstanding as of immediately prior to the effective time of the Partnership Merger into “Partnership Class I Units” pursuant to the Partnership Merger, (iv) the conversion of units of partnership interest in our operating partnership outstanding as of immediately prior to the effective time of the Partnership Merger into units of limited partnership interest of the surviving partnership of like class, and (v) to make other updates to reflect the effects of the mergers consummated pursuant to the Merger Agreement.

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~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~Lines of Credit and Term Loans~~

~~Amendment to 2018 Credit Facility~~

On October 1, 2021, we entered into the Amendment, which provide for, among other things, the following: (i) revisions to financial covenant calculations to exclude the assets, liabilities and operating performance of Trilogy or any subsidiary thereof; (ii) our operating partnership to pledge the equity interests in each direct and indirect subsidiary that owns an unencumbered asset; (iii) updates regarding restrictions and limitations on certain investments during the remainder of the term of the 2018 Credit Facility; and (iv) updates to the certain financial covenants to reflect the Combined Company subsequent to the Merger.

~~Assumption of Obligations Under GAHR III 2019 Corporate Line of Credit~~

On October 1, 2021, upon consummation of the Merger, we assumed GAHR III’s obligations, through the surviving partnership, under the credit agreement, as amended, or the 2019 Corporate Credit Agreement, with Bank of America, KeyBank, Citizens Bank, and a syndicate of other banks, as lenders, with respect to a credit facility with a maximum principal amount of $480,000,000, or the 2019 Corporate Line of Credit. The 2019 Corporate Line of Credit consists of a senior unsecured term loan facility in an amount of $480,000,000. The maximum principal amount of term loans under the 2019 Corporate Line of Credit may be increased by up to $370,000,000, for a total principal amount of $850,000,000, subject to certain conditions. The 2019 Corporate Line of Credit matures on January 25, 2022 and may be extended for 1 12-month period during the term of the 2019 Corporate Credit Agreement, subject to satisfaction of certain conditions, including payment of an extension fee. Upon consummation of the Merger, a previously available $150,000,000 senior unsecured revolving credit facility was cancelled, and a ratable amendment to certain financial covenants to account for the Combined Company was made.

At our option, the 2019 Corporate Line of Credit bears interest at per annum rates equal to (a) (i) the Eurodollar Rate, as defined in the 2019 Corporate Credit Agreement, plus (ii) a margin ranging from 1.85% to 2.80% based on the Consolidated Leverage Ratio, as defined in the 2019 Corporate Credit Agreement, or (b) (i) the greater of: (1) the prime rate publicly announced by Bank of America, (2) the Federal Funds Rate, as defined in the 2019 Corporate Credit Agreement, plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from 0.85% to 1.80% based on the Consolidated Leverage Ratio. Accrued interest on the 2019 Corporate Line of Credit is payable monthly. The loans may be repaid in whole or in part without prepayment premium or penalty, subject to certain conditions.

~~Assumption of GAHR III Obligations Under 2019 Trilogy Credit Facility~~

On October 1, 2021, upon consummation of the Merger, we assumed GAHR III’s obligations under the amended and restated loan agreement, or the 2019 Trilogy Credit Agreement, with KeyBank; CIT Bank, N.A.; Regions Bank; KeyBanc Capital Markets; Regions Capital Markets; Bank of America; The Huntington National Bank; and a syndicate of other banks, as lenders named therein, regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $360,000,000, consisting of: (i) a $325,000,000 secured revolver supported by real estate assets and ancillary business cash flow and (ii) a $35,000,000 accounts receivable revolving credit facility supported by eligible accounts receivable, or the 2019 Trilogy Credit Facility. We may obtain up to $35,000,000 in the form of swing line loans and up to $15,000,000 in the form of standby letters of credit under the 2019 Trilogy Credit Facility. 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 may be increased by up to $140,000,000, for a total principal amount of $500,000,000, subject to certain conditions. The 2019 Trilogy Credit Facility matures on September 5, 2023 and may be extended for 1 12-month period during the term of the 2019 Trilogy Credit Agreement, subject to the satisfaction of certain conditions, including payment of an extension fee.

At our option, the 2019 Trilogy Credit Facility bears interest at per annum rates equal to (a) the London Inter-Bank Offer Rate, or LIBOR, plus 2.75% for LIBOR Rate Loans, as defined in the 2019 Trilogy Credit Agreement, and (b) for Base Rate Loans, as defined in the 2019 Trilogy Credit Agreement, 1.75% plus the greater of: (i) the fluctuating annual rate of interest announced from time to time by KeyBank as its prime rate, (ii) 0.50% above the Federal Funds Effective Rate, as defined in the 2019 Trilogy Credit Agreement, and (iii) 1.00% above the one-month LIBOR. Accrued interest on the 2019 Trilogy Credit Facility is payable monthly. The 2019 Trilogy Credit Facility may be repaid in whole or in part without prepayment fees or penalty, subject to certain conditions. We are required to pay fees on the unused portion of the lenders’ commitments under the 2019 Trilogy Credit Facility, with respect to any day during a calendar quarter, at a per annum rate equal to (a) 0.15% if the sum of the Aggregate Real Estate Revolving Credit Obligations, as defined in the 2019 Trilogy Credit Agreement, outstanding on such day is greater than 50.00% of the commitments or 0.20% if the sum of the Aggregate Real Estate Revolving Credit Obligations on such day is less than or equal to 50.00% of the commitments, and (b) 0.15% if the sum of the Aggregate A/R Revolving Credit Obligations, as defined in the 2019 Trilogy Credit Agreement, outstanding on such day is greater than 50.00% of the commitments or 0.20% if the sum of the Aggregate A/R Revolving Credit Obligations on such day is less than or equal to 50.00% of the commitments, which fees shall be measured and payable on a quarterly basis.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~Reinstatement of the DRIP~~

On October 4, 2021, our board reinstated the DRIP and as a result, beginning with the October 2021 distribution, which was paid in November 2021, stockholders who previously enrolled as participants in the DRIP (including former GAHR III stockholders who participated in the GAHR III distribution reinvestment plan) received or will receive distributions in shares of our common stock pursuant to the terms of the DRIP, instead of cash distributions.

~~Amendments to and Partial Reinstatement of Share Repurchase Plan~~

On October 4, 2021, our board authorized our amended and restated share repurchase plan that included the change in the repurchase price with respect to repurchases resulting from the death or qualifying disability (as such term is defined in the share repurchase plan) of stockholders from 100% of the price paid by the stockholder to acquire shares of our Class T common stock or Class I common stock, as applicable, to the most recently published estimated NAV per share. In addition, on October 4, 2021, our board authorized the partial reinstatement of our share repurchase plan with respect to requests to repurchase shares resulting from the death or qualifying disability of stockholders, effective with respect to qualifying repurchases for the fiscal quarter ending December 31, 2021, which will be paid on or about January 1, 2022. All share repurchase requests other than those requests resulting from the death or qualifying disability of stockholders, shall be rejected.

~~Distributions Declared~~

Our board authorized a daily distribution to our Class T and Class I stockholders of record as of the close of business on October 27, 2021. This distribution for the month of October 2021 was equal to $0.033333333 per share of our common stock, which is equal to an annualized distribution rate of $0.40 per share. The distribution was paid in cash or shares of our common stock pursuant to the DRIP. The distribution was paid in November 2021, only from legally available funds.

~~Director Appointments and Resignation~~

On October 1, 2021, immediately following the effective time of the REIT Merger, our board was increased from 5 members to 9 members. Our board appointed Harold H. Greene, J. Grayson Sanders and Gerald W. Robinson to our board as independent directors. Messrs. Greene, Sanders and Robinson were independent directors on GAHR III’s board of directors immediately prior to the effective time of the REIT Merger. Our board also appointed Mr. Prosky and Mr. Streiff as directors. On October 1, 2021, Richard S. Welch resigned from our board and no longer serves as our director.

Messrs. Greene, Sanders and Robinson satisfy the independent director standards applicable to us and, as independent directors, are entitled to receive the same compensation and reimbursement of expenses that we pay to each of our independent directors; Messrs. Prosky and Streiff also serve as our executive officers and therefore will not receive compensation for services rendered as directors. We also issued 5,000 shares of restricted Class T common stock to each of Messrs. Greene, Sanders and Robinson in connection with their appointment to our board.

~~Officer Transitions and Appointments~~

Effective October 1, 2021, Jeffrey T. Hanson was appointed as our Executive Chairman of the Board of Directors and thereby no longer serves as our Chief Executive Officer. In addition, effective October 1, 2021, Danny Prosky was appointed Chief Executive Officer and thereby no longer serves as our Chief Operating Officer but continues in the role of President, and Mathieu B. Streiff was appointed as our Chief Operating Officer and thereby no longer serves as our Executive Vice President, General Counsel. Also effective October 1, 2021, Gabriel M. Willhite was appointed as our Executive Vice President, General Counsel, filling the vacancy created by Mr. Streiff’s resignation from such position.

~~Employment Agreements~~

On October 1, 2021, immediately prior to the closing of the AHI Acquisition, GAHR III (through a wholly owned subsidiary) entered into offer letters with each of Mr. Hanson, Mr. Prosky, Mr. Streiff and Brian S. Peay, GAHR III’s chief financial officer, relating to their employment with GAHR III following the closing of the AHI Acquisition and relating to their employment with us following the consummation of the REIT Merger. Upon the closing of the REIT Merger, we indirectly assumed (by virtue of the REIT Merger and our acquisition of GAHR III’s wholly owned subsidiary that is party to the offer letters) GAHR III’s obligations under these offer letters.

~~Issuance of Restricted Stock Awards to Key Executives and Employees~~

As a result of the REIT Merger, under our incentive plan, as amended, or our 2015 Incentive Plan, certain of our key executives received initial grants of 477,901 time-based restricted stock and 159,301 performance-based restricted units representing the right to receive shares of our Class T common stock upon vesting. The time-based restricted stock vest in three equal annual installments on October 1, 2022, October 1, 2023 and October 1, 2024 (subject to continuous employment through

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

each vesting date). The performance-based restricted stock will cliff vest in the first quarter of 2025 (subject to continuous employment through that vesting date) with the amount vesting depending on meeting certain key performance criteria as further described in the 2015 Incentive Plan.

Also in connection with the Merger, on October 4, 2021, certain of our key employees were granted 319,149 of restricted Class T common stock under our 2015 Incentive Plan, which will cliff vest on October 4, 2024 (subject to continuous employment through that vesting date).

~~Registration Rights Agreement~~

On October 1, 2021, at the consummation of the AHI Acquisition, GAHR III and the surviving partnership entered into a registration rights agreement, or the Registration Rights Agreement, with Griffin-American Strategic Holdings, LLC, or HoldCo, pursuant to which, subject to certain limitations therein, as promptly as practicable following the later of the expiration of (i) the period commencing on the closing of the AHI Acquisition and ending upon the earliest to occur of (a) the second anniversary date of the issuance of the Surviving Partnership OP Units issued in connection with the AHI Acquisition, (b) a change of control of Merger Sub, and (c) the listing of shares of our common stock on a national securities exchange, or the Lock-Up Period; and (ii) the date on which we are eligible to file a registration statement (but in any event no later than 180 days after such date), we, as the indirect parent company of the surviving partnership, are required to file a shelf registration statement with the SEC under the Securities Act of 1933, as amended, covering the resale of the shares of our Class I common stock issued or issuable in redemption of the Surviving Partnership OP Units that the surviving partnership issued as consideration in the AHI Acquisition. The Registration Rights Agreement also grants HoldCo (or any successor holder of such shares) demand rights to request additional registration statement filings as well as “piggyback” registration rights, in each case on or after the expiration of the Lock-Up Period. In connection with the Merger, we assumed from GAHR III the Registration Rights Agreement and GAHR III’s obligations thereunder in their entirety.

~~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-American Healthcare REIT III, Inc., or GAHR III, and its subsidiaries, including Griffin-American Healthcare REIT III Holdings, LP, for periods prior to the Merger, as defined below, and American Healthcare REIT, Inc. (formerly known as Griffin-American Healthcare REIT IV, Inc.), or GAHR IV) and its subsidiaries, including American Healthcare REIT Holdings, LP (formerly known as Griffin-American Healthcare REIT IVIII Holdings, ~~LP,~~LP), for periods following the Merger, except where otherwise noted. ~~Capitalized terms related to the merger with Griffin-American Healthcare REIT III, Inc., or~~Certain historical information of GAHR ~~III, are defined and further discussed below in the “Overview and Background” section.~~IV is included for background purposes.

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. The following 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 ~~2020~~2021 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or ~~the~~ SEC, on March ~~26, 2021.~~25, 2022. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, together with our results of operations ~~for the three and nine months ended September 30, 2021 and 2020~~ and cash flows for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

In connection with the Merger as discussed and defined below, GAHR IV was the legal acquiror of GAHR III, whereas GAHR III was the accounting acquiror of GAHR IV in accordance with accounting principles generally accepted in the United States of America, or GAAP, and as discussed in Note 1, Organization and Description of Business, to our accompanying condensed consolidated financial statements. Thus, the financial information set forth herein subsequent to the Merger reflects results of the Combined Company (as defined below), and the financial information set forth herein prior to the Merger reflects GAHR III’s results. For this reason, period to period comparisons may not be meaningful.

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Our statements contained in this report that are not historical facts are forward-looking. Actual results may differ materially from those included in the forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations, are generally identifiable by use of the words “expect,” “project,” “may,” “will,” “should,” “could,” “would,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “opinion,” “predict,” “potential,” “seek” and any other comparable and derivative terms or the negatives thereof. Our ability to predict results or the actual effect of future plans and strategies is inherently uncertain. Factors which could have a material adverse effect on our operations on a consolidated basis include, but are not limited to: changes in economic conditions generally and the real estate market specifically; the company’s ability to recover from the continuing adverse effects of the coronavirus, or COVID-19, pandemic, including its effects on the healthcare industry, senior housing and skilled nursing facilities and the economy in general; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs; the availability of capital; changes in interest ~~rates; risks related to disruption of management’s attention from the ongoing business operations due to the Merger;~~rates and foreign currency risk; uncertainty from the ~~expected~~ discontinuance of the London Inter-bank Offered Rate, or LIBOR, and the transition to ~~any other interest rate benchmark;~~the Secured Overnight Financing Rate, or SOFR; competition in the real estate industry; changes in ~~accounting principles generally accepted in the United States of America, or~~ GAAP policies and guidelines applicable to REITs; the success of our investment strategy; ~~and~~ the availability of ~~financing.~~financing; our ability to retain our executives and key employees; and 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.

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Overview and Background

~~We raised $754,118,000 through a best efforts initial public offering, or our initial offering, that commenced on February 16, 2016,~~Merger of Griffin-American Healthcare REIT III, Inc. and issued 75,639,681 aggregate shares of our Class T and Class I common stock. In addition, during our initial offering, we issued 3,253,535 aggregate shares of our Class T and Class I common stock pursuant to our distribution reinvestment plan, as amended, or the DRIP, for a total of $31,021,000 in distributions reinvested. Following the termination of our initial offering on February 15, 2019, we continued issuing shares of our common stock pursuant to the DRIP through a subsequent offering, or the 2019 DRIP Offering, which commenced on March 1, 2019. On March 18, 2021, our board of directors, or our board, authorized the suspension of the DRIP, effective as of April 1, 2021. As of September 30, 2021, a total of $46,970,000 in distributions were reinvested that resulted in 4,923,550 shares of our common stock being issued pursuant to the 2019 DRIP Offering. We collectively refer to the DRIP portion of our initial offering and the 2019 DRIP Offering as our DRIP Offerings. See Note 20, Subsequent Events — ~~Reinstatement of the DRIP, to our accompanying condensed consolidated financial statements.~~

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~~Until October 2021, we conducted substantially all of our operations through~~ Griffin-American Healthcare REIT IV, Holdings, LP, or our operating partnership. Through September 30, 2021, we were externally advised by Griffin-American Healthcare REIT IV Advisor, LLC, or our advisor, pursuant to an advisory agreement, as amended, or the Advisory Agreement, between us, our operating partnership and our advisor. The Advisory Agreement was effective as of February 16, 2016 and had a one-year initial term, subject to successive one-year renewals upon the mutual consent of the parties. The Advisory Agreement was last renewed pursuant to the mutual consent of the parties on February 11, 2021. Inc.

On June 23, 2021, in anticipation of the Merger, as defined and discussed below, we entered into an amendment to the Advisory Agreement, whereby it was agreed that any acquisition fee due to our advisor is to be waived in connection with the REIT Merger, as defined and discussed below. Except as set forth in such amendment to the Advisory Agreement, the terms of the Advisory Agreement continued in full force and effect. Our advisor used its best efforts, subject to the oversight and review of our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives. Our advisor performed its duties and responsibilities under the Advisory Agreement as our fiduciary. Prior to the Merger, our advisor was 75.0% owned and managed by wholly owned subsidiaries of American Healthcare Investors, LLC, or American Healthcare Investors, and 25.0% owned by a wholly owned subsidiary of Griffin Capital Company, LLC, or Griffin Capital, or collectively, our co-sponsors. American Healthcare Investors was 47.1% owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% indirectly owned by Digital Bridge Group, Inc. (NYSE: DBRG) (formerly known as Colony Capital, Inc.), or Digital Bridge, and 7.8% owned by James F. Flaherty III, a former partner of Colony Capital, Inc. We were not affiliated with Griffin Capital, Griffin Capital Securities, LLC, or our dealer manager, Digital Bridge or Mr. Flaherty; however, we were affiliated with our advisor, American Healthcare Investors and AHI Group Holdings. Please see the “Merger with Griffin-American Healthcare REIT III, Inc.” and “AHI Acquisition” sections below for a further discussion of our operations effective October 1, ~~2021.~~

~~We operate through four reportable business segments: medical office buildings, senior housing, senior housing — RIDEA and skilled nursing facilities. As of September 30,~~ 2021, we owned 87 properties, comprising 92 buildings, or approximately 4,799,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $1,080,381,000. As of September 30, 2021, we also owned a 6.0% interest in a joint venture which owned a portfolio of integrated senior health campuses and ancillary businesses.

On March 18, 2021, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established an updated estimated per share net asset value, or NAV, of our common stock of $9.22 calculated as of September 30, 2020. We provide this updated estimated per share NAVpursuant to assist broker-dealers in connection with their obligations under Financial Industry Regulatory Authority, or FINRA, Rule 2231 with respect to customer account statements. The 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 of Class T and Class I common stock outstanding on a fully diluted basis. The valuation was performed in accordance with the methodology provided in Practice Guideline 2013-01, ~~Valuations of Publicly Registered Non-Listed REITs~~, or the Practice Guideline, issued by the Institute for Portfolio Alternatives, or the IPA, in April 2013, in addition to guidance from the SEC. On April 2, 2020, the board previously determined an estimated per share NAV of our common stock of $9.54 calculated as of December 31, 2019. See our Current Report on Form 8-K filed with the SEC on March 19, 2021 for more information on the methodologies and assumptions used to determine, and the limitations and risks of, our updated estimated per share NAV.

~~Merger with Griffin-American Healthcare REIT III, Inc.~~

On June 23, 2021, we, our operating partnership, our wholly owned subsidiary, Continental Merger Sub, LLC, or merger sub, Griffin-American Healthcare REIT III, Inc., or GAHR III, and American Healthcare REIT Holdings, LP (formerly known as Griffin-American Healthcare REIT III Holdings, LP), or the surviving partnership, entered into an Agreement and Plan of Merger dated June 23, 2021, or the Merger ~~Agreement. On October 1, 2021, pursuant to the Merger~~ Agreement, ~~(i)~~ GAHR III merged with and into ~~merger sub,~~Continental Merger Sub, LLC, a Maryland limited liability company and newly formed wholly owned subsidiary of GAHR IV, or Merger Sub, with ~~merger sub~~Merger Sub being the surviving company, or the REIT Merger. On October 1, 2021, also pursuant to the Merger Agreement, Griffin-American Healthcare REIT IV Holdings, LP, a Delaware limited partnership and ~~(ii) our~~subsidiary and operating partnership of GAHR IV, or GAHR IV Operating Partnership, merged with and into ~~the surviving~~Griffin-American Healthcare REIT III Holdings, LP, a Delaware limited partnership, or our operating partnership, with ~~the surviving~~our operating partnership being the surviving entity, or the Partnership Merger. We collectively refer to the REIT Merger and ~~being~~the Partnership Merger as the Merger. Following the Merger on October 1, 2021, our company, or the Combined Company, was renamed American Healthcare REIT, Inc. and our operating partnership, also referred to as the surviving partnership, was renamed American Healthcare REIT Holdings, ~~LP, or the Partnership Merger, and, together with the~~LP. The REIT Merger qualified as a reorganization under, and within the ~~Merger.~~meaning of, Section 368(a) of the Code. As a result of and at the effective time of the Merger, the separate corporate existence of GAHR III and ~~our operating partnership~~GAHR IV Operating Partnership ceased.

At the effective time of the REIT Merger, each issued and outstanding share of GAHR III’s common stock, $0.01 par value per share, converted into the right to receive 0.9266 shares of ~~our~~GAHR IV’s Class I common stock, $0.01 par value per share. Further, at the effective time of the Partnership Merger, (i) each unit of limited partnership interest in the surviving partnership outstanding as of immediately prior to the effective time of the Partnership Merger was converted automatically into the right to receive 0.9266 of a Partnership Class I Unit, as defined in the agreement of limited partnership, as amended, of the surviving partnership, and (ii) each unit of limited partnership interest in ~~our operating partnership~~GAHR IV Operating Partnership outstanding as of immediately prior to the effective time of the Partnership Merger was converted automatically into the right to receive one unit of limited partnership interest of the surviving partnership of like class.

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Following the Merger, our company, combined with GAHR III, or the Combined Company, was renamed “American Healthcare REIT, Inc.” The REIT Merger is intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Code. Based on data as of September 30, 2021, the Combined Company has a healthcare real estate portfolio consisting of 311 buildings and campuses in 36 states (as well as the United Kingdom & Isle of Man). On a pro forma basis, the Combined Company portfolio would have a leased percentage rate as of September 30, 2021 of approximately 94.1% for its leased, non-RIDEA assets, 78.1% for its senior housing-RIDEA assets and 77.8% for its integrated senior health campuses.

AHI Acquisition

Also on October 1, 2021, immediately prior to the consummation of the Merger, GAHR III acquired a newly formed entity, American Healthcare Opps Holdings, LLC, or NewCo, which we refer to as the AHI Acquisition, pursuant to a contribution and exchange agreement dated June 23, 2021, or the ~~surviving partnership,~~Contribution Agreement, between GAHR III; our ~~co-sponsors,~~operating partnership; American Healthcare Investors, LLC, or AHI; Griffin Capital Company, LLC, or Griffin Capital; Platform Healthcare Investor T-II, ~~LLC,~~LLC; Flaherty ~~Trust,~~Trust; and Jeffrey T. Hanson, our former Chief Executive Officer and current Executive Chairman of the Board of Directors, Danny Prosky, our ~~President and~~ former Chief Operating Officer and current Chief Executive Officer and President, and Mathieu B. Streiff, our former Executive Vice President, General Counsel ~~entered into a contribution~~ and ~~exchange agreement,~~current Chief Operating Officer, or ~~the Contribution Agreement, pursuant to which, among other things, the surviving partnership agreed to acquire a newly formed entity, or NewCo, which we refer to as~~collectively, the AHI ~~Acquisition, that~~Principals. NewCo owned substantially all of the business and operations of ~~one of our co-sponsors, American Healthcare Investors,~~AHI, as well as all of the equity interests in (i) Griffin-American Healthcare REIT ~~III~~IV Advisor, LLC, or GAHR ~~III~~IV Advisor, a subsidiary of ~~American Healthcare Investors~~AHI that served as the external advisor of GAHR ~~III,~~IV, and (ii) Griffin-American Healthcare REIT III Advisor, LLC, or GAHR III Advisor, also referred to as our ~~advisor. On October 1, 2021,~~former advisor, a subsidiary of AHI that served as the ~~AHI Acquisition closed immediately prior~~external advisor of GAHR III. See “Operating Partnership and Former Advisor” below for a further discussion.

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partnership OP units as consideration, or the Closing Date Consideration. Following the consummation of the Merger and the AHI Acquisition, the Combined Company ~~has become~~became self-managed. As of March 31, 2022 and December 31, 2021, such surviving partnership OP units are owned by AHI Group Holdings, LLC, or AHI Group Holdings, which is owned and controlled by the AHI Principals, Platform Healthcare Investor T-II, LLC, Flaherty Trust and a ~~self-managed company.~~wholly owned subsidiary of Griffin Capital, or collectively, the NewCo Sellers.

The AHI Acquisition ~~will be~~was treated as a business combination for accounting purposes, with GAHR III as both the legal and accounting acquiror of NewCo. While ~~we are~~GAHR IV was the legal acquiror of GAHR III in the REIT Merger, GAHR III was determined to be the accounting acquiror in the REIT Merger ~~transaction~~ in accordance with Financial Accounting Standards Board, Accounting Standards Codification, Topic 805, Business Combinations, after considering the relative share ownership and the composition of the governing body of the Combined Company. ~~As a result of~~Thus, the ~~completion~~financial information set forth herein subsequent to the consummation of the Merger and the AHI Acquisition reflects results of the ~~historical information regarding our company’s structure, agreements~~Combined Company, and the financial information ~~presented within~~set forth herein prior to the Merger and the AHI Acquisition reflects GAHR III’s results. For this ~~Item 2 has materially changed; however, such information did apply~~reason, period to ~~us as~~period comparisons may not be meaningful.

Operating Partnership and Former Advisor

We conduct substantially all of our operations through our operating partnership. Through September 30, ~~2021. See Note 20, Subsequent Events —~~2021, we were externally advised by our former advisor pursuant to an advisory agreement, as amended, or the Advisory Agreement, between us and our former advisor. Our former advisor used its best efforts, subject to the oversight and review of our board of directors, or our board, to, among other things, provide asset management, property management, acquisition, disposition and other advisory services on our behalf consistent with our investment policies and objectives.Following the Merger and the AHI Acquisition, we became self-managed and are no longer externally advised. As a result, any fees that would have otherwise been payable to our former advisor are no longer being paid. Also, on October 1, 2021 and in connection with the AHI Acquisition, our operating partnership redeemed all 22,222 shares of our common stock owned by our former advisor and the 20,833 shares of our Class T common stock owned by GAHR IV Advisor in GAHR IV.

Prior to the Merger and the AHI Acquisition, our former advisor was 75.0% owned and managed by wholly owned subsidiaries of AHI, and 25.0% owned by a wholly owned subsidiary of Griffin Capital, or collectively, our former co-sponsors. Prior to the AHI Acquisition, AHI was 47.1% owned by AHI Group Holdings, 45.1% indirectly owned by Digital Bridge Group, Inc. (NYSE: DBRG), or Digital Bridge, and 7.8% owned by James F. Flaherty III. We were not affiliated with Griffin Capital, Digital Bridge or Mr. Flaherty; however, we were affiliated with our former advisor, AHI and AHI Group Holdings. Please see the “Merger of Griffin-American Healthcare REIT III, Inc. and ~~AHI Acquisition,~~Griffin-American Healthcare REIT IV, Inc.” and “AHI Acquisition” sections above for a further discussion of our operations effective October 1, 2021. See Note 13, Redeemable Noncontrolling Interests, and Note 14, Equity — Noncontrolling Interests in Total Equity, to our accompanying condensed consolidated financial statements for a further discussion of the ownership in our operating partnership.

Public Offering

GAHR IV raised $754,118,000 through a best efforts initial public offering, or the initial offering, and issued 75,639,681 aggregate shares of its Class T and Class I common stock. In addition, during the initial offering, GAHR IV issued 3,253,535 aggregate shares of its Class T and Class I common stock pursuant to GAHR IV’s distribution reinvestment plan, as amended, or the DRIP, for a total of $31,021,000 in distributions reinvested. Following the deregistration of the initial offering, GAHR IV continued issuing shares of its common stock pursuant to the DRIP through a subsequent offering, or the 2019 GAHR IV DRIP Offering. GAHR IV commenced offering shares pursuant to the 2019 GAHR IV DRIP Offering on March 1, 2019, following the termination of the initial offering on February 15, 2019. On March 18, 2021, the GAHR IV board of directors authorized the suspension of the DRIP, effective as of April 1, 2021.

On October 4, 2021, our board authorized the reinstatement of the DRIP, as amended, or the AHR DRIP. We continue to offer up to $100,000,000 of shares of our common stock to be issued pursuant to the AHR DRIP under an existing Registration Statement on Form S-3 under the Securities Act of 1933, as amended, or the Securities Act, previously filed by GAHR IV. As of March 31, 2022, a total of $65,941,000 in distributions were reinvested that resulted in 6,981,086 shares of common stock being issued pursuant to the AHR DRIP. See Note 14, Equity — Distribution Reinvestment Plan, to our accompanying condensed consolidated financial statements for a further discussion.

On March 24, 2022, our board, at the recommendation of the audit committee of our board, comprised solely of independent directors, unanimously approved and established an updated estimated per share net asset value, or NAV, of our common stock of $9.29. We provide this updated estimated per share NAV annually to assist broker-dealers in connection with their obligations under Financial Industry Regulatory Authority, or FINRA, Rule 2231 with respect to customer account statements. The 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, 2021. The

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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 Current Report on Form 8-K filed with the SEC on ~~October 1, 2021,~~March 25, 2022 for ~~additional~~more information ~~regarding~~on the ~~Merger~~methodologies and assumptions used to determine, and the ~~AHI Acquisition.~~limitations and risks of, our updated estimated per share NAV.

Our Real Estate Investments Portfolio

We currently operate through six reportable business segments: medical office buildings, integrated senior health campuses, skilled nursing facilities, SHOP, senior housing and hospitals. As of March 31, 2022, we owned and/or operated 182 properties, comprising 191 buildings, and 122 integrated senior health campuses including completed development projects, or approximately 19,461,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of $4,299,872,000, including the fair value of the properties acquired in the Merger. In addition, as of March 31, 2022, we also owned a real estate-related debt investment purchased for $60,429,000.

Critical Accounting ~~Policies~~Estimates

The complete listing of our Critical Accounting ~~Policies~~Estimates was previously disclosed in our ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021,~~25, 2022, and there have been no material changes to our Critical Accounting ~~Policies~~Estimates as disclosed therein, except as noted below or included within Note 2, Summary of Significant Accounting Policies, to our accompanying condensed consolidated financial statements.

Interim Unaudited Financial Data

For a discussion of interim unaudited financial data, see Note 2, Summary of Significant Accounting Policies — Interim Unaudited Financial Data, to our accompanying condensed consolidated financial statements. Our accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021.~~25, 2022.

Acquisition and ~~Disposition~~Dispositions in ~~2021~~2022

For a discussion of our acquisition and ~~disposition~~dispositions of investments in ~~2021, See~~2022, see Note 3, Real Estate Investments, Net, and Note 4, Business Combination, to our accompanying condensed consolidated financial statements.

Factors Which May Influence Results of Operations

In connection with the Merger, GAHR IV was the legal acquiror and GAHR III was the accounting acquiror for financial reporting purposes, as discussed in Note 1, Organization and Description of Business, to our accompanying condensed consolidated financial statements. Thus, the financial information set forth herein subsequent to the Merger reflects results of the Combined Company, and the financial information set forth herein prior to the Merger reflects GAHR III’s results. Furthermore, as a result of the closing of the AHI Acquisition on October 1, 2021, and following the Merger, our company is now self-managed and employs all the employees necessary to operate as a self-managed company. The impact of being a self-managed company on our results of operations is predominantly an increase in general and administrative costs related to employing the workforce necessary to operate as a self-managed company and cost savings associated with no longer paying advisory fees to our former advisor. For these reasons, period to period comparisons may not be meaningful.

Other than the effects of the Merger and the AHI Acquisition discussed above, and the COVID-19 pandemic discussed below, as well as other national economic conditions affecting real estate generally, we are not aware of any material trends or uncertainties 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 our properties. ~~In addition,~~For a further discussion of these and other factors that could impact our future results or performance, see Part ~~II,~~I, Item 1A, ~~Risk Factors, of this Quarterly Report on Form 10-Q and those~~ Risk Factors, previously disclosed in our ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021.~~25, 2022.

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

~~Due to the ongoing COVID-19 pandemic in the United States and globally, since March 2020, our~~Our residents, tenants, operating partners and managers, ~~have been materially impacted,~~our industry and the ~~prolonged~~U.S. economy continue to be disrupted by the COVID-19 pandemic and related supply chain disruptions and labor shortages. The timing and extent of the economic ~~impact remains uncertain.~~recovery from the COVID-19 pandemic is dependent upon many factors, including the rate of vaccination, the emergence and severity of COVID-19 variants, the continued effectiveness of the vaccines against those variants, the frequency of booster vaccinations and the duration and implications of continued restrictions and safety measures. As the COVID-19 pandemic is still impacting the healthcare system to a ~~degree,~~certain extent, it continues to present challenges for us as an owner and operator of healthcare facilities. Since its outset, the impacts of the COVID-19 pandemic have been significant, rapidly and continuously evolving and may continue into the future, especially due to the emergence of the Delta variant which has caused

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~~COVID-19 cases and deaths to increase significantly in the third quarter of 2021,~~facilities, making it difficult to ascertain the long-term impact the COVID-19 pandemic will have on real estate markets in which we own and/or operate properties and our portfolio of investments. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and skilled nursing facilities, and we continue

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to work diligently to ~~implement and~~ maintain aggressive protocols at such facilities as well as actively collaborate with our tenants, operating partners and managers to respond and take action to mitigate the impact of the COVID-19 pandemic.

We have evaluated the impacts of the COVID-19 pandemic on our business thus far and incorporated information concerning ~~the impact of COVID-19~~such impacts into our assessments of liquidity, impairment and collectability from tenants and residents as of ~~September 30, 2021.~~March 31, 2022. We will continue to monitor such impacts and will adjust our estimates and assumptions based on the best available information.

Since March 2020, we have taken actions to strengthen our balance sheet and preserve liquidity in response to the COVID-19 pandemic, including reducing the stockholder distribution rate and temporarily suspending our share repurchase plan. We believe that the long-term stability of our portfolio of investments will return once the virus has been controlled. Each type of real estate asset we own has been impacted by the COVID-19 pandemic to varying degrees.

In the early months of the pandemic, the businesses of our medical office tenants were negatively impacted when many of the states had implemented “stay at home” orders, thereby creating unprecedented revenue pressure on such tenants and their ability to pay rent on a timely basis. Substantially all of our physician practices and other medical service providers of non-essential and elective services in our medical office buildings are now open and as a result, our medical office building segment rebounded quickly from the initial shock of the pandemic and has demonstrated remarkable resilience. This trend has continued despite the emergence of the Delta variant.

The COVID-19 pandemic has resulted in a significant decline in ~~the~~ resident occupancies ofat our senior housing facilities, SHOP, integrated senior health campuses and skilled nursing facilities, and an increase in COVID-19 related operating expenses ~~especially in our skilled nursing segment where personal protective equipment, or PPE, costs and~~with more costly short-term hires due to the shortage of healthcare ~~personnel resulting in more costly short-term hires, present ongoing challenges.~~personnel. Therefore, our ~~immediate~~ focus at such properties continues to be on resident occupancy recovery and operating expense management. While ~~we experienced steady recovery in early 2021, the emergence of the Delta variant has slowed the recovery in~~resident occupancies at our integrated senior ~~housing~~health campuses and skilled nursing ~~segments as we are seeing case counts reach~~facilities have gradually improved to near pre-pandemic levels, ~~not seen since January 2021. In addition, since the fourth quarter of 2020, COVID-19 vaccines~~our SHOP have ~~become~~been slower to recover. Based on information available to ~~certain parts~~management as of April 29, 2022, resident occupancy at our SHOP has declined by approximately 11.5% since February 2020, prior to COVID-19 shutdowns.

To date, the impacts of the population, which we believe will be important to a rebound in our resident occupancy levels over time. As of November 1, 2021, based on information provided by our operators, the majority of our residentsCOVID-19 pandemic have been ~~fully vaccinated.~~

significant, rapidly evolving and may continue into the future. The information in this Quarterly Report on Form 10-Q is based on data currently available to us and will likely change as the COVID-19 pandemic progresses. ~~Despite improving macroeconomic conditions~~Future actions that may be taken by state and local governments to mitigate the ~~emergence~~impact of ~~vaccines, surges in~~ COVID-19 ~~cases, including~~ variants ofthat may emerge could disrupt our business, activities and operations, the ~~strain, such as those experienced in Europe and the U.S., could slow down the recovery of the U.S. and the global economy.~~extent to which are highly uncertain. We continue to closely monitor COVID-19 developments and are continuously assessing the implications to our business, residents, tenants, operating partners, managers and our portfolio of investments. We ~~believe that the government-imposed or self-imposed lockdowns and restrictions have created pent-up demand for doctors’ visits and move-ins into senior housing facilities; however, we~~ cannot predict with reasonable certainty when ~~such~~ demand for healthcare services at our senior housing and skilled nursing facility segments will return to pre-COVID-19 pandemic levels.

The medical community understands COVID-19 far better today than it did at the onset of the pandemic, and we are now equipped with greater therapeutics and other treatments to mitigate its impact. Likewise, we are optimistic about the favorable reports regarding the efficacy of vaccines. The COVID-19 pandemic has had, and may continue to have, an adverselasting effect on the operations of our business, and therefore, we are unable to predict the full extent or nature of the future impact to our financial condition and results of operations at this time. We expect the trends discussed above with respect to the impact of the COVID-19 pandemic to continue. Thus, the lasting impact of the COVID-19 pandemic over the next 12 months could be significant and will largely depend on future developments, including COVID-19 vaccination and booster rates; the ~~duration~~long term efficacy of ~~the crisis~~COVID-19 vaccinations and boosters; and the ~~success~~potential emergence of ~~efforts to contain~~new, more transmissible or ~~treat COVID-19 and its~~severe variants, ~~such as the use of effective vaccines and availability of vaccine boosters,~~ which cannot be predicted with confidence at this time. See the “Results of Operations” and “Liquidity and Capital Resources” sections below, for a further discussion.

Scheduled Lease Expirations

Excluding our SHOP and integrated senior ~~housing — RIDEA facilities,~~health campuses, as of ~~September 30, 2021,~~March 31, 2022, our properties were ~~95.7%~~92.7% leased and during the remainder of ~~2021, 1.5%~~2022, 6.5% 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, 2021,~~March 31, 2022, our remaining weighted average lease term was ~~7.8~~7.1 years, excluding our SHOP and integrated senior ~~housing — RIDEA facilities.~~health campuses.

~~For the three~~Our combined SHOP and ~~nine months ended September 30, 2021, our~~integrated senior ~~housing — RIDEA facilities~~health campuses were ~~71.1% and 69.7%~~77.8% leased ~~respectively.~~as of March 31, 2022. Substantially all of our leases with residents at such properties are for a term of one year or less.

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Results of Operations

Comparison of ~~the~~ Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~

Our operating results are primarily comprised of income derived from our portfolio of properties and expenses in connection with the acquisition and operation of such properties. Our primary sources of revenue include rent generated by our leased, non-RIDEA properties, and resident fees and services revenue from our RIDEA properties. Our primary expenses include property operating expenses and rental expenses. In addition, beginning in the fourth quarter of 2021, following the AHI Acquisition that resulted in our company being self managed, general and administrative expenses include payroll and other corporate operating expenses but no longer include advisory fees to our former advisor. In general, and under a normal operating environment without the disruption of the COVID-19 pandemic, we expect amounts related to our portfolio of operating properties to increase in the future due to fixed annual rent escalations on our portfolio of properties. The ability to compare one period to another is also impacted by the closing of the AHI Acquisition and the increase in size of our real estate portfolio as a result of the Merger. See Note 1, Organization and Description of Business, to our accompanying condensed consolidated financial statements for a further discussion.

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. As of ~~September 30, 2021,~~March 31, 2022, we operated through ~~four~~six reportable business ~~segments, with activities related to investing in~~segments: medical office buildings, integrated senior ~~housing, senior housing — RIDEA and~~health campuses, skilled nursing ~~facilities.~~

The COVID-19 pandemic has had a significant adverse impact on the operations of our real estate portfolio. Although we have experienced some delays in receiving rent payments from our tenants, as of September 30, 2021, we have collected 100% of contractual rent from our leased, non-RIDEAfacilities, SHOP, senior housing and skilled nursing facility tenants. Most of our skilled nursing facilities provide behavioral health services with resident occupancies that are less impacted by either the COVID-19 pandemic or restrictions on elective surgeries than traditional skilled nursing facilities. In addition, substantially all of the contractual rent through September 2021 from our medical office building tenants has been received. However, given the significant ongoing uncertainty of the impact of the COVID-19 pandemic over the next 12 months, we are unable to predict the impact it will have on such tenants’ continued ability to pay rent.hospitals.

Except where otherwise noted, the changes in our ~~condensed~~ consolidated results of operations for ~~2021~~2022 as compared to ~~2020~~2021 are primarily due to the acquisition of GAHR IV’s portfolio of 87 properties, comprising 92 buildings, or approximately 4,799,000 square feet of GLA, as a result of the Merger on October 1, 2021, the disruption to our normal operations as a result of the COVID-19 pandemic and grant income ~~received and costs incurred related to the Merger.~~received. As of ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we owned and/or operated the following types of properties:


		September 30,											March 31,
		2021					2020						2022					2021
		Number of Buildings	Aggregate Contract Purchase Price		Leased %		Number of Buildings	Aggregate Contract Purchase Price		Leased %			Number of Buildings/ Campuses	Aggregate Contract Purchase Price		Leased %		Number of Buildings/ Campuses	Aggregate Contract Purchase Price		Leased %
Integrated senior health campuses												Integrated senior health campuses	122	$	1,795,199,000	(1)		120	$	1,732,058,000	(1)
Medical office buildings	Medical office buildings	43	$	608,072,000	93.2	%	43	$	605,122,000	93.0	%	Medical office buildings	105	1,249,658,000		89.7	%	63	657,885,000		89.1	%
Senior housing — RIDEA		24	252,709,000		(1)		26	264,349,000		(1)
SHOP												SHOP	47	708,050,000		(2)		20	433,891,000		(2)
Senior housing	Senior housing	14	101,800,000		100	%	14	101,800,000		100	%	Senior housing	20	169,885,000		100	%	9	89,535,000		100	%
Skilled nursing facilities	Skilled nursing facilities	11	117,800,000		100	%	11	117,800,000		100	%	Skilled nursing facilities	17	237,300,000		100	%	6	119,500,000		100	%
Total/weighted average(2)		92	$	1,080,381,000	95.7	%	94	$	1,089,071,000	95.4	%
Hospitals												Hospitals	2	139,780,000		100	%	2	139,780,000		100	%
Total/weighted average(3)												Total/weighted average(3)	313	$	4,299,872,000	92.7	%	220	$	3,172,649,000	91.7	%

___________

(1)~~For the three months ended September 30, 2021 and 2020, the~~The leased percentage for the resident units of our integrated senior ~~housing — RIDEA facilities~~health campuses was ~~71.1%~~80.0% and ~~71.6%, respectively,~~70.7% as of March 31, 2022 and ~~for the nine months ended September 30,~~ 2021, ~~and 2020, the~~respectively.

(2)The leased percentage for the resident units of our ~~senior housing — RIDEA facilities~~SHOP was ~~69.7%~~71.9% and ~~77.2%, respectively, based on daily average occupancy~~70.3% as of ~~licensed beds or units.~~March 31, 2022 and 2021, respectively.

~~(2)~~(3)Leased percentage excludes our SHOP and integrated senior ~~housing — RIDEA facilities.~~health campuses.

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Revenues and Grant Income

Our primary sources of revenue include rent generated by our leased, ~~non – RIDEA~~non-RIDEA properties, and resident fees and services revenue from our RIDEA properties. The amount of ~~revenue~~revenues generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease available space at ~~market~~the then existing rental rates. We also receive grant income. Revenues and grant income by reportable segment consisted of the following for the periods ~~presented:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Real Estate Revenue
Medical office buildings $ 16,921,000 $ 16,338,000 $ 50,478,000 $ 49,184,000
Skilled nursing facilities 2,996,000 2,979,000 8,987,000 8,984,000
Senior housing 2,203,000 2,202,000 6,589,000 6,656,000
Total real estate revenue 22,120,000 21,519,000 66,054,000 64,824,000
Resident Fees and Services Revenue
Senior housing — RIDEA 15,090,000 18,948,000 46,179,000 51,863,000
Total resident fees and services 15,090,000 18,948,000 46,179,000 51,863,000
Grant Income
Senior housing — RIDEA — 864,000 — 864,000
Total grant income — 864,000 — 864,000
Total revenues and grant income $ 37,210,000 $ 41,331,000 $ 112,233,000 $ 117,551,000
then ended:


	Three Months Ended March 31,
	2022		2021
Resident Fees and Services Revenue
Integrated senior health campuses	$	281,012,000	$	233,226,000
SHOP	37,962,000		19,800,000
Total resident fees and services revenue	318,974,000		253,026,000
Real Estate Revenue
Medical office buildings	37,837,000		20,023,000
Skilled nursing facilities	6,393,000		3,667,000
Senior housing	5,298,000		3,570,000
Hospitals	2,415,000		2,763,000
Total real estate revenue	51,943,000		30,023,000
Grant Income
Integrated senior health campuses	5,096,000		8,229,000
SHOP	118,000		—
Total grant income	5,214,000		8,229,000
Total revenues and grant income	$	376,131,000	$	291,278,000

For the three months ended ~~September 30,~~March 31, 2022 and 2021, and 2020, real estate revenue was primarily comprised of base rent of $16,520,000 and $15,847,000, respectively, and expense recoveries of $4,963,000 and $4,575,000, respectively. For the nine months ended September 30, 2021 and 2020, real estate revenue was primarily comprised of base rent of $48,581,000 and $47,544,000, respectively, and expense recoveries of $14,566,000 and $13,697,000, respectively. For the three and nine months ended September 30, 2021 and 2020, resident fees and services revenue primarily consisted of rental fees related to resident leases, ~~and~~ extended health care ~~fees.~~

~~The decrease~~fees and other ancillary services, and real estate revenue primarily consisted of base rent and expense recoveries. For the three months ended March 31, 2022, $14,113,000 in resident fees and services revenue for ~~both the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, is primarily related to lower occupancy rates in~~ our ~~facilities~~SHOP was due to the ~~prolonged operational disruption~~increase in the size of our portfolio as a result of the ~~COVID-19 pandemic.~~Merger. The ~~decrease~~remaining increase in resident fees and services revenue was primarily attributable to improved occupancy and higher reimbursement rates from both Medicare and Medicaid programs for our integrated senior health campuses and SHOP. In addition, for the ~~nine~~three months ended ~~September 30, 2021, compared~~March 31, 2022, $22,332,000 of real estate revenue was primarily due to the ~~nine~~increase in the size of our portfolio as a result of the Merger.

For the three months ended ~~September 30, 2020 was partially offset by the impact of the transition of five senior housing facilities within Northern California Senior Housing Portfolio to a RIDEA structure in~~ March ~~2020 resulting in higher resident fees~~31, 2022 and ~~services in the comparable period.~~

~~For both the three and nine months ended September 30,~~ 2021, we ~~did not recognize any government grants. For both the three~~recognized $5,214,000 and ~~nine months ended September 30, 2020, we recognized $864,000~~$8,229,000, respectively, of grant income at our integrated senior ~~housing — RIDEA facilities~~health campuses and SHOP related to government grants received through the Coronavirus Aid, Relief, and Economic Security Act, or ~~the~~ CARES Act, economic stimulus programs.

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~~Rental~~Property Operating Expenses and ~~Property Operating~~Rental Expenses

~~Rental expenses and rental expenses as a percentage of real estate revenue, as well as property~~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, by reportable segment consisted of the following for the periods ~~presented:~~then ended:


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2021				2020				2021				2020					2022				2021
Property Operating Expenses																		Property Operating Expenses
Integrated senior health campuses																		Integrated senior health campuses	$	253,150,000	88.5	%	$	228,639,000	94.7	%
SHOP																		SHOP	34,010,000		89.3	%	16,503,000		83.3	%
Total property operating expenses																		Total property operating expenses	$	287,160,000	88.6	%	$	245,142,000	93.8	%

Rental Expenses	Rental Expenses																	Rental Expenses
Medical office buildings	Medical office buildings	$	6,072,000	35.9	%	$	5,607,000	34.3	%	$	17,503,000	34.7	%	$	16,616,000	33.8	%	Medical office buildings	$	14,313,000	37.8	%	$	7,537,000	37.6	%
Skilled nursing facilities																		Skilled nursing facilities	686,000		10.7	%	369,000		10.1	%
Hospitals																		Hospitals	109,000		4.5	%	134,000		4.8	%
Senior housing	Senior housing	172,000		7.8	%	173,000		7.9	%	569,000		8.6	%	648,000		9.7	%	Senior housing	179,000		3.4	%	15,000		0.4	%
Skilled nursing facilities		145,000		4.8	%	125,000		4.2	%	470,000		5.2	%	459,000		5.1	%
Total rental expenses	Total rental expenses	$	6,389,000	28.9	%	$	5,905,000	27.4	%	$	18,542,000	28.1	%	$	17,723,000	27.3	%	Total rental expenses	$	15,287,000	29.4	%	$	8,055,000	26.8	%
Property Operating Expenses
Senior housing — RIDEA		$	14,540,000	96.4	%	$	17,397,000	87.8	%	$	44,179,000	95.7	%	$	44,856,000	85.1	%
Total property operating expenses		$	14,540,000	96.4	%	$	17,397,000	87.8	%	$	44,179,000	95.7	%	$	44,856,000	85.1	%

~~For the three months ended September 30, 2021~~Integrated senior health campuses and 2020, property operating expenses primarily consisted of administration and benefits expense of $10,921,000 and $8,634,000, respectively, and for the nine months ended September 30, 2021 and 2020, property operating expenses primarily consisted of administration and benefits expense of $33,320,000 and $23,683,000, respectively. The decrease in property operating expenses for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, is primarily because we experienced a significant increase in labor costs, as well as the costs of COVID-19 testing of employees and residents in our facilities and the costs of PPE and other supplies required as a result of the COVID-19 pandemic in the prior year, which decreased in the current year in line with the normalization of such costs and with the decline in COVID-19 case counts and increase in vaccination rates. Senior housing — RIDEA facilitiesSHOP typically have a higher percentage of direct operating expenses to revenue than medical office buildings, ~~skilled nursing facilities~~hospitals, and leased ~~non-RIDEA~~ senior housing and skilled nursing facilities due to the nature of RIDEA — type facilities where we conduct day-to-day operations. For the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, rental expenses increased by $6,542,000 and property operating expenses increased by $14,460,000 for our SHOP due to the increase in the size of our portfolio as a result of the Merger. Further, the remaining increase in total property operating expenses was due to an increase in labor costs at our SHOP and integrated senior health campuses.

General and Administrative

~~General~~For the three months ended March 31, 2022, general and administrative expenses ~~consisted of the following~~were $11,119,000 compared to $7,257,000 for the ~~periods presented:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Asset management and property management oversight fees — affiliates $ 2,540,000 $ 2,529,000 $ 7,616,000 $ 7,539,000
Professional and legal fees 1,278,000 566,000 2,433,000 2,664,000
Bank charges 175,000 183,000 534,000 501,000
Transfer agent services 118,000 119,000 362,000 368,000
Directors’ and officers’ liability insurance 89,000 65,000 254,000 194,000
Board of directors fees 64,000 64,000 194,000 206,000
Restricted stock compensation 21,000 73,000 105,000 171,000
Franchise taxes 15,000 54,000 125,000 170,000
Other 4,000 19,000 87,000 147,000
Total $ 4,304,000 $ 3,672,000 $ 11,710,000 $ 11,960,000

three months ended March 31, 2021. The increase in general and administrative expenses of $3,862,000 was primarily the result of an increase of: (i) $6,468,000 in payroll and compensation costs for the ~~three months ended September 30, 2021, compared to~~acquired employees as a result of the ~~three months ended September 30, 2020, is primarily due to an increase~~AHI Acquisition; (ii) $1,319,000 in professional and legal fees; and (iii) $958,000 in corporate operating expenses. Such increases were partially offset by a decrease in our asset management and property management oversight fees ~~from transitioning~~of $5,678,000 as a result of the ~~operator at Central Florida Senior Housing Portfolio in September 2021.~~AHI Acquisition.

Business Acquisition Expenses

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~we recorded business acquisition ~~expenses were $3,800,000~~expense of $173,000 and ~~$57,000, respectively, and for the nine months ended September 30, 2021 and 2020, business acquisition expenses were $6,552,000 and $74,000,~~$1,248,000, respectively. The ~~increase~~decrease in such expenses ~~for the nine months ended September 30, 2021, compared~~primarily related to ~~the nine~~

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~~months ended September 30, 2020, was primarily due to $6,753,000~~a $1,195,000 decrease in third-party ~~legal~~advisory costs and ~~professional services~~ fees ~~incurred~~to our special committee related to the ~~Merger. Such increase was partially offset by~~Merger and the ~~recovery of costs of $400,000 during the nine months ended September 30, 2021 that were incurred in prior periods in the pursuit of a portfolio of properties that did not result in an acquisition.~~AHI Acquisition.

Depreciation and Amortization

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ depreciation and amortization was ~~$10,746,000~~$42,311,000 and ~~$12,669,000,~~$25,723,000, respectively, ~~and~~which primarily consisted ~~primarily~~ of depreciation on our operating properties of ~~$8,181,000~~$34,422,000 and ~~$7,966,000,~~$24,190,000, respectively, and amortization onof our identified intangible assets of ~~$2,261,000~~$7,125,000 and ~~$4,619,000,~~$1,113,000, respectively. ~~For the nine months ended September 30, 2021 and 2020,~~The increase in depreciation and amortization of $16,588,000 was ~~$33,745,000 and $37,919,000, respectively, and consisted~~ primarily the result of ~~depreciation on~~the increase in depreciable assets in our ~~operating properties~~portfolio as a result of ~~$24,025,000 and $23,698,000, respectively,~~the Merger resulting in depreciation and amortization ~~on our identified intangible assets~~expense of ~~$9,199,000 and $14,032,000, respectively. Approximately $3,333,000~~$14,954,000.

Table of the decrease in amortization expense on our identified intangible assets for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 is related to in-place leases recognized in January 2020 and totaling $8,974,000 that were fully amortized during the nine months ended September 30, 2021.Contents

Interest Expense

Interest expense, including gain or loss in fair value of derivative financial instruments, consisted of the following for the periods presented:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Interest expense:	Interest expense:									Interest expense:
Line of credit and term loans and derivative financial instruments		$	4,274,000	$	4,145,000	$	12,492,000	$	13,053,000
Lines of credit and term loans and derivative financial instruments										Lines of credit and term loans and derivative financial instruments	$	7,549,000	$	7,594,000
Mortgage loans payable	Mortgage loans payable	198,000		204,000		596,000		590,000		Mortgage loans payable	9,544,000		8,585,000
Amortization of deferred financing costs:	Amortization of deferred financing costs:									Amortization of deferred financing costs:
Line of credit and term loans		470,000		471,000		1,411,000		1,410,000
Lines of credit and term loans										Lines of credit and term loans	809,000		1,075,000
Mortgage loans payable	Mortgage loans payable	7,000		7,000		20,000		33,000		Mortgage loans payable	441,000		339,000
(Gain) loss in fair value of derivative financial instruments		(1,514,000)		(1,450,000)		(4,431,000)		2,302,000
Amortization of debt discount/premium		12,000		12,000		37,000		37,000
Amortization of debt discount/premium, net										Amortization of debt discount/premium, net	(17,000)		203,000
Gain in fair value of derivative financial instruments										Gain in fair value of derivative financial instruments	(500,000)		(1,821,000)
Loss on extinguishments of debt										Loss on extinguishments of debt	4,591,000		2,288,000
Interest on finance lease liabilities										Interest on finance lease liabilities	74,000		118,000
Interest expense on financing obligations and other liabilities										Interest expense on financing obligations and other liabilities	334,000		163,000
Total	Total	$	3,447,000	$	3,389,000	$	10,125,000	$	17,425,000	Total	$	22,825,000	$	18,544,000

For the three months ended March 31, 2022, interest expense was $22,825,000 compared to $18,544,000 for the three months ended March 31, 2021. The ~~decrease~~increase in interest expense ~~for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, is~~was primarily related to a ~~change to a~~decrease in the gain in fair value recognized on our derivative financial instruments ~~from a~~of $1,321,000 and an increase in loss ~~in fair value recognized~~ on ~~our derivative financial instruments, respectively, as such instruments approach maturity in November 2021, as well as a decline in interest rates on our line~~debt extinguishment of ~~credit and term loans.~~$2,303,000. See Note 6,8, Mortgage Loans Payable, Net, and Note ~~7, Line~~9, Lines of Credit and Term Loans, ~~and Note 8, Derivative Financial Instruments,~~ to our accompanying condensed consolidated financial statements for a further ~~discussion.~~discussion on debt extinguishments.

Liquidity and Capital Resources

~~Our sources of funds primarily consist of operating cash flows and borrowings.~~ In the normal course of business, our ~~principal demands for funds are for~~material cash requirements consist of payment of operating expenses, capital improvement expenditures, interest on our indebtedness, distributions to our stockholders and repurchases of our common ~~stock. Upon consummation~~stock. Our sources of ~~the Merger, on October 1, 2021,~~funds primarily consist of operating cash flows and borrowings.

Absent our requirements to make distributions to maintain our REIT qualification, we assumed GAHR III's obligations, through the surviving partnership, with respect to a credit facility with a maximum principal amount of $480,000,000, or the 2019 Corporate Line of Credit. In addition, on October 1, 2021, upon consummation of the Merger, we assumed GAHR III's obligations under an amended and restated loan agreement regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $360,000,000, or the 2019 Trilogy Credit Facility. We also entered into an amendment to our credit agreement for our line of credit and term loans, as amended, or the 2018 Credit Facility. We refer to the 2019 Corporate Line of Credit, 2019 Trilogy Credit Facility and the 2018 Credit Facility as the Credit Facilities. See Note 20, Subsequent Events — Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements, for a further discussion, and our Current Report on Form 8-K filed with the SEC on October 5, 2021 for more information on the amendments to or assumption of the Credit Facilities. Our total capacity to pay operating expenses, capital improvement expenditures, interest, distributions and repurchases is a function of our current cash position, our borrowing capacity on our Credit Facilities, as well asdo not have any ~~future indebtedness~~material off-balance sheet arrangements that we ~~may incur.~~

~~Table of Contents~~

As of October 31, 2021, the Combined Company’s aggregate borrowing capacity under the Credit Facilities was $1,370,000,000. As of October 31, 2021, the Combined Company’s aggregate borrowings outstanding under the Credit Facilities was $1,205,634,000. The 2018 Credit Facility is scheduled to mature on November 19, 2021. We intend to extend the maturity date of the 2018 Credit Facility for an additional 12 months pursuant to the terms of the 2018 Credit Agreement, as amended, and expect to pay an extension fee of approximately $795,000. The 2019 Corporate Line of Credit is scheduled to mature on January 25, 2022; however, we intend to combine our 2019 Corporate Line of Credit and the 2018 Credit Facility into one joint credit facility and pay any related fees. As of October 31, 2021, we had an aggregate of $164,366,000 available on the Credit Facilities. We believe that these resources will be sufficient to satisfy our cash requirements for the foreseeable future.

Due to the impact the COVID-19 pandemic has had on the United States and globally, and the uncertainty of the severity and duration of the COVID-19 pandemic and its effects, beginning in March 2020, our board decided to take steps to protect our capital and maximizewould materially affect our liquidity ~~in an effort to strengthen our long-term financial prospects by decreasing our distributions to stockholders~~ and temporarily suspending our share repurchase plan. Consequently, our board approved a reduced distribution rate for April 2020 through October 2021 for our Class T and Class I common stock, which is equal to an annualized distribution rate of $0.40 per share, a decrease from the annualized rate of $0.60 per share previously paid by us. See the “Distributions” section below for a further discussion. In addition, on March 31, 2020, our board suspended our share repurchase plan with respect to all repurchase requests other than repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchase requests submitted for repurchase during the second quarter of 2020. Furthermore, in connection with our special committee’s strategic alternative review process and in order to facilitate a strategic transaction, on March 18, 2021, our board authorized the suspension of the DRIP, effective as of April 1, 2021, and also approved the suspension of our share repurchase plan with respect to all repurchase requests received by us after February 28, 2021, including repurchases resulting from the death or qualifying disability of stockholders. For a further discussion, see our Current Report on Form 8-K filed with the SEC on March 19, 2021. On October 4, 2021, our board authorized the reinstatement of the DRIP and a partial reinstatement of our share repurchase plan with respect to repurchase requests resulting from the death or qualifying disability of stockholders. See Note 20, Subsequent Events — Reinstatement of the DRIP and — Amendments to and Partial Reinstatement of Share Repurchase Plan, to our accompanying condensed consolidated financial statements for a further discussion, and our Current Report on Form 8-K filed with the SEC on October 5, 2021 for more information on the reinstatement of the DRIP and partial reinstatement of our share repurchase plan.capital resources.

Material Cash Requirements

Capital Improvement Expenditures

A capital plan for each investment is established upon acquisition that contemplates the estimated capital needs of that investment, including costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan also sets forth the anticipated sources of the necessary capital, which may include operating cash generated by the investment, capital reserves, a line of credit or other loan established with respect to the investment, other borrowings or additional equity investments from us orand joint venture partners. The capital plan for each investment is adjusted through ongoing, regular reviews of our portfolio or as necessary to respond to unanticipated additional capital needs. As of March 31, 2022, we had $16,673,000 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 own as of ~~the Combined Company,~~March 31, 2022, we estimate that our discretionary expenditures for capital and tenant improvements could require up to ~~$33,809,000~~$96,038,000 for the remaining ~~three~~nine months of ~~2021.~~2022.

~~Other Liquidity Needs~~

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Contractual Obligations

The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and our lines of credit and term loans; (ii) interest payments on our mortgage loans payable, lines of credit and term loans; (iii) ground and other lease obligations; and (iv) financing obligations as of March 31, 2022:


	Payments Due by Period
	2022		2023-2024		2025-2026		Thereafter		Total
Principal payments — fixed-rate debt	$	61,521,000	$	106,157,000	$	184,034,000	$	510,768,000	$	862,480,000
Interest payments — fixed-rate debt	19,960,000		46,823,000		38,564,000		202,140,000		307,487,000
Principal payments — variable-rate debt	60,431,000		483,681,000		385,339,000		569,104,000		1,498,555,000
Interest payments — variable-rate debt (based on rates in effect as of March 31, 2022)	27,483,000		50,914,000		32,030,000		2,561,000		112,988,000
Ground and other lease obligations	14,522,000		37,520,000		34,041,000		163,815,000		249,898,000
Financing obligations	13,837,000		5,366,000		3,048,000		16,241,000		38,492,000
Total	$	197,754,000	$	730,461,000	$	677,056,000	$	1,464,629,000	$	3,069,900,000

Distributions and Share Repurchases

For information on distributions, see the “Distributions” section below. For information on our share repurchase plan, see Note 14, Equity — Share Repurchase Plan, to our accompanying condensed consolidated financial statements.

Credit Facilities

On January 19, 2022, we terminated our credit agreement, as amended, for our line of credit and term loans with an aggregate maximum principal amount of $530,000,000, or the 2018 Credit Facility, and, through our operating partnership, entered into an agreement that superseded and replaced our amended credit facility with a maximum principal amount of $480,000,000, or the 2019 Credit Facility, with a credit facility with an aggregate maximum principal amount of up to $1,050,000,000, or the 2022 Credit Facility. See Note 9, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements for a further discussion. In addition, we are subject to an amended and restated loan agreement regarding a senior secured revolving credit facility with an aggregate maximum principal amount of $360,000,000, or the ~~event that there~~2019 Trilogy Credit Facility. Our total capacity to pay operating expenses, capital improvement expenditures, interest, distributions and repurchases is a ~~shortfall in net~~function of our current cash ~~available due to various factors, including, without limitation, the timing~~position, our borrowing capacity on our lines of ~~distributions or the collection of receivables,~~credit and term loans, as well as any future indebtedness that we may ~~seek~~incur.

As of March 31, 2022, our aggregate borrowing capacity under the 2022 Credit Facility and the 2019 Trilogy Credit Facility was $1,410,000,000. As of March 31, 2022, our aggregate borrowings outstanding under our credit facilities was $1,239,134,000 and we had an aggregate of $170,866,000 available on such facilities. We believe that the resources described above will be sufficient to ~~obtain capital to pay distributions by means of secured or unsecured debt financing through one or more third parties, or~~satisfy our ~~advisor or its affiliates. There are currently no limits or restrictions on~~cash requirements for 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.foreseeable future.

Cash Flows

The following table sets forth changes in cash flows:

Nine Months Ended September 30,
2021 2020
Cash, cash equivalents and restricted cash — beginning of period $ 18,125,000 $ 15,846,000
Net cash provided by operating activities 16,556,000 29,943,000
Net cash used in investing activities (1,573,000) (74,761,000)
Net cash (used in) provided by financing activities (15,939,000) 52,368,000
Cash, cash equivalents and restricted cash — end of period $ 17,169,000 $ 23,396,000

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	Three Months Ended March 31,
	2022		2021
Cash, cash equivalents and restricted cash — beginning of period	$	125,486,000	$	152,190,000
Net cash provided by (used in) operating activities	22,360,000		(5,255,000)
Net cash used in investing activities	(27,367,000)		(106,841,000)
Net cash (used in) provided by financing activities	(1,307,000)		89,605,000
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(2,000)		7,000
Cash, cash equivalents and restricted cash — end of period	$	119,170,000	$	129,706,000

The following summary discussion of our changes in our cash flows is based on our accompanying condensed consolidated statements of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.

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Operating Activities

~~For the nine months ended September 30, 2021,~~The change from net cash ~~flows provided by~~used in operating activities ~~was $16,556,000, compared~~ to ~~cash flows provided by operating activities of $29,943,000 for the nine months ended September 30, 2020. The decrease in~~net cash provided by operating activities of ~~$13,387,000~~$27,615,000 was primarily due to ~~payments~~the increase in the size of ~~general and administrative expenses, interest payments~~our portfolio as a result of the Merger on October 1, 2021, thereby increasing our ~~outstanding indebtedness and payment of costs related~~net operating income during the three months ended March 31, 2022, as compared to the ~~Merger of $6,753,000 during the nine months ended September 30, 2021, as well as grant income of $864,000 recognized during the nine months ended September 30, 2020~~.

~~Investing Activities~~

~~For the nine months ended September 30, 2021 and 2020,~~prior year period. In general, cash flows ~~used in investing~~from operating activities related to our property acquisitions in the amount of $3,385,000 and $68,032,000, respectively, and the payment of $4,384,000 and $6,729,000, respectively, for capital expenditures. For the nine months ended September 30, 2021, cash flows used in investing activities were offset by $6,196,000 in net proceeds from the sale of two senior housing facilities, which were part of the Northern California Senior Housing Portfolio. We anticipate that cash flows used in investing activities will primarily beis affected by the timing of cash receipts and payments. See the “Results of Operations” section above for a further discussion.

Investing Activities

The decrease in net cash used in investing activities of $79,474,000 was primarily due to a $58,664,000 decrease in property acquisitions, a $12,826,000 increase in proceeds from dispositions of real estate and an $8,340,000 decrease in developments and capital expenditures ~~and generally will decrease~~during the three months ended March 31, 2022 as compared to the prior ~~years as we have substantially completed the acquisition phase of our real estate investment strategy.~~year period.

Financing Activities

For the nine months ended September 30, 2021, cash flows used in financing activities was $15,939,000, compared to cash flows provided by financing activities of $52,368,000 for the nine months ended September 30, 2020. The ~~$68,307,000~~ change from net cash provided by financing activities to net cash used in financing activities of $90,912,000 was primarily due to ~~the~~a decrease in net ~~borrowing proceeds on~~borrowings under our ~~2018 Credit Facility~~mortgage loans payable of ~~$70,700,000~~$82,661,000 during the three months ended March 31, 2022 as compared to the prior year period, as well as the $15,010,000 payment of distributions to our common stockholders and ~~an increase~~$4,134,000 payment to repurchase our common stock for the three months ended March 31, 2022. Such amounts were partially offset by a decrease in net borrowings under our lines of ~~$7,768,000~~credit and term loans of $13,900,000 during the three months ended March 31, 2022 as compared to the prior year period. The change in distributions paid to ~~our~~ common stockholders partially offset by the January 2020 payoff of one mortgage loan payable with a principal balance of $7,738,000 and a decrease in share repurchases of $3,475,000. The increase in distributions paid in cash for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was ~~primarily~~ due to the suspension of ~~the DRIP by our board~~all stockholder distributions on ~~March 18, 2021, resulting in no further issuances of shares pursuant to the DRIP, and stockholders who were participants in the DRIP received cash distributions instead beginning with the~~ May ~~2021 payment date. The decrease in share repurchases paid in the nine months ended September 30, 2021 compared to the nine months ended September 30,~~29, 2020 ~~was primarily related to the partial suspension of our share repurchase plan in March 2020 by our board to protect our capital and maximize our liquidity~~ in response to the impact of the COVID-19 ~~pandemic. See Note 12, Equity, and Note 20, Subsequent Events — Reinstatement~~pandemic, which the board of directors of GAHR III subsequently reinstated in June 2021. The change in share repurchases was due to the suspension of the ~~DRIP and — Amendments to and Partial Reinstatement~~GAHR III share repurchase plan from May 31, 2020 through October 4, 2021, when the partial reinstatement of ~~Share Repurchase Plan, to our accompanying condensed consolidated financial statements, for a further discussion regarding~~ our share repurchase plan ~~and DRIP distributions. Overall, we anticipate cash flows from financing activities to decrease in the future.~~was approved by our board.

Distributions

The following information represents distributions of GAHR IV for the period before the consummation of the Merger between GAHR III and GAHR IV on October 1, 2021. Since October 1, 2021, the information included below represents the distributions of the Combined Company.

Prior to March 31, 2020, ~~our~~the GAHR IV board authorized a daily distribution to our stockholders of record as of the close of business on each day of the period commencing on May 1, 2016 and ending on March 31, 2020. 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 and Class I common stock, which was equal to an annualized distribution rate of $0.60 per share. These distributions were aggregated and paid ~~monthly in arrears~~ in cash or shares of our common stock pursuant to ~~our~~the DRIP ~~Offerings,~~on a monthly basis, in arrears, only from legally available funds.

In response to the COVID-19 pandemic and its effects to our business and operations, at the end of the first quarter of 2020, ~~our~~the GAHR IV board decided to take steps to protect our capital and maximize our liquidity in an effort to strengthen our long-term financial prospects by reducing our distribution payments to stockholders. Consequently, ~~our~~the GAHR IV board authorized a daily distribution to our stockholders of record as of the close of business on each day of the period commencing on April 1, 2020 and ending on August 31, 2021, which was calculated based on 365 days in the calendar year and was equal to $0.001095890 per share of our Class T and Class I common stock. Such daily distribution was equal to an annualized distribution rate of $0.40 per share. The distributions were aggregated and paid in cash or shares of our common stock pursuant to the DRIP on a monthly basis, in arrears, only from legally available funds.

~~Our~~The GAHR IV board of directors also authorized distributions to our Class T and Class I stockholders of record as of the close of business on September 17, 2021, ~~and October 27, 2021. The distributions were~~ equal to $0.0328767 ~~and $0.033333333~~ per share of our common stock, ~~for the months of September 2021 and October 2021, respectively,~~ which was equal to an annualized distribution of $0.40 per share. Further, our board authorized record date distributions to our Class T and Class I stockholders of record as of each monthly record date from October 2021 through June 2022, equal to $0.033333333 per share of our common stock, which is equal to an annualized distribution rate of $0.40 per share. The distributions were or will be paid in cash or shares of our common stock pursuant to the DRIP. Beginning with the third quarter of 2022, distributions, if any, shall be authorized by our board on a quarterly basis, in ~~September 2021~~such amounts as our board shall determine, and ~~November 2021, respectively, only from legally available funds.~~each quarterly record date for purposes of such distributions shall be determined and declared by our board in the last month of each calendar quarter until such time as our board changes such policy. Stockholders who have elected to participate in our DRIP will continue to have their distributions reinvested to purchase additional shares of our common stock, but on a quarterly basis beginning with any third quarter 2022 distribution declared.

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~~As discussed above,~~On March 18, 2021, in connection with ~~our~~the GAHR IV special ~~committee’s~~committee's strategic alternative review process, ~~on March 18, 2021, our~~the GAHR IV board of directors authorized the suspension of the DRIP, effective as of April 1, 2021. As a result, beginning with the April 2021 distributions, which were paid in May 2021, there were no further issuances of shares pursuant to the DRIP, and stockholders who ~~are~~were participants in the DRIP received ~~or will receive~~ cash distributions instead. ~~As also discussed above, on~~On October 4, 2021, our board authorized the reinstatement of the DRIP and as a result, beginning with the October 2021 distribution, which ~~were~~was paid in November 2021, stockholders who previously enrolled as participants in the DRIP (including former GAHR III stockholders who participated in the GAHR III distribution reinvestment plan) received distributions in shares of our common stock pursuant to the terms of the DRIP, instead of cash distributions. See Note 20, Subsequent Events — Reinstatement of the DRIP, to our accompanying condensed consolidated financial statements, for a further discussion, and our Current Report on Form 8-K filed with the SEC on October 5, 2021 for more information on the reinstatement of the DRIP and the declaration of October 2021 distribution.

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

GAHR III did not pay any distributions for the three months ended March 31, 2021. The distributions paid for the ~~nine~~three months ended ~~September 30, 2021 and 2020,~~March 31, 2022, along with the amount of distributions reinvested pursuant to ~~our~~the AHR DRIP, ~~Offerings~~ and the sources of our distributions as compared to cash flows from operations were as follows:


		Nine Months Ended September 30,
		2021				2020					Three Months Ended March 31, 2022
Distributions paid in cash	Distributions paid in cash	$	21,700,000			$	13,932,000			Distributions paid in cash		$	15,010,000
Distributions reinvested	Distributions reinvested	5,499,000				15,681,000				Distributions reinvested		11,304,000
		$	27,199,000			$	29,613,000					$	26,314,000
Sources of distributions:	Sources of distributions:									Sources of distributions:
Cash flows from operations	Cash flows from operations	$	16,556,000	60.9	%	$	29,613,000	100	%	Cash flows from operations		$	22,360,000	85.0	%
Proceeds from borrowings	Proceeds from borrowings	10,643,000		39.1		—		—		Proceeds from borrowings		3,954,000		15.0
		$	27,199,000	100	%	$	29,613,000	100	%
												$	26,314,000	100	%

As of ~~September 30, 2021,~~March 31, 2022, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and all or any portion of a distribution to our stockholders may have been paid from ~~net offering proceeds and~~ borrowings. ~~The payment of~~

GAHR III did not pay any distributions ~~from our net offering proceeds and borrowings have reduced~~for the ~~amount of capital we ultimately invested in assets and negatively impacted the amount of income available for future distributions.~~

three months ended March 31, 2021. The distributions paid for the ~~nine~~three months ended ~~September 30, 2021 and 2020,~~March 31, 2022, along with the amount of distributions reinvested pursuant to ~~our~~the AHR DRIP, ~~Offerings~~ and the sources of our distributions as compared to funds from operations attributable to controlling interest, or FFO, a non-GAAP financial measure, were as follows:


		Nine Months Ended September 30,
		2021				2020					Three Months Ended March 31, 2022
Distributions paid in cash	Distributions paid in cash	$	21,700,000			$	13,932,000			Distributions paid in cash		$	15,010,000
Distributions reinvested	Distributions reinvested	5,499,000				15,681,000				Distributions reinvested		11,304,000
		$	27,199,000			$	29,613,000					$	26,314,000
Sources of distributions:	Sources of distributions:									Sources of distributions:
FFO attributable to controlling interest	FFO attributable to controlling interest	$	23,126,000	85.0	%	$	29,361,000	99.1	%	FFO attributable to controlling interest		$	26,314,000	100	%

Proceeds from borrowings	Proceeds from borrowings	4,073,000		15.0		252,000		0.9		Proceeds from borrowings		—		—
		$	27,199,000	100	%	$	29,613,000	100	%
												$	26,314,000	100	%

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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)~~loss to FFO, see ~~the~~ “Funds from Operations and Modified Funds from Operations” ~~section~~ below.

Financing

We anticipate that our overall leverage will not exceed 50.0% of the combined fair market value of all of our properties, ~~including the properties acquired as part of the Merger,~~ and other real estate-related investments, as determined at the end of each calendar 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

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policies do not limit the amount we may borrow with respect to any individual investment. As of ~~September 30, 2021,~~March 31, 2022, our aggregate borrowings were ~~40.5%~~46.9% 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. Furthermore, we may borrow if we otherwi~~se deem it necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes. As of September 30, 2021, our leverage did not exceed 300% of the~~ ~~value of our net assets.~~investments.

Mortgage Loans Payable, Net

For a discussion of our mortgage loans payable, ~~net,~~ see Note 6,8, Mortgage Loans Payable, Net, to our accompanying condensed consolidated financial statements.

Lines of Credit and Term Loans

For a discussion of our ~~line~~lines of credit and term loans, see Note ~~7, Line of Credit and Term Loans and Note 20, Subsequent Events —~~9, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements.

REIT Requirements

In order to maintain our qualification as a REIT for federal income tax purposes, we are required to distribute to our stockholders a minimum of 90.0% of our annual taxable income, excluding net capital gains. 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 pay distributions by means of secured and unsecured debt financing through one or more unaffiliated third parties. We may also pay distributions from cash from capital transactions including, without limitation, the sale of one or more of our properties.

Commitments and Contingencies

For a discussion of our commitments and contingencies, see Note ~~10,~~12, Commitments and Contingencies, to our accompanying condensed consolidated financial statements.

Debt Service Requirements

A significant liquidity need is the payment of principal and interest on our outstanding indebtedness. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$18,291,000 ($17,409,000, net~~$1,121,901,000 of ~~discount/premium~~fixed-rate and ~~deferred financing costs) of fixed-rate~~variable-rate mortgage loans payable outstanding secured by our properties. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$488,900,000~~$1,239,134,000 outstanding and ~~$41,100,000~~$170,866,000 remained available under ~~the 2018 Credit Facility.~~our lines of credit. The weighted average effective interest rate on our outstanding debt was 2.72% per annum as of March 31, 2022. See Note 6,8, Mortgage Loans Payable, Net and Note ~~7, Line~~9, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial statements.

We are required by the terms of certain loan documents to meet ~~certain reporting requirements~~various financial and non-financial covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ratios. AsExcept as explained below, as of ~~September 30, 2021,~~March 31, 2022, we

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were in compliance with all such covenants and requirements on our ~~Combined Company~~ mortgage loans payable and our lines of credit and term loans. While the ~~Credit Facilities. As~~extent and severity of ~~September 30, 2021,~~ the ~~weighted average effective interest rate~~COVID-19 pandemic on our ~~outstanding~~business is subsiding, any potential future deterioration of operations in excess of management's projections as a result of COVID-19 could impact future compliance with these covenants. If any future covenants are violated, we anticipate seeking a waiver or amending the debt ~~factoring in our fixed-rate interest rate swaps, was 3.32% per annum.~~

~~Contractual Obligations~~

~~The following table provides information~~covenants with ~~respect to: (i)~~ the ~~maturity~~lenders when and ~~scheduled principal repayment~~if such event should occur. However, there can be no assurances that management will be able to effectively achieve such plans. Some of our ~~secured~~ mortgage ~~loans payable~~loan agreements include a standard loan term requiring lender approval for a change of control event, which was triggered upon the closing of the Merger. All of our mortgage lenders and loan servicers approved such event, except for the ~~2018 Credit Facility; (ii) interest payments on~~servicers of two of our mortgage loans ~~payable and the 2018 Credit Facility; and (iii) ground lease obligations as~~with an aggregate principal balance of ~~September 30, 2021:~~

Payments Due by Period
2021 2022-2023 2024-2025 Thereafter Total
Principal payments — fixed-rate debt $ 132,000 $ 1,331,000 $ 6,589,000 $ 10,239,000 $ 18,291,000
Interest payments — fixed-rate debt 179,000 1,370,000 1,113,000 4,970,000 7,632,000
Principal payments — variable-rate debt 488,900,000 — — — 488,900,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2021) 1,691,000 — — — 1,691,000
Ground lease obligations 213,000 1,056,000 1,072,000 46,565,000 48,906,000
Total $ 491,115,000 $ 3,757,000 $ 8,774,000 $ 61,774,000 $ 565,420,000

~~Off-Balance Sheet Arrangements~~

~~As of September 30, 2021, we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.~~$14,137,000, for which approvals were received in April 2022.

Inflation

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ inflation has not significantly affected our operations; however, the annual rate of inflation in the United States reached 8.3% in April 2022, the highest rate in more than four decades, as measured by the Consumer Price Index, and while we believe inflation has not significantly impacted our operations, ~~because~~we have experienced, and continue to experience, increases in the cost of ~~the moderate inflation rate; however, we expect to be exposed to inflation risk as income from~~labor, services and personal protective equipment and therefore continued inflationary pressures could impact our profitability in future ~~long-term tenant leases will be the primary source of our cash flows from operations.~~periods. There are provisions in the majority of our tenant leases that will protect us from the impact of inflation. These provisions include negotiated rental increases, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of the anticipated leases, among other factors, the leases may not ~~re-set~~reset frequently enough to cover inflation.

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Related Party Transactions

For a summary of related party transactions, see Note ~~13,~~15, Related Party Transactions, to our accompanying condensed consolidated financial statements, and Note ~~13,~~15, Related Party Transactions, to the consolidated financial statements that are a part of our ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021.~~25, 2022.

Funds from Operations and Modified Funds from Operations

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

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on funds from operations approved by the Board of Governors of NAREIT, 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 certain real estate assets and 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.

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

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valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related depreciation and amortization and impairments, provides a further understanding of our performance to investors and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income (loss).

However, FFO and modified funds from operations attributable to controlling interest, or MFFO, as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real 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.

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~~the initial offering stage has been completed and our properties have been acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the publicly registered, non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our ~~initial~~ offering stage and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after ~~our~~the initial offering stage has been completed and properties have been acquired, as it excludes expensed acquisition fees and expenses that have a negative effect on our initial operating performance during the periods in which properties are acquired.

We define MFFO, a non-GAAP measure, consistent with the Practice Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline, issued by the ~~IPA.~~IPA in November 2010. The Practice Guideline defines modified funds from operations as funds from operations further

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adjusted for the following items included in the determination of GAAP net income (loss): expensed acquisition fees and costs; amounts relating to deferred rent and amortization of above- and below-market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to closer to an expected to be received cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect modified funds from operations on the same basis. Our MFFO calculation complies with the IPA’s Practice Guideline described above.

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.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate funds from operations and modified funds from operations the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations, which is an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating

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periods, and in particular, after the offering and acquisition stages are complete. FFO and MFFO are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO.

For ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2022 and 2021, we recognized government grants ~~through economic stimulus programs of the CARES Act~~ as grant income or as a reduction of property operating expenses, as applicable, and within ~~income or~~ loss from an unconsolidated ~~entity.~~entities. Such amounts were granted through federal and state government programs, such as through the CARES Act, and which were established for eligible healthcare providers to preserve liquidity in response to the COVID-19 pandemic. See the “Results of Operations” section above for a further discussion. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial condition and results of operations. Without such relief funds, the COVID-19 pandemic ~~impact~~ would have had a material adverse impact to our FFO and MFFO. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ FFO would have been approximately ~~$5,809,000~~$28,244,000 and ~~$10,662,000, respectively, and for the nine months ended September 30, 2021 and 2020, FFO would have been approximately $22,522,000 and $26,563,000,~~$4,458,000, respectively, excluding government grants recognized. For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ MFFO would have been approximately ~~$7,659,000~~$32,722,000 and ~~$8,200,000, respectively, and for the nine months ended September 30, 2021 and 2020, MFFO would have been approximately $22,531,000 and $26,028,000,~~$4,707,000, respectively, excluding government grants recognized.

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The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to FFO and MFFO for the periods presented below:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net loss $ (5,898,000) $ (5,152,000) $ (13,782,000) $ (14,240,000)
Add:
Depreciation and amortization related to real estate — consolidated properties 10,746,000 12,669,000 33,745,000 37,919,000
Depreciation and amortization related to real estate — unconsolidated entity 977,000 880,000 2,889,000 2,640,000
Impairment of real estate investments — consolidated properties — 3,064,000 — 3,064,000
(Gain) loss on disposition of real estate investments — consolidated properties (15,000) — 184,000 —
Impairments and gain or loss on disposition of real estate investments, net — unconsolidated entity 4,000 99,000 7,000 99,000
Net loss attributable to noncontrolling interests 121,000 232,000 489,000 608,000
Less:
Depreciation, amortization and loss on disposition — noncontrolling interests (72,000) (250,000) (406,000) (729,000)
FFO attributable to controlling interest $ 5,863,000 $ 11,542,000 $ 23,126,000 $ 29,361,000
Business acquisition expenses(1) $ 3,800,000 $ 57,000 $ 6,552,000 $ 74,000
Amortization of above- and below-market leases(2) 38,000 31,000 115,000 90,000
Change in deferred rent(3) (523,000) (1,009,000) (2,500,000) (3,232,000)
(Gain) loss in fair value of derivative financial instruments(4) (1,514,000) (1,450,000) (4,431,000) 2,302,000
Adjustments for unconsolidated entity(5) 49,000 (91,000) 273,000 237,000
Adjustments for noncontrolling interests(5) — — — (6,000)
MFFO attributable to controlling interest $ 7,713,000 $ 9,080,000 $ 23,135,000 $ 28,826,000
Weighted average Class T and Class I common shares outstanding — basic and diluted 81,704,261 80,788,359 81,635,053 80,498,693
Net loss per Class T and Class I common share — basic and diluted $ (0.07) $ (0.06) $ (0.17) $ (0.18)
FFO attributable to controlling interest per Class T and Class I common share — basic and diluted $ 0.07 $ 0.14 $ 0.28 $ 0.36
MFFO attributable to controlling interest per Class T and Class I common share — basic and diluted $ 0.09 $ 0.11 $ 0.28 $ 0.36


	Three Months Ended March 31,
	2022		2021
Net loss	$	(897,000)	$	(16,273,000)
Add:
Depreciation and amortization related to real estate �� consolidated properties	42,311,000		25,723,000
Depreciation and amortization related to real estate — unconsolidated entities	426,000		806,000

Less:
(Gain) loss on dispositions of real estate investments — consolidated properties	(756,000)		335,000
Net (income) loss attributable to noncontrolling interests	(2,059,000)		4,426,000
Depreciation, amortization and gain/loss on dispositions — noncontrolling interests	(6,409,000)		(4,765,000)
FFO attributable to controlling interest	$	32,616,000	$	10,252,000

Business acquisition expenses(1)	$	173,000	$	1,248,000
Amortization of above- and below-market leases(2)	505,000		36,000
Amortization of closing costs(3)	56,000		47,000
Change in deferred rent(4)	(1,026,000)		(334,000)
Loss on debt extinguishments(5)	4,591,000		2,288,000
Gain in fair value of derivative financial instruments(6)	(500,000)		(1,821,000)
Foreign currency loss (gain)(7)	1,387,000		(415,000)

Adjustments for unconsolidated entities(8)	105,000		171,000
Adjustments for noncontrolling interests(8)	(813,000)		(971,000)
MFFO attributable to controlling interest	$	37,094,000	$	10,501,000
Weighted average common shares outstanding — basic and diluted	262,516,815		179,627,778
Net loss per common share — basic and diluted	$	—	$	(0.09)
FFO attributable to controlling interest per common share — basic and diluted	$	0.12	$	0.06
MFFO attributable to controlling interest per common share — basic and diluted	$	0.14	$	0.06

___________

(1)In evaluating investments in real estate, we differentiate the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for publicly registered, non-listed REITs that have completed their acquisition activity and have other similar operating characteristics. By excluding business acquisition expenses that have been deducted as expenses in the determination of GAAP net income or loss, we believe MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Business acquisition expenses include payments to our former advisor or its affiliates and third parties.

(2)Under GAAP, above- and below-market leases are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real ~~estate-related~~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, closing costs are amortized over the term of our debt security investment as an adjustment to the yield on our debt security investment. This may result in income recognition that is different than the contractual cash flows under our debt security investment. By adjusting for the amortization of the closing costs, MFFO may provide useful supplemental information on the realized economic impact of our debt security investment, providing insight on the expected contractual cash flows of such investment, and aligns results with management’s analysis of operating performance.

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(4)Under GAAP, as a lessor, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays). As a lessee, we record amortization of right-of-use assets and accretion of lease liabilities for

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our operating leases. This may result in income or expense recognition that is significantly different than the underlying contract terms. By adjusting ~~for~~ such amounts, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns results with management’s analysis of operating performance.

~~(4)~~(5)The loss associated with the early extinguishment of debt primarily relates to the write-off of unamortized deferred financing fees, write-off of unamortized debt discount or premium, penalties, or other fees incurred. We believe that adjusting for such non-recurring losses provides useful supplemental information because such charges (or losses) may not be reflective of on-going business transactions and operations and is consistent with management’s analysis of our operating performance.

(6)Under GAAP, we are required to include changes in fair value of our derivative financial instruments in the determination of net income or loss. We believe that adjusting for the change in fair value of our derivative financial instruments to arrive at MFFO is appropriate because such adjustments may not be reflective of on-going operations and reflect unrealized impacts on value based only on then current market conditions, although they may be based upon general market conditions. The need to reflect the change in fair value of our derivative financial instruments is a continuous process and is analyzed on a quarterly basis in accordance with GAAP.

~~(5)~~(7)We believe that adjusting for the change in foreign currency exchange rates provides useful information because such adjustments may not be reflective of on-going operations.

(8)Includes all adjustments to eliminate the unconsolidated ~~entity’s~~entities’ share or noncontrolling interests’ share, as applicable, of the adjustments described in notes (1) – ~~(4)~~(7) above to convert our FFO to MFFO.

Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss on ~~disposition~~dispositions, impairment of real estate investments, income or loss from unconsolidated ~~entity,~~entities, foreign currency gain or loss, other income and income tax benefit or 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 should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of cash flow available to fund our cash needs including our ability to make distributions to our stockholders. NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operating performance. Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any business acquisition expenses.

We believe that NOI is an appropriate supplemental performance measure to reflect the performance of our operating assets because NOI excludes certain items that are not associated with the operations of the properties. We believe that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.

For ~~both~~ the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~we did not recognize any government grants. For both the three and nine months ended September 30, 2020,~~ we recognized government grants ~~through economic stimulus programs of the CARES Act~~ as grant ~~income.~~income or as a reduction of property operating expenses, as applicable. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial ~~condition.~~condition and results of operations. Without such relief ~~proceeds, the negative impact of~~funds, the COVID-19 pandemic would have had a material adverse impact to our NOI. For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2022 and 2021, NOI would have been approximately ~~$17,165,000~~$68,470,000 and ~~$54,108,000,~~$29,852,000, respectively, excluding government grants recognized.

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To facilitate understanding of this financial measure, the following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to NOI for the periods presented below:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net loss $ (5,898,000) $ (5,152,000) $ (13,782,000) $ (14,240,000)
General and administrative 4,304,000 3,672,000 11,710,000 11,960,000
Business acquisition expenses 3,800,000 57,000 6,552,000 74,000
Depreciation and amortization 10,746,000 12,669,000 33,745,000 37,919,000
Interest expense 3,447,000 3,389,000 10,125,000 17,425,000
Impairment of real estate investments — 3,064,000 — 3,064,000
(Gain) loss on disposition of real estate investments (15,000) — 184,000 —
(Income) loss from unconsolidated entity (70,000) 377,000 1,027,000 (952,000)
Other income (33,000) (8,000) (49,000) (278,000)
Income tax benefit — (39,000) — —
Net operating income $ 16,281,000 $ 18,029,000 $ 49,512,000 $ 54,972,000

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~~Subsequent Events~~

~~For a discussion of subsequent events, see Note 20, Subsequent Events, to our accompanying condensed consolidated financial statements.~~


	Three Months Ended March 31,
	2022		2021
Net loss	$	(897,000)	$	(16,273,000)
General and administrative	11,119,000		7,257,000
Business acquisition expenses	173,000		1,248,000
Depreciation and amortization	42,311,000		25,723,000
Interest expense	22,825,000		18,544,000
(Gain) loss on dispositions of real estate investments	(756,000)		335,000

(Income) loss from unconsolidated entities	(1,386,000)		1,771,000
Foreign currency loss (gain)	1,387,000		(415,000)
Other income	(1,260,000)		(272,000)
Income tax expense	168,000		163,000
Net operating income	$	73,684,000	$	38,081,000

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 ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021.~~25, 2022.

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 other permitted investments. Our interest rate risk is monitored using a variety of techniques. Our interest rate risk management objectives are to limit the impact of interest rate ~~changes~~increases 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 continue to enter into, derivative financial instruments such as interest rate swaps and interest rate caps in order to mitigate our interest rate risk on a related financial ~~instrument.~~instrument, and for which we have not and may not elect hedge accounting treatment. We dodid not elect to apply hedge accounting treatment to these derivatives; therefore, changes in the fair value of interest rate derivative financial instruments ~~are~~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.~~operations and comprehensive income (loss). As of ~~September 30, 2021, our interest rate swap liabilities are recorded in our accompanying condensed consolidated balance sheets at their aggregate fair value of $824,000.~~March 31, 2022, we did not have any derivative financial instruments. We ~~will~~do not enter into ~~derivatives or interest rate~~derivative transactions for speculative purposes.

In July 2017, the Financial Conduct Authority, or FCA, that regulates LIBOR announced its intention to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified ~~the Secured Overnight Financing Rate, or~~ SOFR as its preferred alternative to United States dollar LIBOR in derivatives and other financial contracts. ~~In March 2021, the~~The FCA ~~confirmed its intention to cease~~ceased publishing one-week and two-month LIBOR after December 31, 2021 and intends to cease publishing all remaining LIBOR after June 30, 2023. ~~At this time, it is not known whether or when SOFR or other alternative reference~~On January 19, 2022, we entered into the 2022 Credit Agreement that bears interest at varying rates ~~will attain market traction as replacements~~based upon SOFR. Please see Note 9, Lines of Credit and Term Loans — 2022 Credit Facility, to our accompanying condensed consolidated financial statements for ~~LIBOR.~~a further discussion.

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We have variable rate debt outstanding ~~under our credit facilities~~ and ~~derivative financial instruments~~ maturing on ~~November 19, 2021~~various dates from 2022 to 2031 that are indexed to LIBOR. ~~We intend to extend the maturity date of such variable rate credit facilities for an additional 12 months pursuant to the terms of the 2018 Credit Agreement, as amended.~~ As such, we are monitoring and evaluating the related risks of the discontinuation of LIBOR, which include possible changes to the interest on loans or amounts received and paid on derivative instruments we may enter into in the future. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans or derivative instruments tied to LIBOR could also be impacted ~~if LIBOR is discontinued.~~by the discontinuation of LIBOR. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty. If a contract is not transitioned to an alternative rate, ~~and LIBOR is discontinued,~~upon LIBOR’s discontinuation the impact on our contracts is likely to vary. ~~If LIBOR is discontinued, interest rates on our current or future indebtedness may be adversely affected.~~ Currently we cannot estimate the overall impact of the phase-out of LIBOR on our current debt agreements, although it is possible that an alternative variable rate could raise our borrowing costs. It is not possible to predict whether LIBOR will continue to be viewed as an acceptable market “benchmark” prior to June 30, 2023, and it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

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As of ~~September 30, 2021,~~March 31, 2022, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes.


		Expected Maturity Date																								Expected Maturity Date
		2021			2022			2023			2024			2025			Thereafter			Total			Fair Value			2022			2023			2024			2025			2026			Thereafter			Total			Fair Value

Assets																									Assets
Debt security held-to-maturity																									Debt security held-to-maturity	$	—		$	—		$	—		$	93,433,000		$	—		$	—		$	93,433,000		$	93,859,000
Weighted average interest rate on maturing fixed-rate debt security																									Weighted average interest rate on maturing fixed-rate debt security	—		%	—		%	—		%	4.24		%	—		%	—		%	4.24		%	—
Liabilities																									Liabilities
Fixed-rate debt — principal payments	Fixed-rate debt — principal payments	$	132,000		$	651,000		$	680,000		$	711,000		$	5,878,000		$	10,239,000		$	18,291,000		$	20,891,000	Fixed-rate debt — principal payments	$	61,521,000		$	34,521,000		$	71,636,000		$	29,107,000		$	154,927,000		$	510,768,000		$	862,480,000		$	777,535,000
Weighted average interest rate on maturing fixed-rate debt	Weighted average interest rate on maturing fixed-rate debt	4.36		%	4.49		%	4.49		%	4.50		%	3.85		%	3.83		%	3.92		%	—		Weighted average interest rate on maturing fixed-rate debt	4.05		%	3.78		%	3.53		%	3.35		%	2.98		%	3.01		%	3.16		%	—
Variable-rate debt — principal payments	Variable-rate debt — principal payments	$	488,900,000		$	—		$	—		$	—		$	—		$	—		$	488,900,000		$	488,995,000	Variable-rate debt — principal payments	$	60,431,000		$	391,343,000		$	92,338,000		$	464,000		$	384,875,000		$	569,104,000		$	1,498,555,000		$	1,505,193,000
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2021)		2.05		%	—		%	—		%	—		%	—		%	—		%	2.05		%	—
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of March 31, 2022)																									Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of March 31, 2022)	2.33		%	3.20		%	3.76		%	2.33		%	2.07		%	2.03		%	2.46		%	—

Debt Security Investment, Net

As of March 31, 2022, the net carrying value of our debt security investment was $80,239,000. 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 16, 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 March 31, 2022.

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

Mortgage loans payable ~~was $18,291,000 ($17,409,000, net of discount/premium and deferred financing costs)~~were $1,121,901,000 as of ~~September 30, 2021.~~March 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, we had ~~three~~67 fixed-rate mortgage loans payable and 11 variable-rate mortgage loans payable with effective interest rates ranging from ~~3.67%~~2.21% to 5.25% per ~~annum.~~annum and a weighted average effective interest rate of 3.16%. In addition, as of ~~September 30, 2021,~~March 31, 2022, we had ~~$488,900,000~~$1,239,134,000 outstanding under our ~~line~~lines of credit and term loans, at a weighted average interest rate of ~~2.05%~~2.32% per annum.

As of ~~September 30, 2021,~~March 31, 2022, the weighted average effective interest rate on our outstanding debt ~~factoring in our fixed-rate interest rate swaps,~~ was ~~3.32%~~2.72% per annum. An increase in the variable interest rate on our variable-rate ~~line~~mortgage loans payable and lines of credit and term loans constitutes a market risk. As of ~~September 30, 2021,~~March 31, 2022, 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 ~~line~~mortgage loans payable and lines of credit and term loans by ~~$983,000,~~$7,597,000, or ~~5.63%~~11.7% of total annualized interest expense on our mortgage loans payable and ~~our line~~lines of credit and term loans. See Note 6,8, Mortgage Loans Payable, Net and Note ~~7, Line~~9, Lines of Credit and Term Loans, to our accompanying condensed consolidated financial ~~statements, for a further discussion.~~statements.

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Other Market Risk

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

Item 4. Controls and Procedures.

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

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of ~~September 30, 2021~~March 31, 2022 was conducted under the supervision and with the participation of our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that our disclosure controls and procedures, as of ~~September 30, 2021,~~March 31, 2022, 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, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

For a discussion of our legal proceedings, see Note ~~10,~~12, Commitments and Contingencies — Litigation, to our accompanying condensed consolidated financial statements.

Item 1A. Risk Factors.

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

There were no material changes from the risk factors previously disclosed in our ~~2020~~2021 Annual Report on Form 10-K, as filed with the SEC on March ~~26, 2021, except as noted below.~~

~~Risks Related to Our Business~~

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

In December 2019, COVID-19 was identified in Wuhan, China. This virus continues to spread globally including in the United States. As a result of the COVID-19 pandemic and related shelter-in-place, business re-opening and quarantine restrictions, our property values, NOI and revenues may decline, and our tenants, operating partners and managers have been, and may continue to be, limited in their ability to generate income, service patients and residents and/or properly manage our properties. In addition, based on preliminary information available to management as of October 29, 2021, we have experienced an approximate 14.9% and 4.5% decline in resident occupancies since February 2020, as well as a significant increase in costs to care for residents, at our senior housing — RIDEA facilities and our integrated senior health campuses, respectively. Our leased, non-RIDEA senior housing and skilled nursing facility tenants have also experienced, and may continue to experience, similar pressures related to occupancy declines and expense increases, which may impact their ability to pay rent and have an adverse effect on our operations. However, through October 2021, substantially all rents have been collected from such leased, non-RIDEA senior housing and skilled nursing facility tenants. Given the significant uncertainty of the impact of the COVID-19 pandemic, we are unable to predict the impact it will have on such tenants’ continued ability to pay rent. Therefore, information provided regarding prior rent collections should not serve as an indication of expected future rent collections. As such, our immediate focus continues to be on resident occupancy recovery and operating expense management.

The emergence of the Delta variant and other new variants may put additional pressure on our operations. Additionally, the public perception of a risk of a pandemic or media coverage of the COVID-19 pandemic and related deaths or confirmed cases, or public perception of health risks linked to perceived regional healthcare safety in our senior housing or SNFs, particularly if focused on regions in which our properties are located, may adversely affect our business operations by reducing occupancy demand at our facilities. We have also held discussions with our tenants, operating partners and managers and they have expressed that the ultimate impact of the COVID-19 pandemic on their business operations is uncertain.

Although vaccines for COVID-19 that have been approved for use are generally effective, vaccine boosters may be necessary and there can be no assurance that efforts to vaccinate the public will be successful in ending the pandemic or that vaccines will be effective against variants such as the Delta variant. The rapid development and fluidity of this situation continues to preclude any prediction as to the ultimate adverse impact of the COVID-19 pandemic on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and the performance of our investments. The full extent of the impact and effects of the COVID-19 pandemic will depend on future developments, including, among other factors, the success of efforts to contain or treat COVID-19 and its variants, the use and distribution of effective vaccines and availability of such vaccines and vaccine boosters, potential resurgences of COVID-19, along with the related travel advisories, quarantines and business restrictions, the recovery time of the disrupted supply chains and industries, the impact of the labor market interruptions, the impact of government interventions, and the performance or valuation outlook for healthcare REIT markets and certain property types. The COVID-19 pandemic and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk and have had an adverse effect on us and may have a material adverse effect on us in the future.

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The integrated senior health campuses managed by Trilogy Management Services, LLC, or TMS, account for a significant portion of our revenues and/or operating income. Adverse developments in TMS’s business or financial condition could have a material adverse effect on us.

As of November 15, 2021, TMS managed all of the day-to-day operations for our integrated senior health campuses pursuant to long-term management agreements. These integrated senior health campuses represent a substantial portion of our portfolio, based on their gross book value, and account for a significant portion of our revenues and/or NOI. Although we have various rights as the owner of these integrated senior health campuses under our management agreements, we rely on TMS’s personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our integrated senior health campuses operations efficiently and effectively, and to identify and manage development opportunities for new integrated senior health campuses. We also rely on TMS to provide accurate campus-level financial results for our integrated senior health campuses in a timely manner and to otherwise operate our integrated senior health campuses in compliance with the terms of our management agreements and all applicable laws and regulations. We depend on TMS’s ability to attract and retain skilled personnel to provide these services. A shortage of nurses or other trained personnel or general inflationary pressures may force TMS to enhance its pay and benefits package to compete effectively for such personnel, but it may not be able to offset these added costs by increasing the rates charged to residents. As such, any adverse developments in TMS’s business or financial condition, including its ability to retain key personnel, could impair its ability to manage our integrated senior health campuses efficiently and effectively and could have a material adverse effect on us. In addition, if TMS experiences any significant financial, legal, accounting or regulatory difficulties due to a weak economy, industry downturn or otherwise, such difficulties could result in, among other adverse events, acceleration of its indebtedness, impairment of its continued access to capital, the enforcement of default remedies by its counterparties, or the commencement of insolvency proceedings by or against it under the United States Bankruptcy Code. Any one or a combination of these risks could have a material adverse effect on us.

In the event that our management agreements with TMS are terminated or not renewed, we may be unable to replace TMS with another suitable manager, or, if we were successful in locating such a manager, that it would manage the integrated senior health campuses effectively or that any such transition would be completed timely, which may have a material adverse effect on us.

We continually monitor and assess our contractual rights and remedies under our management agreements with TMS. When determining whether to pursue any existing or future rights or remedies under those agreements, including termination rights, we consider numerous factors, including legal, contractual, regulatory, business and other relevant considerations. In the event that we exercise our rights to terminate management agreements with TMS for any reason or such agreements are not renewed upon expiration of their terms, we would attempt to reposition the affected integrated senior health campuses with another manager. Although we believe that many qualified national and regional operators would be interested in managing our integrated senior health campuses, we cannot provide any assurance that we would be able to locate another suitable manager or, if we were successful in locating such a manager, that it would manage the integrated senior health campuses effectively or that any such transition would be completed timely. Any such transition would likely result in disruption of the operation of such facilities, including matters relating to staffing and reporting. Moreover, the transition to a replacement manager may require approval by the applicable regulatory authorities and, in most cases, one or more of our lenders including the mortgage lenders for the integrated senior health campuses, and we cannot provide any assurance that such approvals would be granted on a timely basis, if at all. Any inability to replace, or delay in replacing TMS as the manager of integrated senior health campuses could have a material adverse effect on us.

~~Risks Related to Investments in Real Estate~~

~~A high concentration of our properties in a particular geographic area would magnify the effects of downturns in that geographic area.~~

We have a concentration of properties in particular geographic areas; therefore, any adverse situation that disproportionately effects one of those areas would have a magnified adverse effect on our portfolio. As of November 15, 2021, our properties located in Indiana accounted for approximately 30.7% of our total property portfolio’s annualized base rent or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in such state’s economy.

~~Most of our costs, such as operating and general and administrative expenses, interest expense, and real estate acquisition and construction costs, are subject to inflation.~~

A significant portion of our operating expenses is sensitive to inflation. These include expenses for property-related costs such as insurance, utilities and repairs and maintenance. Property taxes are also impacted by inflationary changes as taxes are typically regularly reassessed in most states based on changes in the fair value of our properties. We also have ground lease expenses in certain of our properties. Ground lease costs are contractual, but in some cases, lease payments reset every few years based on changes on consumer price indexes.

~~Table of Contents~~

Operating expenses on our non-RIDEA properties, with the exception of ground lease rental expenses, are typically recoverable through our lease arrangements, which allow us to pass through substantially all expenses associated with property taxes, insurance, utilities, repairs and maintenance, and other operating expenses (including increases thereto) to our tenants. As of September 30, 2021, the majority of our existing leases were either triple net leases or leases that allow us to recover operating expenses, and also provided for the recapture of capital expenditures. Our remaining leases are generally gross leases, which provide for recoveries of operating expenses above the operating expenses from the initial year within each lease. During inflationary periods, we expect to recover increases in operating expenses from our triple net leases and our gross leases. As a result, we do not believe that inflation would result in a significant adverse effect on our net operating income, results of operations, and operating cash flows at the property level. For our RIDEA properties, increases in operating expenses, including labor, that are caused by inflationary pressures will generally be passed through to the us and may adversely impact our net operating income, results of operations and operating cash flows.

Effective upon the Merger and the AHI Acquisition on October 1, 2021, our general and administrative expenses consist primarily of compensation costs, as well as professional and legal fees. Annually, our employee compensation is adjusted to reflect merit increases; however, to maintain our ability to successfully compete for the best talent, rising inflation rates may require us to provide compensation increases beyond historical annual merit increases, which may significantly increase our compensation costs. Similarly, professional and legal fees are also subject to the impact of inflation and expected to increase proportionately with increasing market prices for such services. Consequently, inflation is expected to increase our general and administrative expenses over time and may adversely impact our results of operations and operating cash flows.

Also, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. Our exposure to increases in interest rates is limited to our variable-rate borrowings, which consist of borrowings under the Credit Facilities and variable-rate mortgage loans payable. As of September 30, 2021, our outstanding debt and GAHR III outstanding debt aggregated $2.4 billion, of which 31.2% was unhedged variable-rate debt. Therefore, a significant increase in inflation rates would have a material adverse impact on our financing costs and interest expense.

We have long term lease agreements with our tenants that contain effective annual rent escalations that were either fixed or indexed based on a consumer price index or other index. We believe our annual lease expirations allow us to reset these leases to market rents upon renewal or re-leasing and that annual rent escalations within our long-term leases are generally sufficient to offset the effect of inflation on non-recoverable costs, such as general and administrative expenses and interest expense. However, it is possible that during higher inflationary periods the impact of inflation will not be adequately offset by the resetting of rents from our renewal and re-leasing activities or our annual rent escalations. As a result, during inflationary periods in which the inflation rate exceeds the annual rent escalation percentages within our lease contracts, we may not adequately mitigate the impact of inflation, which may adversely affect to our business, financial condition, results of operations, and cash flows.

Additionally, inflationary pricing may have a negative effect on the real estate acquisitions and construction costs necessary to complete our development and redevelopment projects, including, but not limited to, costs of construction materials, labor, and services from third-party contractors and suppliers. Higher acquisition and construction costs could adversely impact our net investments in real estate and expected yields in our development and redevelopment projects, which may make otherwise lucrative investment opportunities less profitable to us. As a result, our financial condition, results of operations, and cash flows, we well as our ability to pay dividends, could be adversely affected over time.

~~Risks Related to Debt Financing~~

Changes in banks’ inter-bank lending rate reporting practices or the method pursuant to which LIBOR is determined may adversely affect the value of the financial obligations to be held or issued by us that are linked to LIBOR.

LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective while others are still to be implemented. These reforms may cause such “benchmarks” to perform differently than in the past, or have other consequences which cannot be predicted. As published by the Federal Reserve Bank of New York, it currently appears that, over time, United States dollar LIBOR may be replaced by SOFR. In March 2021, the FCA confirmed its intention to cease publishing one-week and two-month LIBOR after December 31, 2021 and all remaining LIBOR after June 30, 2023. At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR. Market participants are still considering how various types of financial instruments and securitization vehicles should react to a discontinuation of LIBOR. It is possible that not all of our assets and liabilities will transition away from LIBOR at the same time, or to the same alternative reference rate, in each case increasing the difficulty of hedging. The process of transition involves operational risks. It is also possible that no transition will occur for many financial instruments. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to

~~Table of Contents~~

LIBOR that may be implemented. Uncertainty as to the nature of such potential changes, alternative reference rates or other reforms may adversely affect the market for or value of any securities on which the interest or dividend is determined by reference to LIBOR, loans, derivatives and other financial obligations or on our overall financial condition or results of operations. More generally, any of the above changes or any other consequential changes to LIBOR or any other “benchmark” as a result of international, national or other proposals for reform or other initiatives, or any further uncertainty in relation to the timing and manner of implementation of such changes, could have a material adverse effect on the value of financial assets and liabilities based on or linked to a “benchmark.”

~~Risks Related to the Merger~~

~~The ownership position of our stockholders and the stockholders of GAHR III is diluted by the REIT Merger~~.

The REIT Merger diluted the ownership percentage of our stockholders and resulted in GAHR III stockholders having an ownership stake in the Combined Company that is smaller than their prior stake in GAHR III. Based on the number of shares of our common stock and GAHR III common stock outstanding on September 30, 2021, our stockholders, on the one hand, and former GAHR III stockholders, on the other hand, owned approximately 31.3% and 68.7%, respectively, of the issued and outstanding shares of our common stock following the REIT Merger on October 1, 2021. Consequently, each of our stockholders and each GAHR III stockholder, as a general matter, has less influence over the management and policies of the Combined Company following the Merger than previously exercisable over our management and policies and the management and policies of GAHR III, as applicable.

If and when the Combined Company completes a liquidity event, the market value ascribed to the shares of common stock of the Combined Company upon the liquidity event may be significantly lower than the current estimated per share NAV after the consummation of the Merger.

The estimated per share NAV of our common stock was not immediately determined following the consummation of the Merger. In the event that the Combined Company completes a liquidity event after consummation of the Merger, such as a listing of its shares on a national securities exchange, a merger in which stockholders of the Combined Company receive securities that are listed on a national securities exchange, or a sale of the Combined Company for cash, the market value of the shares of the Combined Company upon consummation of such liquidity event may be significantly lower than the current estimated per share NAV of our common stock that may be reflected on the account statements of stockholders of the Combined Company after consummation of the Merger. For example, if the shares of the Combined Company are listed on a national securities exchange at some point after the consummation of the Merger, the trading price of the shares may be significantly lower than the most recent estimated per share NAV of our common stock of $9.22 as of September 30, 2020.

~~As a result of the AHI Acquisition, the Combined Company is newly self-managed.~~

As a result of the AHI Acquisition and the Merger, the Combined Company is a self-managed REIT. The Combined Company will no longer bear the costs of the various fees and expense reimbursements previously paid to the former external advisors of GAHR III and our company and their affiliates; however, the Combined Company’s expenses will include the compensation and benefits of the Combined Company’s officers, employees and consultants, as well as overhead previously paid by the former external advisors of GAHR III and our company and their affiliates. The Combined Company’s employees will provide services historically provided by the external advisors and their affiliates. The Combined Company will be subject to potential liabilities that are commonly faced by employers, such as workers’ disability and compensation claims, potential labor disputes, and other employee-related liabilities and grievances, and the Combined Company will bear the cost of the establishment and maintenance of any employee compensation plans. In addition, the Combined Company has not previously operated as a self-managed REIT and may encounter unforeseen costs, expenses and difficulties associated with providing these services on a self-advised basis. If the Combined Company incurs unexpected expenses as a result of its self-management, its results of operations could be lower than they otherwise would have been.

~~If the REIT Merger does not qualify as a tax-free reorganization, there may be adverse tax consequences.~~

The REIT Merger is intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. The closing of the REIT Merger was conditioned on the receipt by us and GAHR III of an opinion of counsel to the effect that the REIT Merger will qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. However, these legal opinions will not be binding on the IRS or on the courts. If, for any reason, the REIT Merger were to fail to qualify as a tax-free reorganization, then each GAHR III stockholder generally would recognize gain or loss, as applicable, equal to the difference between (1) the merger consideration (i.e. the fair market value of the shares of our Class I common stock) received by such GAHR III stockholder in the REIT Merger; and (2) such GAHR III stockholder’s adjusted tax basis in its GAHR III common stock.

25, 2022.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~None~~Recent Sales of Unregistered Securities

None.

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. 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 AHR DRIP.

On October 4, 2021, our board approved our amended and restated share repurchase plan that included a change in the repurchase price with respect to repurchases resulting from the death or qualifying disability (as such term is defined in our share repurchase plan) of stockholders, to the most recently published estimated per share NAV. In addition, on October 4, 2021, our board authorized the partial reinstatement of our share repurchase plan with respect to requests to repurchase shares resulting from the death or qualifying disability of stockholders, 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 and shall be rejected.

During the three months ended March 31, 2022, 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
January 1, 2022 to January 31, 2022	448,375	$	9.22	448,375	(1)
February 1, 2022 to February 28, 2022	—	$	—	—	(1)
March 1, 2022 to March 31, 2022	—	$	—	—	(1)
Total	448,375	$	9.22	448,375

___________

(1)A description of the maximum number of shares that may be purchased under our share repurchase plan is included in Note 14, Equity — Share Repurchase Plan, to our accompanying condensed consolidated financial statements.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the period ended ~~September 30, 2021~~March 31, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).


~~2.1~~			Agreement and Plan of Merger, dated June 23, 2021, by and among Griffin-American Healthcare REIT IV, Inc., Griffin-American Healthcare REIT IV Holdings, LP, Continental Merger Sub, LLC, Griffin-American Healthcare REIT III, Inc. and Griffin-American Healthcare REIT III Holdings, LP (included as Exhibit 2.1 to our Current Report on Form 8-K (File No. 000-55775) filed June 24, 2021 and incorporated herein by reference)

3.1			Fourth Articles of Amendment and Restatement of Griffin-American Healthcare REIT IV, Inc., dated October 1, 2021 (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55775) filed October 1, 2021 and incorporated herein by reference)

3.2			Bylaws of American Healthcare REIT, Inc. (included as Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55775) filed October 5, 2021 and incorporated herein by reference)

~~4.1~~4.1			Amended and Restated Distribution Reinvestment Plan of Griffin-American Healthcare REIT IV, Inc. (included as Exhibit 4.6 to our Registration Statement on Form S-3 (File No. 333-229301) filed January 18, 2019 and incorporated herein by reference)

~~10.1~~10.1			~~Form~~Amended and Restated Credit Agreement by and among American Healthcare REIT Holdings, L.P., American Healthcare REIT, Inc. and certain subsidiaries, Bank of ~~Indemnification Agreement~~America, N.A., KeyBank, National Association, Citizens Bank, National Association, Bank of the West, Fifth Third Bank, National Association, Truist Bank, Regions Bank, KeyBanc Capital Markets and BofA Securities, Inc. dated January 19, 2022 (included as Exhibit 10.1 to our Current Report on Form 8-K (File No. ~~000-55775)~~000-055775) filed ~~October 1, 2021~~January 25, 2022 and incorporated herein by reference)

10.2			~~Second Amended~~Transition Services Agreement by and ~~Restated Agreement of Limited Partnership of~~among American Healthcare REIT, Inc., American Healthcare Opps Holdings, L P ,LLC and Jeffrey T. Hanson, dated ~~October 1, 2021~~March 24, 2022 (included as Exhibit ~~10.1 to the Company’s Current Form on 8-K (File No. 000-55775) filed October 5, 2021 and incorporated by reference~~)

~~10.3~~			~~Amended and Restated Share Repurchase Plan (included as Exhibit 10.2~~10.15 to our ~~Current~~Annual Report on Form ~~8-K (File No. 000-55775)~~10-K for the year ended December 31, 2021 filed ~~October 5, 2021~~on March 25, 2022 and incorporated herein by reference)

~~10.4~~			~~Registration Rights Agreement, dated October 1, 2021, by and between Griffin-American Healthcare REIT III, Inc. and Griffin-American Healthcare REIT III Holdings, LP (included as~~ ~~Exhibit 10.1 to Griffin-American Healthcare REIT III, Inc’s Current Report on Form 8-K (File No. 000-55434) filed~~ ~~October 1, 2021~~ ~~and incorporated herein by reference~~)

10.5*			~~Second Amendment to Credit Agreement by and among Griffin-American Healthcare REIT IV Holdings, L~~P ~~, Griffin-American Healthcare REIT IV, Inc., Subsidiary Guarantors, Lenders and Bank of America, N.A., dated October 1, 2021~~

~~10.6~~			Credit Agreement dated as of January 25, 2019, among Griffin-American Healthcare REIT III Holdings, LP, Griffin-American Healthcare REIT III, Inc. and certain subsidiaries, certain lender parties, Bank of America, N.A., KeyBank, National Association, Citizens Bank, National Association, Merrill Lynch, Pierce, Fenner & Smith Incorporated and KeyBanc Capital Markets (included as Exhibit 10.1 to Griffin-American Healthcare REIT III, Inc’s Current Report on Form 8-K (File No. 000-55434) filed January 31, 2019 and incorporated herein by reference)

~~10.7~~			First Amendment to Credit Agreement by and among Griffin-American Healthcare REIT III Holdings, LP, Griffin-American Healthcare REIT III, Inc., Subsidiary Guarantors, Lenders and Bank of America, N.A., dated July 28, 2020 (included as Exhibit 10.1 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed August 3, 2020 and incorporated herein by reference)

10.8*			Second Amendment to Credit Agreement by and among Griffin-American Healthcare REIT III Holdings, LP, Griffin-American Healthcare REIT III, Inc., Subsidiary Guarantors, Lenders and Bank of America, N.A., dated October 1, 2021

~~10.9~~			First Amended and Restated Senior Secured Credit Agreement dated as of September 5, 2019, among Trilogy RER, LLC, and certain subsidiaries of Trilogy RER, LLC, Trilogy OpCo, LLC and Trilogy Pro Services, LLC, KeyBank National Association and the other lenders which are parties thereto from time to time, CIT Bank, N.A., Regions Bank, KeyBanc Capital Markets, Inc., Regions Capital Markets, Bank of America, N.A. and The Huntington National Bank (included as Exhibit 10.1 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed September 11, 2019 and incorporated herein by reference)

~~10.10~~			Unconditional Guaranty of Payment dated as of September 5, 2019, by Trilogy Investors, LLC, Trilogy Healthcare Holdings, Inc., Trilogy Pro Services, LLC and Trilogy OpCo, LLC for the benefit of KeyBank National Association and the other lenders which are parties thereto from time to time, CIT Bank, N.A., Regions Bank, KeyBanc Capital Markets, Inc., Regions Capital Markets, Bank of America, N.A. and The Huntington National Bank (included as Exhibit 10.2 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed September 11, 2019 and incorporated herein by reference)

~~10.11~~			~~Offer Letter, dated October 1, 2021, between Griffin-American Healthcare REIT III, Inc. and Jeffrey T. Hanson (included as~~ ~~Exhibit 10.2 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed~~ ~~October 1, 2021and incorporated herein by reference~~)

~~Table of Contents~~


~~10.12~~			~~Offer Letter, dated October 1, 2021, between Griffin-American Healthcare REIT III, Inc. and Danny Prosky (included as~~ ~~Exhibit 10.3 to Griffin-American Healthcare REIT~~ ~~III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed~~ ~~October 1, 2021and incorporated herein by reference~~)

~~10.13~~			~~Offer Letter, dated October 1, 2021, between Griffin-American Healthcare REIT III, Inc. and Mathieu B. Streiff~~ (~~included as~~ ~~Exhibit 10.4 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed~~ ~~October 1, 2021and incorporated herein by reference~~)

~~10.14~~			~~Offer Letter, dated October 1, 2021, between Griffin-American Healthcare REIT III, Inc. and Brian S. Peay (included as~~ ~~Exhibit 10.5 to Griffin-American Healthcare REIT III, Inc.’s Current Report on Form 8-K (File No. 000-55434) filed~~ ~~October 1, 2021and incorporated herein by reference~~)

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

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

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

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

101.INS*			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.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

104*			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.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

American Healthcare REIT, Inc. ~~(f/k/a Griffin-American Healthcare REIT IV, Inc.)~~

(Registrant)

~~November 15, 2021~~May 16, 2022

By:

/s/ DANNY PROSKY

Date

Danny Prosky

Chief Executive Officer, President and ~~President~~Director

(Principal Executive Officer)

~~November 15, 2021~~May 16, 2022

By:

/s/ BRIAN S. PEAY

Date

Brian S. Peay

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

6259


	Three Months Ended September 30, 2021
	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 — June 30, 2021	81,731,261	$	817,000	$	736,827,000	$	(208,759,000)	$	528,885,000	$	577,000	$	529,462,000
Amortization of nonvested common stock compensation	—	—		21,000		—		21,000		—		21,000
Distributions to noncontrolling interest	—	—		—		—		—		(7,000)		(7,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(92,000)		—		(92,000)		—		(92,000)
Distributions declared ($0.10 per share)	—	—		—		(8,239,000)		(8,239,000)		—		(8,239,000)
Net loss	—	—		—		(5,777,000)		(5,777,000)		(30,000)		(5,807,000)		(1)
BALANCE — September 30, 2021	81,731,261	$	817,000	$	736,756,000	$	(222,775,000)	$	514,798,000	$	540,000	$	515,338,000


	Three Months Ended September 30, 2020
	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 — June 30, 2020	80,599,306	$	805,000	$	726,516,000	$	(159,366,000)	$	567,955,000	$	1,047,000	$	569,002,000
Offering costs — common stock	—	—		5,000		—		5,000		—		5,000
Issuance of common stock under the DRIP	445,239	4,000		4,243,000		—		4,247,000		—		4,247,000
Issuance of vested and nonvested restricted common stock	15,000	—		29,000		—		29,000		—		29,000
Amortization of nonvested common stock compensation	—	—		44,000		—		44,000		—		44,000
Repurchase of common stock	(71,551)	—		(706,000)		—		(706,000)		—		(706,000)
Distributions to noncontrolling interest	—	—		—		—		—		(22,000)		(22,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(208,000)		—		(208,000)		—		(208,000)
Distributions declared ($0.10 per share)	—	—		—		(8,150,000)		(8,150,000)		—		(8,150,000)
Net loss	—	—		—		(4,920,000)		(4,920,000)		(105,000)		(5,025,000)		(1)
BALANCE — September 30, 2020	80,987,994	$	809,000	$	729,923,000	$	(172,436,000)	$	558,296,000	$	920,000	$	559,216,000


	Nine Months Ended September 30, 2021
	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, 2020	81,339,337	$	813,000	$	733,192,000	$	(185,047,000)	$	548,958,000	$	781,000	$	549,739,000
Offering costs — common stock	—	—		5,000		—		5,000		—		5,000
Issuance of common stock under the DRIP	581,491	6,000		5,493,000		—		5,499,000		—		5,499,000
Amortization of nonvested common stock compensation	—	—		105,000		—		105,000		—		105,000
Repurchase of common stock	(189,567)	(2,000)		(1,872,000)		—		(1,874,000)		—		(1,874,000)
Distributions to noncontrolling interest	—	—		—		—		—		(62,000)		(62,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(167,000)		—		(167,000)		—		(167,000)
Distributions declared ($0.30 per share)	—	—		—		(24,435,000)		(24,435,000)		—		(24,435,000)
Net loss	—	—		—		(13,293,000)		(13,293,000)		(179,000)		(13,472,000)		(1)
BALANCE — September 30, 2021	81,731,261	$	817,000	$	736,756,000	$	(222,775,000)	$	514,798,000	$	540,000	$	515,338,000


	Nine Months Ended September 30, 2020
	Stockholders’ Equity
	Class T and Class I Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
BALANCE — December 31, 2019	79,899,874	$	798,000	$	719,894,000	$	(130,613,000)	$	590,079,000	$	—	$	590,079,000
Offering costs — common stock	—	—		67,000		—		67,000		—		67,000
Issuance of common stock under the DRIP	1,643,731	16,000		15,665,000		—		15,681,000		—		15,681,000
Issuance of vested and nonvested restricted common stock	22,500	—		43,000		—		43,000		—		43,000
Amortization of nonvested common stock compensation	—	—		128,000		—		128,000		—		128,000
Repurchase of common stock	(578,111)	(5,000)		(5,344,000)		—		(5,349,000)		—		(5,349,000)
Contribution from noncontrolling interest	—	—		—		—		—		1,250,000		1,250,000
Distributions to noncontrolling interest	—	—		—		—		—		(54,000)		(54,000)
Adjustment to value of redeemable noncontrolling interests	—	—		(530,000)		—		(530,000)		—		(530,000)
Distributions declared ($0.35 per share)	—	—		—		(28,191,000)		(28,191,000)		—		(28,191,000)
Net loss	—	—		—		(13,632,000)		(13,632,000)		(276,000)		(13,908,000)		(1)
BALANCE — September 30, 2020	80,987,994	$	809,000	$	729,923,000	$	(172,436,000)	$	558,296,000	$	920,000	$	559,216,000


	September 30, 2021		December 31, 2020
Amortized intangible assets:
In-place leases, net of accumulated amortization of $30,663,000 and $32,134,000 as of September 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.8 years as of both September 30, 2021 and December 31, 2020)	$	52,112,000	$	61,166,000
Above-market leases, net of accumulated amortization of $1,252,000 and $1,009,000 as of September 30, 2021 and December 31, 2020, respectively (with a weighted average remaining life of 8.5 years and 9.1 years as of September 30, 2021 and December 31, 2020, respectively)	2,292,000		2,587,000
Unamortized intangible assets:
Certificates of need	348,000		348,000
Total	$	54,752,000	$	64,101,000


	September 30, 2021		December 31, 2020
Investment in unconsolidated entity	$	45,627,000	$	46,653,000
Deferred rent receivables	15,101,000		12,395,000
Prepaid expenses, deposits and other assets	3,939,000		9,028,000
Lease commissions, net of accumulated amortization of $687,000 and $426,000 as of September 30, 2021 and December 31, 2020, respectively	3,763,000		2,399,000
Deferred financing costs, net of accumulated amortization of $4,808,000 and $3,397,000 as of September 30, 2021 and December 31, 2020, respectively(1)	313,000		1,724,000
Total	$	68,743,000	$	72,199,000


	Payments Due by Period
	2021		2022-2023		2024-2025		Thereafter		Total
Principal payments — fixed-rate debt	$	132,000	$	1,331,000	$	6,589,000	$	10,239,000	$	18,291,000
Interest payments — fixed-rate debt	179,000		1,370,000		1,113,000		4,970,000		7,632,000
Principal payments — variable-rate debt	488,900,000		—		—		—		488,900,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2021)	1,691,000		—		—		—		1,691,000
Ground lease obligations	213,000		1,056,000		1,072,000		46,565,000		48,906,000
Total	$	491,115,000	$	3,757,000	$	8,774,000	$	61,774,000	$	565,420,000