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, ~~2022~~2023


☐			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)

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 ~~11, 2022,~~10, 2023, there were ~~78,140,362~~19,552,856 shares of Class T common stock and ~~186,704,088~~46,673,320 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, ~~2022~~2023 and December 31, ~~2021~~2022			3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022			5
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022			6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022			9
Notes to Condensed Consolidated Financial Statements			12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			4544
Item 3. Quantitative and Qualitative Disclosures About Market Risk			6460
Item 4. Controls and Procedures			6662

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			6763
Item 1A. Risk Factors			6763
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			7064
Item 3. Defaults Upon Senior Securities			7164
Item 4. Mine Safety Disclosures			7164
Item 5. Other Information			7164
Item 6. Exhibits			7265
Signatures			7366

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, ~~2022~~2023 and December 31, ~~2021~~2022

(In thousands, except share and per share amounts) (Unaudited)


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Real estate investments, net	Real estate investments, net	$	3,526,591,000	$	3,514,686,000	Real estate investments, net	$	3,430,640	$	3,581,609
Debt security investment, net	Debt security investment, net	82,067,000		79,315,000		Debt security investment, net	85,922		83,000
Cash and cash equivalents	Cash and cash equivalents	79,421,000		81,597,000		Cash and cash equivalents	35,178		65,052
Restricted cash	Restricted cash	44,877,000		43,889,000		Restricted cash	46,978		46,854
Accounts and other receivables, net	Accounts and other receivables, net	136,028,000		122,778,000		Accounts and other receivables, net	169,484		137,501

Identified intangible assets, net	Identified intangible assets, net	237,969,000		248,871,000		Identified intangible assets, net	196,884		236,283
Goodwill	Goodwill	254,888,000		209,898,000		Goodwill	234,942		231,611

Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	262,489,000		158,157,000		Operating lease right-of-use assets, net	233,955		276,342
Other assets, net	Other assets, net	134,316,000		121,148,000		Other assets, net	154,934		128,446
Total assets	Total assets	$	4,758,646,000	$	4,580,339,000	Total assets	$	4,588,917	$	4,786,698

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)	$	1,159,159,000	$	1,095,594,000	Mortgage loans payable, net(1)	$	1,221,238	$	1,229,847
Lines of credit and term loans, net(1)		1,292,043,000		1,226,634,000
Lines of credit and term loan, net(1)						Lines of credit and term loan, net(1)	1,277,076		1,281,794
Accounts payable and accrued liabilities(1)	Accounts payable and accrued liabilities(1)	235,515,000		187,254,000		Accounts payable and accrued liabilities(1)	233,925		243,831
Accounts payable due to affiliates(1)		—		866,000

Identified intangible liabilities, net	Identified intangible liabilities, net	11,249,000		12,715,000		Identified intangible liabilities, net	9,346		10,837
Financing obligations(1)	Financing obligations(1)	20,827,000		33,653,000		Financing obligations(1)	38,181		48,406
Operating lease liabilities(1)	Operating lease liabilities(1)	260,380,000		145,485,000		Operating lease liabilities(1)	231,148		273,075
Security deposits, prepaid rent and other liabilities(1)	Security deposits, prepaid rent and other liabilities(1)	54,098,000		48,567,000		Security deposits, prepaid rent and other liabilities(1)	44,334		49,545
Total liabilities	Total liabilities	3,033,271,000		2,750,768,000		Total liabilities	3,055,248		3,137,335

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

Redeemable noncontrolling interests (Note 13)		85,869,000		72,725,000
Redeemable noncontrolling interests (Note 11)						Redeemable noncontrolling interests (Note 11)	59,961		81,598

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; 200,000,000 shares authorized; 77,895,942 and 77,176,406 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		770,000		763,000
Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 186,275,548 and 185,855,625 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,863,000		1,859,000
Class T common stock, $0.01 par value per share; 200,000,000 shares authorized; 19,562,539 and 19,535,095 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively						Class T common stock, $0.01 par value per share; 200,000,000 shares authorized; 19,562,539 and 19,535,095 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	194		194
Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 46,673,320 and 46,675,367 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively						Class I common stock, $0.01 par value per share; 800,000,000 shares authorized; 46,673,320 and 46,675,367 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	467		467
Additional paid-in capital	Additional paid-in capital	2,532,047,000		2,531,940,000		Additional paid-in capital	2,548,390		2,540,424
Accumulated deficit	Accumulated deficit	(1,064,270,000)		(951,303,000)		Accumulated deficit	(1,232,183)		(1,138,304)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,130,000)		(1,966,000)		Accumulated other comprehensive loss	(2,624)		(2,690)
Total stockholders’ equity	Total stockholders’ equity	1,467,280,000		1,581,293,000		Total stockholders’ equity	1,314,244		1,400,091
Noncontrolling interests (Note 14)		172,226,000		175,553,000
Noncontrolling interests (Note 12)						Noncontrolling interests (Note 12)	159,464		167,674
Total equity	Total equity	1,639,506,000		1,756,846,000		Total equity	1,473,708		1,567,765
Total liabilities, redeemable noncontrolling interests and equity	Total liabilities, redeemable noncontrolling interests and equity	$	4,758,646,000	$	4,580,339,000	Total liabilities, redeemable noncontrolling interests and equity	$	4,588,917	$	4,786,698

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

As of September 30, ~~2022~~2023 and December 31, ~~2021~~2022

(In thousands) (Unaudited)

___________

(1)Such liabilities of American Healthcare REIT, Inc. represented liabilities of American Healthcare REIT Holdings, LP or its consolidated subsidiaries as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. American Healthcare REIT Holdings, LP is a variable interest entity, or VIE, and a consolidated subsidiary of American Healthcare REIT, Inc. The creditors of American Healthcare REIT Holdings, LP or its consolidated subsidiaries do not have recourse against American Healthcare REIT, Inc., except for the 2022 Credit Facility, as defined in Note 9,8, held by American Healthcare REIT Holdings, LP in the amount of ~~$963,900,000~~$910,900 and $965,900 as of September 30, ~~2022~~2023 and ~~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 $441,900,000 and $480,000,000, respectively, as of~~ December 31, ~~2021,~~2022, respectively, which ~~were~~was 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, ~~2022~~2023 and ~~2021~~2022

(In thousands, except share and per share amounts) (Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues and grant income:	Revenues and grant income:									Revenues and grant income:
Resident fees and services	Resident fees and services	$	368,306,000	$	286,882,000	$	1,013,505,000	$	816,260,000	Resident fees and services	$	416,206	$	368,306	$	1,235,458	$	1,013,505
Real estate revenue	Real estate revenue	51,323,000		29,668,000		154,371,000		90,333,000		Real estate revenue	46,970		51,323		141,134		154,371
Grant income	Grant income	6,533,000		936,000		22,716,000		10,264,000		Grant income	1,064		6,533		7,445		22,716
Total revenues and grant income	Total revenues and grant income	426,162,000		317,486,000		1,190,592,000		916,857,000		Total revenues and grant income	464,240		426,162		1,384,037		1,190,592
Expenses:	Expenses:									Expenses:
Property operating expenses	Property operating expenses	337,487,000		256,821,000		920,706,000		752,389,000		Property operating expenses	374,603		337,487		1,117,298		920,706
Rental expenses	Rental expenses	14,850,000		8,188,000		44,800,000		24,362,000		Rental expenses	14,574		14,850		44,422		44,800
General and administrative	General and administrative	9,626,000		9,008,000		31,673,000		23,608,000		General and administrative	11,342		9,626		36,169		31,673
Business acquisition expenses	Business acquisition expenses	231,000		3,633,000		2,161,000		7,631,000		Business acquisition expenses	1,024		231		2,244		2,161
Depreciation and amortization	Depreciation and amortization	40,422,000		26,334,000		122,704,000		78,414,000		Depreciation and amortization	49,273		40,422		138,644		122,704
Total expenses	Total expenses	402,616,000		303,984,000		1,122,044,000		886,404,000		Total expenses	450,816		402,616		1,338,777		1,122,044

Other income (expense):	Other income (expense):									Other income (expense):
Interest expense:	Interest expense:									Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)	Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)	(27,524,000)		(18,885,000)		(71,194,000)		(57,740,000)		Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)	(42,005)		(27,524)		(122,006)		(71,194)
Gain in fair value of derivative financial instruments	Gain in fair value of derivative financial instruments	—		1,860,000		500,000		5,456,000		Gain in fair value of derivative financial instruments	3,402		—		8,200		500
Gain (loss) on dispositions of real estate investments		2,113,000		276,000		2,796,000		(101,000)
Gain on dispositions of real estate investments, net										Gain on dispositions of real estate investments, net	31,981		2,113		29,777		2,796
Impairment of real estate investments	Impairment of real estate investments	(21,851,000)		—		(39,191,000)		(3,335,000)		Impairment of real estate investments	(12,510)		(21,851)		(12,510)		(39,191)
(Loss) income from unconsolidated entities		(344,000)		384,000		1,680,000		(2,288,000)
Gain on re-measurement of previously held equity interest		19,567,000		—		19,567,000		—
Foreign currency loss		(3,695,000)		(1,394,000)		(8,689,000)		(741,000)

(Loss) income from unconsolidated entities										(Loss) income from unconsolidated entities	(505)		(344)		(924)		1,680
Gain on re-measurement of previously held equity interests										Gain on re-measurement of previously held equity interests	—		19,567		726		19,567
Foreign currency (loss) gain										Foreign currency (loss) gain	(1,704)		(3,695)		372		(8,689)
Other income	Other income	670,000		348,000		2,399,000		811,000		Other income	1,755		670		5,952		2,399
Total net other expense	Total net other expense	(31,064,000)		(17,411,000)		(92,132,000)		(57,938,000)		Total net other expense	(19,586)		(31,064)		(90,413)		(92,132)
Loss before income taxes	Loss before income taxes	(7,518,000)		(3,909,000)		(23,584,000)		(27,485,000)		Loss before income taxes	(6,162)		(7,518)		(45,153)		(23,584)
Income tax expense	Income tax expense	(126,000)		(127,000)		(499,000)		(785,000)		Income tax expense	(284)		(126)		(775)		(499)
Net loss	Net loss	(7,644,000)		(4,036,000)		(24,083,000)		(28,270,000)		Net loss	(6,446)		(7,644)		(45,928)		(24,083)
Net (income) loss attributable to noncontrolling interests		(5,861,000)		(1,201,000)		(9,688,000)		3,508,000
Net loss attributable to controlling interest		$	(13,505,000)	$	(5,237,000)	$	(33,771,000)	$	(24,762,000)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted		$	(0.05)	$	(0.03)	$	(0.13)	$	(0.14)
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	457		(5,861)		1,884		(9,688)
Net loss attributable to controlling interest										Net loss attributable to controlling interest	$	(5,989)	$	(13,505)	$	(44,044)	$	(33,771)
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted										Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted	$	(0.09)	$	(0.21)	$	(0.67)	$	(0.51)
Weighted average number of Class T and Class I common shares outstanding — basic and diluted	Weighted average number of Class T and Class I common shares outstanding — basic and diluted	263,279,232		179,641,677		262,940,706		179,632,818		Weighted average number of Class T and Class I common shares outstanding — basic and diluted	66,048,991		65,819,808		66,036,253		65,735,176

Net loss	Net loss	$	(7,644,000)	$	(4,036,000)	$	(24,083,000)	$	(28,270,000)	Net loss	$	(6,446)	$	(7,644)	$	(45,928)	$	(24,083)
Other comprehensive loss:
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Foreign currency translation adjustments	Foreign currency translation adjustments	(477,000)		(207,000)		(1,164,000)		(96,000)		Foreign currency translation adjustments	(180)		(477)		66		(1,164)
Total other comprehensive loss		(477,000)		(207,000)		(1,164,000)		(96,000)
Total other comprehensive (loss) income										Total other comprehensive (loss) income	(180)		(477)		66		(1,164)
Comprehensive loss	Comprehensive loss	(8,121,000)		(4,243,000)		(25,247,000)		(28,366,000)		Comprehensive loss	(6,626)		(8,121)		(45,862)		(25,247)
Comprehensive (income) loss attributable to noncontrolling interests		(5,861,000)		(1,201,000)		(9,688,000)		3,508,000
Comprehensive loss (income) attributable to noncontrolling interests										Comprehensive loss (income) attributable to noncontrolling interests	457		(5,861)		1,884		(9,688)
Comprehensive loss attributable to controlling interest	Comprehensive loss attributable to controlling interest	$	(13,982,000)	$	(5,444,000)	$	(34,935,000)	$	(24,858,000)	Comprehensive loss attributable to controlling interest	$	(6,169)	$	(13,982)	$	(43,978)	$	(34,935)

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands, except share and per share amounts) (Unaudited)

Three Months Ended September 30, 2022
Stockholders’ Equity
Class T and Class I
Common Stock
Number
of
Shares Amount Additional
Paid-In
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity Noncontrolling
Interests Total Equity
BALANCE — June 30, 2022 264,364,596 $ 2,635,000 $ 2,541,504,000 $ (1,024,328,000) $ (2,653,000) $ 1,517,158,000 $ 172,602,000 $ 1,689,760,000
Issuance of common stock under the DRIP 395,174 4,000 3,667,000 — — 3,671,000 — 3,671,000
Issuance of nonvested restricted common stock 19,858 — — — — — — —
Amortization of nonvested restricted common stock and stock units — — 914,000 — — 914,000 — 914,000
Stock based compensation — — — — — — 20,000 20,000
Repurchase of common stock (608,138) (6,000) (5,644,000) — — (5,650,000) — (5,650,000)
Distributions to noncontrolling interests — — — — — — (3,516,000) (3,516,000)
Reclassification of noncontrolling interests to mezzanine equity — — — — — — (20,000) (20,000)
Adjustment to value of redeemable noncontrolling interests — — (8,394,000) — — (8,394,000) (2,367,000) (10,761,000)
Distributions declared ($0.10 per share) — — — (26,437,000) — (26,437,000) — (26,437,000)
Net (loss) income — — — (13,505,000) — (13,505,000) 5,507,000 (7,998,000) (1)
Other comprehensive loss — — — — (477,000) (477,000) — (477,000)
BALANCE — September 30, 2022 264,171,490 $ 2,633,000 $ 2,532,047,000 $ (1,064,270,000) $ (3,130,000) $ 1,467,280,000 $ 172,226,000 $ 1,639,506,000


	Three Months Ended September 30, 2023
	Stockholders’ Equity
	Class T and Class I Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — June 30, 2023	66,235,859	$	661	$	2,547,135	$	(1,209,578)	$	(2,444)	$	1,335,774	$	160,628	$	1,496,402





Amortization of nonvested restricted common stock and stock units	—	—		1,558		—		—		1,558		—		1,558


Stock based compensation	—	—		—		—		—		—		21		21


Distributions to noncontrolling interests	—	—		—		—		—		—		(764)		(764)


Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(21)		(21)
Adjustment to value of redeemable noncontrolling interests	—	—		(303)		—		—		(303)		(21)		(324)
Distributions declared ($0.25 per share)	—	—		—		(16,616)		—		(16,616)		—		(16,616)
Net loss	—	—		—		(5,989)		—		(5,989)		(379)		(6,368)		(1)
Other comprehensive loss	—	—		—		—		(180)		(180)		—		(180)
BALANCE — September 30, 2023	66,235,859	$	661	$	2,548,390	$	(1,232,183)	$	(2,624)	$	1,314,244	$	159,464	$	1,473,708

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 Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity Noncontrolling
Interests Total Equity
BALANCE — June 30, 2021 179,658,367 $ 1,798,000 $ 1,730,002,000 $ (886,983,000) $ (1,897,000) $ 842,920,000 $ 163,551,000 $ 1,006,471,000
Amortization of nonvested restricted common stock — — 13,000 — — 13,000 — 13,000
Distributions to noncontrolling interests — — — — — — (9,005,000) (9,005,000)
Adjustment to value of redeemable noncontrolling interests — — 62,000 — — 62,000 27,000 89,000
Distributions declared ($0.05 per share) — — — (9,774,000) — (9,774,000) — (9,774,000)
Net (loss) income — — — (5,237,000) — (5,237,000) 1,084,000 (4,153,000) (1)
Other comprehensive loss — — — — (207,000) (207,000) — (207,000)
BALANCE — September 30, 2021 179,658,367 $ 1,798,000 $ 1,730,077,000 $ (901,994,000) $ (2,104,000) $ 827,777,000 $ 155,657,000 $ 983,434,000


	Three Months Ended September 30, 2022
	Stockholders’ Equity
	Class T and Class I Common Stock
	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — June 30, 2022	66,091,145	$	661	$	2,543,478	$	(1,024,328)	$	(2,653)	$	1,517,158	$	172,602	$	1,689,760

Issuance of common stock under the DRIP	98,794	1		3,670		—		—		3,671		—		3,671
Issuance of nonvested restricted common stock	4,965	—		—		—		—		—		—		—
Amortization of nonvested restricted common stock and stock units	—	—		914		—		—		914		—		914


Stock based compensation	—	—		—		—		—		—		20		20
Repurchase of common stock	(152,035)	(2)		(5,648)		—		—		(5,650)		—		(5,650)

Distributions to noncontrolling interests	—	—		—		—		—		—		(3,516)		(3,516)

Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(20)		(20)
Adjustment to value of redeemable noncontrolling interests	—	—		(8,394)		—		—		(8,394)		(2,367)		(10,761)
Distributions declared ($0.40 per share)	—	—		—		(26,437)		—		(26,437)		—		(26,437)
Net (loss) income	—	—		—		(13,505)		—		(13,505)		5,507		(7,998)		(1)
Other comprehensive loss	—	—		—		—		(477)		(477)		—		(477)
BALANCE — September 30, 2022	66,042,869	$	660	$	2,534,020	$	(1,064,270)	$	(3,130)	$	1,467,280	$	172,226	$	1,639,506

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands, except share and per share amounts) (Unaudited)

Nine Months Ended September 30, 2022
Stockholders’ Equity
Class T and Class I
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 — — (2,000) — — (2,000) — (2,000)
Issuance of common stock under the DRIP 2,820,674 28,000 26,090,000 — — 26,118,000 — 26,118,000
Issuance of nonvested restricted common stock 74,758 1,000 (1,000) — — — — —
Amortization of nonvested restricted common stock and stock units — — 2,705,000 — — 2,705,000 — 2,705,000
Stock based compensation — — — — — — 62,000 62,000
Repurchase of common stock (1,755,973) (18,000) (16,215,000) — — (16,233,000) — (16,233,000)
Distributions to noncontrolling interests — — — — — — (10,568,000) (10,568,000)
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 — — — — — — (62,000) (62,000)
Adjustment to value of redeemable noncontrolling interests — — (11,297,000) — — (11,297,000) (3,297,000) (14,594,000)
Distributions declared ($0.30 per share) — — — (79,196,000) — (79,196,000) — (79,196,000)
Net (loss) income — — — (33,771,000) — (33,771,000) 9,365,000 (24,406,000) (1)
Other comprehensive loss — — — — (1,164,000) (1,164,000) — (1,164,000)
BALANCE — September 30, 2022 264,171,490 $ 2,633,000 $ 2,532,047,000 $ (1,064,270,000) $ (3,130,000) $ 1,467,280,000 $ 172,226,000 $ 1,639,506,000


	Nine Months Ended September 30, 2023
	Stockholders’ Equity
	Class T and Class I 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, 2022	66,210,462	$	661	$	2,540,424	$	(1,138,304)	$	(2,690)	$	1,400,091	$	167,674	$	1,567,765



Issuance of nonvested restricted common stock	26,156	—		—		—		—		—		—		—
Vested restricted stock units(2)	4,120	—		(72)		—		—		(72)		—		(72)
Amortization of nonvested restricted common stock and stock units	—	—		4,173		—		—		4,173		—		4,173


Stock based compensation	—	—		—		—		—		—		62		62
Repurchase of common stock	(4,879)	—		(165)		—		—		(165)		—		(165)

Distributions to noncontrolling interests	—	—		—		—		—		—		(6,958)		(6,958)


Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(62)		(62)
Adjustment to value of redeemable noncontrolling interests	—	—		4,030		—		—		4,030		68		4,098
Distributions declared ($0.75 per share)	—	—		—		(49,835)		—		(49,835)		—		(49,835)
Net loss	—	—		—		(44,044)		—		(44,044)		(1,320)		(45,364)		(1)
Other comprehensive income	—	—		—		—		66		66		—		66
BALANCE — September 30, 2023	66,235,859	$	661	$	2,548,390	$	(1,232,183)	$	(2,624)	$	1,314,244	$	159,464	$	1,473,708

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 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 restricted common stock — — 66,000 — — 66,000 — 66,000
Stock based compensation — — — — — — (14,000) (14,000)
Distributions to noncontrolling interests — — — — — — (9,360,000) (9,360,000)
Adjustment to value of redeemable noncontrolling interests — — (577,000) — — (577,000) (233,000) (810,000)
Distributions declared ($0.07 per share) — — — (12,961,000) — (12,961,000) — (12,961,000)
Net loss — — — (24,762,000) — (24,762,000) (3,111,000) (27,873,000) (1)
Other comprehensive loss — — — — (96,000) (96,000) — (96,000)
BALANCE — September 30, 2021 179,658,367 $ 1,798,000 $ 1,730,077,000 $ (901,994,000) $ (2,104,000) $ 827,777,000 $ 155,657,000 $ 983,434,000

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY — (Continued)

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands, except share and per share amounts) (Unaudited)


	Nine Months Ended September 30, 2022
	Stockholders’ Equity
	Class T and Class I 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	65,758,004	$	658	$	2,533,904	$	(951,303)	$	(1,966)	$	1,581,293	$	175,553	$	1,756,846

Offering costs — common stock	—	—		(2)		—		—		(2)		—		(2)
Issuance of common stock under the DRIP	705,169	7		26,111		—		—		26,118		—		26,118
Issuance of nonvested restricted common stock	18,690	—		—		—		—		—		—		—
Amortization of nonvested restricted common stock and stock units	—	—		2,705		—		—		2,705		—		2,705
Stock based compensation	—	—		—		—		—		—		62		62
Repurchase of common stock	(438,994)	(5)		(16,228)		—		—		(16,233)		—		(16,233)



Distributions to noncontrolling interests	—	—		—		—		—		—		(10,568)		(10,568)
Adjustment to noncontrolling interest in connection with the Merger	—	—		(1,173)		—		—		(1,173)		1,173		—

Reclassification of noncontrolling interests to mezzanine equity	—	—		—		—		—		—		(62)		(62)
Adjustment to value of redeemable noncontrolling interests	—	—		(11,297)		—		—		(11,297)		(3,297)		(14,594)
Distributions declared ($1.20 per share)	—	—		—		(79,196)		—		(79,196)		—		(79,196)
Net (loss) income	—	—		—		(33,771)		—		(33,771)		9,365		(24,406)		(1)
Other comprehensive loss	—	—		—		—		(1,164)		(1,164)		—		(1,164)
BALANCE — September 30, 2022	66,042,869	$	660	$	2,534,020	$	(1,064,270)	$	(3,130)	$	1,467,280	$	172,226	$	1,639,506

___________

(1)For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, amounts exclude ~~$354,000~~$(78) and ~~$117,000,~~$354, respectively, of net (loss) income attributable to redeemable noncontrolling interests. For thenine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, amounts exclude ~~$323,000~~$(564) and ~~$(397,000),~~$323, respectively, of net (loss) income ~~(loss)~~ attributable to redeemable noncontrolling interests. See Note ~~13,~~11, Redeemable Noncontrolling Interests, for afurther discussion.

(2)The amounts are shown net of common stock withheld from issuance to satisfy employee minimum tax withholding requirements in connection with the vesting of restricted stock units. See Note 12, Equity — AHR 2015 Incentive Plan, for further discussion.

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands) (Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	Net loss	$	(24,083,000)	$	(28,270,000)	Net loss	$	(45,928)	$	(24,083)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:						Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	122,716,000		78,414,000		Depreciation and amortization	138,644		122,716
Other amortization	Other amortization	21,316,000		17,312,000		Other amortization	46,576		21,316
Deferred rent	Deferred rent	(5,414,000)		(1,013,000)		Deferred rent	(2,896)		(5,414)

Stock based compensation	Stock based compensation	2,658,000		52,000		Stock based compensation	4,235		2,658

Gain on dispositions of real estate investments, net						Gain on dispositions of real estate investments, net	(29,777)		(2,796)
Impairment of real estate investments	Impairment of real estate investments	39,191,000		3,335,000		Impairment of real estate investments	12,510		39,191
(Gain) loss on dispositions of real estate investments		(2,796,000)		101,000
(Income) loss from unconsolidated entities		(1,680,000)		2,288,000
Gain on re-measurement of previously held equity interest		(19,567,000)		—
Foreign currency loss		8,427,000		783,000
Loss (income) from unconsolidated entities						Loss (income) from unconsolidated entities	924		(1,680)
Gain on re-measurement of previously held equity interests						Gain on re-measurement of previously held equity interests	(726)		(19,567)
Foreign currency (gain) loss						Foreign currency (gain) loss	(351)		8,427

Loss on extinguishments of debt	Loss on extinguishments of debt	5,038,000		2,293,000		Loss on extinguishments of debt	345		5,038

Change in fair value of derivative financial instruments	Change in fair value of derivative financial instruments	(500,000)		(5,456,000)		Change in fair value of derivative financial instruments	(8,200)		(500)
Other adjustments		—		850,000

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	(8,051,000)		5,529,000		Accounts and other receivables	(19,997)		(8,051)
Other assets	Other assets	(7,688,000)		(4,843,000)		Other assets	(6,817)		(7,688)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	9,410,000		(27,287,000)		Accounts payable and accrued liabilities	12,375		9,410
Accounts payable due to affiliates	Accounts payable due to affiliates	(184,000)		(7,075,000)		Accounts payable due to affiliates	—		(184)
Operating lease liabilities	Operating lease liabilities	(15,638,000)		(12,130,000)		Operating lease liabilities	(27,708)		(15,638)
Security deposits, prepaid rent and other liabilities	Security deposits, prepaid rent and other liabilities	(9,714,000)		(26,376,000)		Security deposits, prepaid rent and other liabilities	(443)		(9,714)
Net cash provided by (used in) operating activities		113,441,000		(1,493,000)
Net cash provided by operating activities						Net cash provided by operating activities	72,766		113,441
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from dispositions of real estate investments						Proceeds from dispositions of real estate investments	167,861		25,622
Developments and capital expenditures						Developments and capital expenditures	(74,386)		(51,358)
Acquisitions of real estate investments	Acquisitions of real estate investments	(75,125,000)		(79,854,000)		Acquisitions of real estate investments	(45,382)		(75,125)
Developments and capital expenditures		(51,358,000)		(61,318,000)
Acquisition of previously held equity interest		(13,713,000)		—
Proceeds from dispositions of real estate investments		25,622,000		4,499,000
Acquisitions of previously held equity interests						Acquisitions of previously held equity interests	(335)		(13,713)

Investments in unconsolidated entities	Investments in unconsolidated entities	(4,437,000)		(650,000)		Investments in unconsolidated entities	(12,000)		(4,437)

Issuance of note receivable		(3,000,000)		—
Issuance of notes receivable						Issuance of notes receivable	(13,778)		(3,000)
Real estate and other deposits	Real estate and other deposits	(528,000)		(257,000)		Real estate and other deposits	(1,279)		(528)

Net cash used in investing activities		(122,539,000)		(137,580,000)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	20,701		(122,539)
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	89,950,000		292,083,000		Borrowings under mortgage loans payable	85,477		89,950
Payments on mortgage loans payable	Payments on mortgage loans payable	(61,954,000)		(30,688,000)		Payments on mortgage loans payable	(96,596)		(61,954)

Borrowings under the lines of credit and term loan	Borrowings under the lines of credit and term loan	1,068,400,000		16,600,000		Borrowings under the lines of credit and term loan	301,750		1,068,400
Payments on the lines of credit and term loan	Payments on the lines of credit and term loan	(1,002,100,000)		(103,500,000)		Payments on the lines of credit and term loan	(306,484)		(1,002,100)
Borrowings under financing obligation						Borrowings under financing obligation	16,283		—
Payments on financing and other obligations						Payments on financing and other obligations	(34,292)		(12,892)
Deferred financing costs	Deferred financing costs	(5,829,000)		(2,455,000)		Deferred financing costs	(3,418)		(5,829)
Debt extinguishment costs	Debt extinguishment costs	(3,222,000)		(125,000)		Debt extinguishment costs	(269)		(3,222)

Payments on financing obligations		(12,892,000)		(10,710,000)

Distributions paid to common stockholders	Distributions paid to common stockholders	(35,391,000)		(12,961,000)		Distributions paid to common stockholders	(59,685)		(35,391)
Repurchase of common stock	Repurchase of common stock	(16,233,000)		—		Repurchase of common stock	(165)		(16,233)

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands) (Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Payments to taxing authorities in connection with common stock directly withheld from employees						Payments to taxing authorities in connection with common stock directly withheld from employees	$	(72)	$	—
Distributions to noncontrolling interests in total equity	Distributions to noncontrolling interests in total equity	$	(9,821,000)	$	(9,356,000)	Distributions to noncontrolling interests in total equity	(7,371)		(9,821)
Contributions from redeemable noncontrolling interests		273,000		—
Contribution from redeemable noncontrolling interest						Contribution from redeemable noncontrolling interest	—		273
Distributions to redeemable noncontrolling interests	Distributions to redeemable noncontrolling interests	(1,918,000)		(550,000)		Distributions to redeemable noncontrolling interests	(1,190)		(1,918)
Repurchase of redeemable noncontrolling interests and stock warrants		—		(88,000)
Repurchase of redeemable noncontrolling interests						Repurchase of redeemable noncontrolling interests	(15,954)		—
Payment of offering costs	Payment of offering costs	(666,000)		—		Payment of offering costs	(885)		(666)
Security deposits	Security deposits	(628,000)		21,000		Security deposits	(306)		(628)
Net cash provided by financing activities		7,969,000		138,271,000
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(123,177)		7,969
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(1,129,000)	$	(802,000)	NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(29,710)	$	(1,129)
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(59,000)		(96,000)		EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(40)		(59)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	125,486,000		152,190,000		CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period	111,906		125,486
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	124,298,000	$	151,292,000	CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period	$	82,156	$	124,298

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH	RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH					RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period:	Beginning of period:					Beginning of period:
Cash and cash equivalents	Cash and cash equivalents	$	81,597,000	$	113,212,000	Cash and cash equivalents	$	65,052	$	81,597
Restricted cash	Restricted cash	43,889,000		38,978,000		Restricted cash	46,854		43,889
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	125,486,000	$	152,190,000	Cash, cash equivalents and restricted cash	$	111,906	$	125,486

End of period:	End of period:					End of period:
Cash and cash equivalents	Cash and cash equivalents	$	79,421,000	$	109,650,000	Cash and cash equivalents	$	35,178	$	79,421
Restricted cash	Restricted cash	44,877,000		41,642,000		Restricted cash	46,978		44,877
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	124,298,000	$	151,292,000	Cash, cash equivalents and restricted cash	$	82,156	$	124,298

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:	Cash paid for:					Cash paid for:
Interest	Interest	$	60,328,000	$	49,895,000	Interest	$	114,002	$	60,328
Income taxes	Income taxes	$	653,000	$	1,037,000	Income taxes	$	1,014	$	653
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES	SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES					SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued developments and capital expenditures	Accrued developments and capital expenditures	$	25,096,000	$	17,262,000	Accrued developments and capital expenditures	$	19,329	$	25,096

Capital expenditures from financing obligations	Capital expenditures from financing obligations	$	—	$	1,409,000	Capital expenditures from financing obligations	$	1,301	$	—
Tenant improvement overage	Tenant improvement overage	$	605,000	$	568,000	Tenant improvement overage	$	2,359	$	605

Acquisition of real estate investment with financing obligation		$	—	$	15,504,000

Issuance of common stock under the DRIP						Issuance of common stock under the DRIP	$	—	$	26,118
Distributions declared but not paid — common stockholders						Distributions declared but not paid — common stockholders	$	16,559	$	26,417
Distributions declared but not paid — limited partnership units						Distributions declared but not paid — limited partnership units	$	875	$	1,400
Distributions declared but not paid — restricted stock units						Distributions declared but not paid — restricted stock units	$	140	$	54
Accrued offering costs						Accrued offering costs	$	1,685	$	1,796

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

(In thousands) (Unaudited)

Nine Months Ended September 30,
2022 2021
Issuance of common stock under the DRIP $ 26,118,000 $ —
Distributions declared but not paid — common stockholders $ 26,417,000 $ —
Distributions declared but not paid — limited partnership units $ 1,400,000 $ —
Distributions declared but not paid — restricted stock units $ 54,000 $ —
Accrued offering costs $ 1,796,000 $ —
Issuance of redeemable noncontrolling interests $ — $ 132,000
The following represents the net increase (decrease) in certain assets and liabilities in connection with our acquisitions and dispositions of investments:
Accounts and other receivables $ 2,410,000 $ (153,000)
Other assets $ (10,967,000) $ (4,036,000)
Mortgage loan payable $ 33,241,000 $ —
Accounts payable and accrued liabilities $ 14,828,000 $ (160,000)
Due to affiliates $ — $ 6,000
Financing obligations $ 65,000 $ —
Security deposits and other liabilities $ 15,994,000 $ —


	Nine Months Ended September 30,
	2023		2022
The following represents the net increase (decrease) in certain assets and liabilities in connection with our acquisitions and dispositions of investments:
Accounts and other receivables	$	(1,784)	$	2,410
Other assets, net	$	(3,211)	$	(10,967)
Mortgage loan payable, net	$	—	$	33,241

Accounts payable and accrued liabilities	$	(1,460)	$	14,828

Financing obligations	$	12	$	65
Security deposits, prepaid rent and other liabilities	$	(458)	$	15,994

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

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 III Holdings, 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., a Maryland corporation, is a self-managed real estate investment trust, or REIT, that owns a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, or MOBs, senior housing, skilled nursing facilities, ~~senior housing,~~or SNFs, hospitals and other healthcare-related facilities. We also operate healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007, which is commonly referred to as a “RIDEA” structure (the provisions of the Internal Revenue Code of 1986, as amended, or the Code, authorizing the RIDEA structure were enacted as part of the Housing and Economic Recovery Act of 2008). Our healthcare facilities operated under a RIDEA structure include our senior housing operating properties, or SHOP, ~~(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~~have elected to be taxed as a ~~real estate investment trust, or~~ REIT ~~under the Code~~ for U.S. federal income tax ~~purposes,~~purposes. We believe that we have been organized and operated, and we intend to continue to ~~qualify to be taxed~~operate, in conformity with the requirements for qualification and taxation as a ~~REIT.~~REIT under the Code.

~~Merger of~~On October 1, 2021, Griffin-American Healthcare REIT III, Inc. ~~and Griffin-American Healthcare REIT IV, Inc.~~

~~On October 1, 2021, pursuant to an Agreement and Plan of Merger dated June 23, 2021,~~, or ~~the Merger Agreement,~~ GAHR III, merged with and into ~~Continental Merger Sub, LLC,~~ a ~~Maryland limited liability company and newly formed~~ wholly owned subsidiary, ~~of GAHR IV,~~ or Merger Sub, of Griffin-American Healthcare REIT IV, Inc., or GAHR IV, with Merger Sub being the surviving company, orwhich we refer to as the REIT ~~Merger. On October 1, 2021, also pursuant to the~~ Merger, ~~Agreement,~~and our operating partnership, 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,~~the Surviving Partnership, with ~~our operating partnership~~the Surviving Partnership being the surviving entity, ~~or the Partnership Merger. We collectively~~which we refer to ~~the REIT Merger and~~as the Partnership Merger asand, together with the REIT Merger, 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,~~Surviving Partnership was renamed American Healthcare REIT Holdings, LP. The 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 inLP, or our operating 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 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~~partnership.

Operating Partnership

We conduct substantially all of our operations through our operating ~~partnership; American Healthcare Investors,~~partnership and we are the sole general partner of our operating partnership. As of both September 30, 2023 and December 31, 2022, we owned 95.0% of the partnership units, or OP units, in our operating partnership, and the remaining 5.0% limited OP units, were owned by AHI Group Holdings, LLC, ~~or AHI; Griffin Capital Company, LLC, or Griffin Capital; Platform Healthcare Investor T-II, LLC; Flaherty Trust;~~which is owned and controlled by Jeffrey T. Hanson, ~~our former Chief Executive Officer and current~~the non-executive Chairman of ~~the Board~~our board of ~~Directors,~~directors, or our board, Danny Prosky, our ~~former Chief Operating Officer and current~~ Chief Executive Officer and President, and Mathieu B. Streiff, one of our ~~former Executive Vice President, General Counsel~~directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; and ~~Chief Operating~~a wholly owned subsidiary of Griffin Capital Company, LLC, or collectively, the NewCo Sellers. See Note 11, Redeemable Noncontrolling Interests, and Note 12, Equity — Noncontrolling Interests in Total Equity, for a further discussion of the ownership in our operating partnership.

Public Offerings

As of September 30, 2023, after taking into consideration the impact of the Merger and the reverse stock split as discussed in Note 2, Summary of Significant Accounting Policies, we had issued 65,445,557 shares for a total of $2,737,716,000 of common stock since February 26, 2014 in our initial public offerings and our distribution reinvestment plan, or DRIP, offerings (includes historical offering amounts sold by GAHR III and GAHR IV prior to the Merger).

On September 16, 2022, we filed with the United States Securities and Exchange Commission, or the SEC, a Registration Statement on Form S-11 (File No. 333-267464), which was last amended on November 7, 2023 upon filing with the SEC Amendment No. 2 to Registration Statement on Form S-11, with respect to a proposed public offering by us of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock Exchange, or the Proposed Listing. Such registration statement and contemplated listing are not yet effective.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Officer and current Executive Vice President, or collectively, the AHI Principals. NewCo owned substantially all of the business and operations of AHI, as well as all of the equity interests in (i) Griffin-American Healthcare REIT IV Advisor, LLC, or GAHR IV Advisor, a subsidiary of AHI that served as the external advisor of GAHR IV, and (ii) Griffin-American Healthcare REIT III Advisor, LLC, or GAHR III Advisor, also referred to as our former advisor, a subsidiary of AHI that served as the 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 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 became self-managed. 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 wholly owned subsidiary of Griffin Capital, or collectively, the NewCo Sellers.

The AHI Acquisition was treated as a business combination for accounting purposes, with GAHR III as both the legal and accounting acquiror of NewCo. While 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 in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 805, ~~Business Combinations~~, after considering the relative share ownership and the composition of the governing body of the Combined Company. Thus, the financial information set forth herein subsequent to the consummation of the Merger and the AHI Acquisition reflects results of the Combined Company, and the financial information set forth herein prior to the Merger and the AHI Acquisition reflects GAHR III’s results. For this reason, period to 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, 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, subject to the oversight and review of our board of directors, or our board, provided 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 DigitalBridge Group, Inc. (NYSE: DBRG), or DigitalBridge, and 7.8% owned by James F. Flaherty III. We were not affiliated with Griffin Capital, DigitalBridge 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 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, for a further discussion of the ownership in our operating partnership.~~

~~Public Offerings~~

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.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

On September 16, 2022, we filed with the United States Securities and Exchange Commission, or the SEC, a Registration Statement on Form S-11 (File No. 333-267464), with respect to a proposed primary public offering of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock Exchange. Such registration statement and contemplated listing are not yet effective. The potential public offering is subject to market conditions, and there can be no assurance as to whether, or when, any such offering may be completed, or as to the size, public offering price or other terms of such offering.

~~See Note 14,~~12, Equity — Common Stock, and Note ~~14,~~12, Equity — Distribution Reinvestment Plan, for a further discussion of our public offerings.

Our Real Estate Investments Portfolio

We currently operate through six reportable business segments: integrated senior health campuses, ~~medical office buildings, skilled nursing facilities,~~MOBs, SHOP, SNFs, senior housing — leased ~~hospitals~~ and ~~SHOP.~~hospitals. As of September 30, ~~2022,~~2023, we owned and/or operated ~~312~~298 buildings and integrated senior health campuses, orincluding completed development and expansion projects, representing approximately ~~19,432,000~~18,875,000 square feet of gross leasable area, or GLA, for an aggregate contract purchase price of ~~$4,548,366,000, including the fair value of the properties acquired in the Merger.~~$4,485,940,000. In addition, as of September 30, ~~2022,~~2023, 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 U.S. economy ~~continue to be~~have been adversely affected by the impacts of the COVID-19 pandemic, ~~and related supply chain disruptions and labor shortages. The~~including its economic impact. While the immediate effects of the COVID-19 pandemic have subsided, the timing and extent of the economic recovery ~~from the COVID-19 pandemic~~towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the ~~continued~~ effectiveness and frequency of booster vaccinations, ~~and~~ the duration and implications of ~~continued~~ongoing or future restrictions and safety ~~measures.~~measures, the availability of ongoing government financial support to our tenants, operating partners and managers and the overall pace of economic recovery, among others. As ~~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~~we expect to ~~ascertain~~continue to be adversely affected by the long-term ~~impact~~effects of the COVID-19 pandemic ~~will have~~for some period of time; however, it is not possible to predict the full extent of its future impact on ~~real estate~~us, including our residents, tenants, operating partners and managers, the operations of our properties or the markets in which ~~we own and/~~they are located, or ~~operate properties and our portfolio of investments.~~the overall healthcare industry.

We have evaluated ~~the~~such economic impacts of the COVID-19 pandemic on our business thus far and have incorporated information concerning such impacts into our assessments of liquidity, impairment and collectability from tenants and residents as of September 30, ~~2022.~~2023. 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 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.

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

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

We operate and intend to continue to operate in an umbrella partnership REIT structure in which our operating partnership, or wholly owned subsidiaries of our operating partnership and all non-wholly owned subsidiaries of which we have control, will own substantially all of the interests in properties acquired on our behalf. We are the sole general partner of our operating partnership and as of both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we owned ~~an approximately~~a 95.0% ~~and 94.9%~~ general partnership interest therein, ~~respectively,~~ and the remaining 5.0% ~~and 5.1%, respectively,~~limited partnership interest was owned by the NewCo Sellers. Prior to the Merger on October 1, 2021, we owned greater than a 99.99% general partnership interest in our operating partnership and our former advisor was a limited partner 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, our operating partnership redeemed our former advisor’s 222 limited partnership units in our operating partnership and the 208 limited partnership units owned by GAHR IV Advisor in GAHR IV Operating Partnership.

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). 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 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 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 ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022.~~17, 2023.

Use of Estimates

The preparation of our accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of our condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the initial and recurring valuation of certain assets acquired and liabilities assumed through property acquisitions, including through business combinations, goodwill and its impairment, revenues and grant income, allowance for credit losses, impairment of long-lived and intangible assets and contingencies. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

1514

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

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:~~time (in thousands):


		Three Months Ended September 30,													Three Months Ended September 30,
		2022						2021							2023						2022
		Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total			Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Over time	Over time	$	265,705,000	$	38,740,000	$	304,445,000	$	213,823,000	$	20,975,000	$	234,798,000	Over time	$	305,379	$	42,752	$	348,131	$	265,705	$	38,740	$	304,445
Point in time	Point in time	63,046,000		815,000		63,861,000		51,520,000		564,000		52,084,000		Point in time	66,912		1,163		68,075		63,046		815		63,861
Total resident fees and services	Total resident fees and services	$	328,751,000	$	39,555,000	$	368,306,000	$	265,343,000	$	21,539,000	$	286,882,000	Total resident fees and services	$	372,291	$	43,915	$	416,206	$	328,751	$	39,555	$	368,306


		Nine Months Ended September 30,													Nine Months Ended September 30,
		2022						2021							2023						2022
		Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total			Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Over time	Over time	$	729,079,000	$	113,848,000	$	842,927,000	$	606,811,000	$	60,473,000	$	667,284,000	Over time	$	902,836	$	134,965	$	1,037,801	$	729,079	$	113,848	$	842,927
Point in time	Point in time	168,266,000		2,312,000		170,578,000		147,573,000		1,403,000		148,976,000		Point in time	194,081		3,576		197,657		168,266		2,312		170,578
Total resident fees and services	Total resident fees and services	$	897,345,000	$	116,160,000	$	1,013,505,000	$	754,384,000	$	61,876,000	$	816,260,000	Total resident fees and services	$	1,096,917	$	138,541	$	1,235,458	$	897,345	$	116,160	$	1,013,505

The following tables disaggregate our resident fees and services revenue by payor ~~class:~~class (in thousands):


		Three Months Ended September 30,													Three Months Ended September 30,
		2022						2021							2023						2022
		Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total			Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Private and other payors	Private and other payors	$	151,296,000	$	36,228,000	$	187,524,000	$	122,467,000	$	21,258,000	$	143,725,000	Private and other payors	$	177,901	$	41,296	$	219,197	$	151,296	$	36,228	$	187,524
Medicare	Medicare	112,547,000		—		112,547,000		84,616,000		—		84,616,000		Medicare	112,773		974		113,747		112,547		—		112,547
Medicaid	Medicaid	64,908,000		3,327,000		68,235,000		58,260,000		281,000		58,541,000		Medicaid	81,617		1,645		83,262		64,908		3,327		68,235
Total resident fees and services	Total resident fees and services	$	328,751,000	$	39,555,000	$	368,306,000	$	265,343,000	$	21,539,000	$	286,882,000	Total resident fees and services	$	372,291	$	43,915	$	416,206	$	328,751	$	39,555	$	368,306


		Nine Months Ended September 30,													Nine Months Ended September 30,
		2022						2021							2023						2022
		Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total			Integrated Senior Health Campuses		SHOP(1)		Total		Integrated Senior Health Campuses		SHOP(1)		Total
Private and other payors	Private and other payors	$	420,518,000	$	106,897,000	$	527,415,000	$	341,323,000	$	60,934,000	$	402,257,000	Private and other payors	$	512,733	$	129,674	$	642,407	$	420,518	$	106,897	$	527,415
Medicare	Medicare	300,744,000		—		300,744,000		256,784,000		—		256,784,000		Medicare	357,238		1,753		358,991		300,744		—		300,744
Medicaid	Medicaid	176,083,000		9,263,000		185,346,000		156,277,000		942,000		157,219,000		Medicaid	226,946		7,114		234,060		176,083		9,263		185,346
Total resident fees and services	Total resident fees and services	$	897,345,000	$	116,160,000	$	1,013,505,000	$	754,384,000	$	61,876,000	$	816,260,000	Total resident fees and services	$	1,096,917	$	138,541	$	1,235,458	$	897,345	$	116,160	$	1,013,505

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

___________

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

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

Accounts Receivable, Net — Resident Fees and Services Revenue

The beginning and ending balances of accounts receivable, net — resident fees and services are as ~~follows:~~follows (in thousands):
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 — September 30, 2022
51,209,000 45,609,000 23,578,000 120,396,000
Increase $ 9,153,000 $ 9,656,000 $ 6,656,000 $ 25,465,000


	Private and Other Payors		Medicare		Medicaid		Total
Beginning balance — January 1, 2023	$	55,484	$	45,669	$	20,832	$	121,985
Ending balance — September 30, 2023	58,195		46,385		29,975		134,555
Increase	$	2,711	$	716	$	9,143	$	12,570

Deferred Revenue — Resident Fees and Services Revenue

Deferred revenue is included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheets. The beginning and ending balances of deferred revenue — resident fees and services, almost all of which relates to private and other payors, are as ~~follows:~~follows (in thousands):


	Total
Beginning balance — January 1, ~~2022~~2023	$	~~14,673,000~~17,901
Ending balance — September 30, ~~2022~~2023	~~19,001,000~~20,893
Increase	$	~~4,328,000~~2,992

In addition to the deferred revenue above, as of December 31, 2021, we had approximately $12,969,000 remaining in Medicare advance payments that were received during 2020 through an expanded program of the Centers for Medicare & Medicaid Services. Such amounts were included in security deposits, prepaid rent and other liabilities in our accompanying condensed consolidated balance sheet as of December 31, 2021, and were fully applied to Medicare claims and recognized as resident fees and services revenue for the nine months ended September 30, 2022.

Resident and Tenant Receivables and Allowances

Resident receivables, which are related to resident fees and services revenue, 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 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 where collectability is not probable, which are recognized as direct reductions of real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss.

AsThe following is a summary of ~~September 30, 2022 and December 31, 2021, we had $14,283,000 and $12,378,000, respectively, in~~our adjustments to allowances ~~which were determined necessary to reduce receivables by our expected future credit losses. For~~for the nine months ended September 30, 2023 and 2022 and 2021, we increased allowances by $16,476,000 and $9,098,000, respectively, and reduced allowances for collections or adjustments by $5,451,000 and $5,828,000, respectively. For the nine months ended September 30, 2022 and 2021, $9,120,000 and $3,105,000, respectively, of our receivables were written off against the related allowances.

~~Accounts Payable and Accrued Liabilities~~

As of September 30, 2022 and December 31, 2021, accounts payable and accrued liabilities primarily include insurance reserves of $40,474,000 and $36,440,000, respectively, reimbursement of payroll-related costs to the managers of our SHOP and integrated senior health campuses of $34,859,000 and $31,101,000, respectively, accrued property taxes of $29,043,000 and $22,102,000, respectively, accrued developments and capital expenditures to unaffiliated third parties of $25,096,000 and $22,852,000, respectively, and accrued distributions to common stockholders of $26,417,000 and $8,768,000, respectively.

~~Recently Issued Accounting Pronouncements~~(in thousands):


	Nine Months Ended September 30,
	2023		2022
Beginning balance	$	14,071	$	12,378
Additional allowances	14,035		16,476
Write-offs	(7,011)		(9,120)
Recoveries collected or adjustments	(6,446)		(5,451)
Ending balance	$	14,649	$	14,283

~~In July 2021, the FASB issued Accounting Standard Update, or ASU, 2021-05,~~

~~Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments, or ASU 2021-05, which amends the lease classification requirements for lessors to align them with practice under the previous lease accounting standard, ASC Topic 840,~~ ~~Leases. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the~~

1716

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

~~following criteria are met: (1)~~Accounts Payable and Accrued Liabilities

As of September 30, 2023 and December 31, 2022, accounts payable and accrued liabilities primarily include insurance reserves of $43,050,000 and $39,893,000, respectively, reimbursement of payroll-related costs to the ~~lease would have been classified~~managers of our SHOP and integrated senior health campuses of $40,650,000 and $38,624,000, respectively, accrued property taxes of $28,619,000 and $24,926,000, respectively, accrued developments and capital expenditures to unaffiliated third parties of $19,329,000 and $30,211,000, respectively, and accrued distributions to common stockholders of $16,559,000 and $26,484,000, respectively.

Recently Issued Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2020-04, Facilitation of the Effects of Reference Rate Reform of Financial Reporting, or ASU 2020-04, which provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria. ASU 2020-04 applies to the aforementioned transactions that reference the London Inter-bank Offered Rate, or LIBOR, or another reference rate expected to be discontinued because of the reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), or ASU 2021-01, which clarifies that certain optional expedients and exceptions for contract modification and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting or contract price alignment that is modified as a ~~sales-type lease~~result of the discontinuation of the use of LIBOR as a benchmark interest rate due to reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, or ~~a direct financing lease;~~ASU 2022-06, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. ASU 2020-04, ASU 2021-01 and ~~(2) the lessor would have otherwise recognized a day-one loss.~~ ASU ~~2021-05 was~~2022-06 are effective for fiscal years and interim periods beginning after March 12, 2020 and through the effective date December ~~15, 2021. Early adoption was permitted.~~31, 2024, as extended by ASU 2022-06. We adopted such accounting ~~pronouncement~~pronouncements on January 1, 2023, which has not had a material impact on our consolidated financial statements and disclosures as of September 30, 2023.

In July 2023, the FASB issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 ~~which~~EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280-General Revision of Regulation S-X: Income or Loss Applicable to Common Stock, or ASU 2023-03. ASU 2023-03 amends the Accounting Standards Codification, or ASC, for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a material impact on our consolidated financial statements and disclosures.

In August 2023, the FASB issued ASU 2023-05,Business Combinations — Joint Venture Formations (Subtopic 805- 60): Recognition and Initial Measurement, or ASU 2023-05. ASU 2023-05 applies to the initial formation of a “joint venture” or a “corporate joint venture” as defined in the accounting literature and requires a joint venture to apply a new basis of accounting by initially measuring and recognizing all contributions received upon its formation at fair value. In particular, a joint venture will measure its total assets and liabilities upon formation as the fair value of the joint venture as a whole, which would equal the fair value of all of the joint venture’s outstanding equity interests. The new guidance does not change the definition of a joint venture, the accounting by the investors for their investments in a joint venture (e.g., equity method accounting) or the accounting by a joint venture for contributions received after its formation. ASU 2023-05 will be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025. Early adoption is permitted. We do not expect the adoption of ASU 2023-05 on January 1, 2025 to have a material impact to our consolidated financial statements and ~~disclosures as we have no material sales-type or direct financing leases.~~

~~In March 2022, the FASB issued ASU 2022-02,~~ ~~Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures,~~ or ASU 2022-02, which eliminates certain previously issued accounting guidance for troubled debt restructurings, or TDRs, and enhances disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. For entities that have adopted the previously issued guidance amended by this update, ASU 2016-13, ~~Measurement of Credit Losses on Financial Instruments~~, which we adopted during the year ended December 31, 2020, this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted the previously issued guidance amended by this update. We are currently evaluating this guidance to determine the impact to our condensed consolidated financial statements and disclosures.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

3. Real Estate Investments, Net and Business Combinations

Our real estate investments, net consisted of the following as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022 (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Building, improvements and construction in process	Building, improvements and construction in process	$	3,595,437,000	$	3,505,786,000	Building, improvements and construction in process	$	3,588,614	$	3,670,361
Land and improvements	Land and improvements	334,496,000		334,562,000		Land and improvements	335,517		344,359
Furniture, fixtures and equipment	Furniture, fixtures and equipment	218,052,000		198,224,000		Furniture, fixtures and equipment	234,311		221,727
		4,147,985,000		4,038,572,000			4,158,442		4,236,447
Less: accumulated depreciation	Less: accumulated depreciation	(621,394,000)		(523,886,000)		Less: accumulated depreciation	(727,802)		(654,838)
		$	3,526,591,000	$	3,514,686,000		$	3,430,640	$	3,581,609

Depreciation expense for the three months ended September 30, 2023 and 2022 was $36,929,000 and ~~2021 was~~ $35,327,000, ~~and $24,769,000,~~ respectively, and for the nine months ended September 30, 2023 and 2022 was $109,967,000 and ~~2021 was~~ $104,077,000, ~~and $73,622,000,~~ respectively. ~~For the three months ended September 30, 2022, we incurred~~

The following is a summary of our capital expenditures ~~of $14,578,000~~ for our medical office buildings, $9,154,000 for our integrated senior health campuses, $1,867,000 for our SHOP and $93,500 for our hospitals. We did not incur any capital expenditures for our properties within our skilled nursing facilities and senior housing — leased segments for the three months ended September 30, 2022. For the nine months ended September 30, 2022, we incurred capital expenditures of $25,932,000 for our integrated senior health campuses, $21,156,000 for our medical office buildings, $4,918,000 for our SHOP and $93,500 for our hospitals. We did not incur any capital expenditures for our properties within our skilled nursing facilities and senior housing — leased segments for the nine months ended September 30, 2022.

~~For~~ the three and nine months ended September 30, 2023 (in thousands):


	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Integrated senior health campuses	$	8,806	$	37,865
MOBs	5,235		16,077
SHOP	5,006		8,935
Senior housing — leased	172		417
SNFs	—		—
Hospitals	—		—
Total	$	19,219	$	63,294

Acquisitions of Real Estate Investments and Previously Leased Real Estate Investments

Acquisitions of Real Estate Investments

For the nine months ended September 30, 2023, using cash on hand and debt financing, we, through a majority-owned subsidiary of Trilogy Investors, LLC, or Trilogy, completed the acquisition of one integrated senior health campus. The following is a summary of our property acquisition for the nine months ended September 30, 2023 (dollars in thousands):


Location	Date Acquired	Contract Purchase Price		Mortgage Loan Payable
Louisville, KY	02/15/23	$	11,000	$	7,700

In addition, on June 30, 2023, we, through a majority-owned subsidiary of Trilogy, acquired a land parcel in Ohio for a contract purchase price of $660,000, plus closing costs, for the future expansion of an existing integrated senior health campus.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Acquisitions of Previously Leased Real Estate Investments

For the nine months ended September 30, 2023, using cash and debt financing, we, through a majority-owned subsidiary of Trilogy, acquired three previously leased real estate investments located in Indiana and Ohio. The following is a summary of such acquisitions, which are included in our integrated senior health campuses segment (dollars in thousands):


Location	Date Acquired	Contract Purchase Price		Mortgage Loan Payable		Financing Obligation
Washington, IN	07/13/23	$	14,200	$	12,212	$	—
Tell City, IN	07/13/23	2,400		1,988		—
New Albany, OH	07/13/23	16,283		—		16,283
Total		$	32,883	$	14,200	$	16,283

We accounted for our acquisitions of land and real estate investments completed during the nine months ended September 30, 2023 as asset acquisitions. The following table summarizes the purchase price of such assets acquired at the time of acquisition based on their relative fair values and adjusted for $28,623,000 operating lease right-of-use assets and $30,498,000 operating lease liabilities (in thousands):


	2023 Acquisitions
Building and improvements	$	38,517
Land and improvements	4,917




Total assets acquired	$	43,434

Dispositions of Real Estate Investments

For the nine months ended September 30, 2023, we disposed of six SHOP and 14 MOBs. We recognized a total aggregate net gain on such dispositions of $30,022,000. The following is a summary of such dispositions (dollars in thousands):


Location	Number of Buildings	Type	Date Disposed	Contract Sales Price
Pinellas Park, FL(1)	1	SHOP	02/01/23	$	7,730
Olympia Fields, IL	1	MOB	04/10/23	3,750
Auburn, CA	1	MOB	04/26/23	7,050
Pottsville, PA	1	MOB	04/26/23	6,000
New London, CT	1	MOB	05/24/23	4,200
Stratford, CT	1	MOB	05/24/23	4,800
Westbrook, CT	1	MOB	05/24/23	7,250
Lakeland, FL(1)	1	SHOP	06/01/23	7,080
Winter Haven, FL(1)	1	SHOP	06/01/23	17,500
Acworth, GA	3	MOB	06/14/23	8,775
Lithonia, GA	1	MOB	06/14/23	3,445
Stockbridge, GA	1	MOB	06/14/23	2,430
Lake Placid, FL(1)	1	SHOP	06/30/23	5,620
Brooksville, FL(1)	1	SHOP	06/30/23	7,800
Spring Hill, FL(1)	1	SHOP	08/01/23	7,800
Morristown, NJ	1	MOB	08/09/23	62,210
Evendale, OH	1	MOB	08/29/23	11,900
Longview, TX	1	MOB	09/19/23	1,500
Total	20			$	176,840

___________

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

(1)As of September 30, 2023, we had disposed of all of the facilities that comprised the Central Florida Senior Housing Portfolio. See Note 11, Redeemable Noncontrolling Interests, for information about the ownership of the Central Florida Senior Housing Portfolio.

Impairment of Real Estate Investments

As we continue to evaluate additional non-strategic properties for sale, we determined that two of our SHOP were impaired and recognized an aggregate impairment charge of $12,510,000 for the three and nine months ended September 30, 2023, which reduced the total aggregate carrying value of such assets to $15,977,000. The remaining $3,477,000 carrying value of one such SHOP was then reclassified to properties held for sale, which is included in other assets, net in our accompanying condensed consolidated balance sheet. The fair value of one SHOP was based on its projected sales price from independent third-party letters of intent, which were considered Level 2 measurements within the fair value hierarchy. The fair value of the other SHOP was determined by a third-party appraiser based on the sales comparison approach with the most significant inputs based on a price per unit and price per square foot analysis within the area for similar types of assets. The ranges of these inputs were $190,000 to $200,000 per unit and $250 to $260 per square foot, which were considered Level 3 measurements within the fair value hierarchy.

In 2022, we commenced an initiative to evaluate non-strategic assets for sale. In doing so, we determined that five and eight of our SHOP, respectively, were impaired and recognized an aggregate impairment charge of $21,851,000 and $39,191,000, for the three and nine months ended September 30, 2022, respectively, which reduced the total carrying value of such eight SHOP to ~~$63,154,000 as of September 30, 2022.~~$63,154,000. The fair value of one ~~of our~~ SHOP was determined by the sales price from an executed purchase and sale agreement with a third-party buyer, which was considered a Level 2 measurement within the fair value hierarchy. The fair ~~value~~values of ~~our~~the remaining seven SHOP were based on their projected sales prices, which were considered Level 2 measurements within the fair value hierarchy.

We ~~did not recognize impairment charges on real estate investments for~~disposed of three such impaired facilities during the ~~three months ended September 30, 2021. For~~fourth quarter of 2022, and we disposed of the remaining five such impaired facilities during the nine months ended September 30, ~~2021, we determined that one medical office building was impaired and recognized an impairment charge of $3,335,000, which reduced~~2023. See the carrying value of such asset to $2,880,000. The fair value of such property was determined based on the contract sales price of an executed purchase and sale agreement with a third-party buyer, and adjusted for anticipated selling costs, which was considered a Level 2 measurement within the fair value hierarchy. We

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~disposed of such impaired medical office building in July 2021 for a contract sales price of $3,000,000 and recognized a net gain on sale of $346,000.~~

~~Acquisitions and Development~~“Dispositions of Real Estate ~~Investments~~Investments” section above.

Included in the capital expenditure amounts above are costs for the development and expansion of our integrated senior health campuses. For the nine months ended September 30, 2022, we exercised our right to purchase a leased property that cost $15,462,000 to develop and incurred $1,204,000 to expand one of our existing integrated senior health campuses. In addition, for the nine months ended September 30, 2022,Business Combinations

On February 15, 2023, we, through a majority-owned subsidiary of Trilogy, ~~Investors,~~acquired from an unaffiliated third party, a 60.0% controlling interest in a privately held company, Memory Care Partners, LLC, or ~~Trilogy, acquired a land parcel in Indiana for a contract purchase price of $320,000, plus closing costs.~~

In April and May 2022, we, through a majority-owned subsidiary of Trilogy, of which we own 72.9%, exercised the purchase options to acquire four previously leased real estate investments located in Indiana and Kentucky for an aggregate contract purchase price of $54,805,000, which investments are included in ourMCP, that operated integrated senior health campuses ~~segment. We financed such acquisitions with~~located in Kentucky. The contract purchase price for the acquisition of MCP was $900,000, which was acquired using cash on ~~hand and~~hand. Prior to such acquisition, we owned a ~~mortgage loan payable with a principal balance of $52,725,000.~~

We40.0% interest in MCP, which was accounted for ~~our acquisitions of land~~as an equity method investment and previously leased real estate investments completed during the nine months ended September 30, 2022 as asset acquisitions. We incurred and capitalized direct acquisition related expenses of $292,000. The following table summarizes the purchase price of such assets acquired, adjusted for $37,464,000 operating lease right-of-use assets and $36,326,000 operating lease liabilities, and based on their relative fair values:


	2022 Acquisitions
~~Building and improvements~~	$	~~49,645,000~~
~~Land and improvements~~	~~8,173,000~~




~~Total assets acquired~~	$	~~57,818,000~~

~~Disposition of Real Estate Investment~~

~~During the nine months ended September 30, 2022, we disposed of one integrated senior health campus~~was included in ~~Indiana for a contract sales price of $12,000,000 and recognized a gain on sale of $2,092,000.~~

~~Sale of Controlling Interests in Real Estate Investments~~

On February 8, 2022, we sold approximately 74.0% of our ownership interests in several real estate development assets within our integrated senior health campuses segment for an aggregate sales price of $19,622,000 and we recognized an aggregate gain on sale of $683,000 for the nine months ended September 30, 2022. At the time of sale, we retained approximately 26.0% ownership interests in such real estate development assets. As of September 30, 2022, we own approximately 31.6% ownership interests in such real estate development assets, which interests are accounted for as investments in unconsolidated entities within other assets, net in our accompanying condensed consolidated balance sheet as of ~~September 30,~~December 31, 2022. ~~From February 8, 2022 through September 30, 2022,~~In connection with the acquisition of the remaining interest in MCP, we now own a 100% controlling interest in MCP. As a result, we re-measured the fair value of our ~~interests~~previously held equity interest in ~~the net earnings or losses~~MCP and recognized a gain on re-measurement of ~~such unconsolidated entities were included in income or loss from unconsolidated entities~~$726,000 in our accompanying condensed consolidated statements of operations and comprehensive loss.

~~4. Business Combinations~~

On January 3, 2022, we, through a majority-owned subsidiary of Trilogy, acquired an integrated senior health campus in Kentucky from an unaffiliated third party. The contract purchase price for such property acquisition was $27,790,000 plus immaterial ~~closing~~transaction costs. We acquired such property using cash on hand and placed a mortgage loan payable of $20,800,000 on the property at the time of acquisition.

On April 1, 2022, we, through a majority-owned subsidiary of Trilogy, acquired a 50.0% interest in a pharmaceutical business in Florida from an unaffiliated third party and incurred transaction costs of $938,000. Prior to such pharmaceutical business acquisition, we ~~through a majority-owned subsidiary of Trilogy,~~ owned the other 50.0% interest in such business, which ~~investment~~ was ~~included in investments in unconsolidated entities within other assets, net in our accompanying condensed consolidated balance sheet~~accounted for as ~~of December 31, 2021.~~an equity method investment. Therefore, through March 31, 2022, our 50.0% interest in the net earnings or losses of such unconsolidated entity was included in income or loss from unconsolidated entities in our accompanying condensed consolidated statements of operations and comprehensive loss.

1920

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

On August 1, 2022, we, through a majority-owned subsidiary of Trilogy, acquired ~~the~~a 50.0% controlling interest in a privately held company, RHS Partners, LLC, or RHS, that owns and/or operates 16 integrated senior health campuses located in Indiana, from an unaffiliated third party. The contract purchase price for the acquisition of RHS was $36,661,000 plus immaterial closing costs, which was primarily acquired using cash on hand. Prior to such acquisition, we owned a 50.0% interest in RHS, which was accounted for as an equity method investment and was included in investments in unconsolidated entities within other assets, net in our accompanying condensed consolidated balance sheet as of December 31, 2021. Therefore, through July 31, 2022, our 50.0% equity interest in the net earnings or losses of RHS was included in income or loss from unconsolidated entities in our accompanying condensed consolidated statements of operations and comprehensive loss. In connection with the acquisition of the remaining interest in RHS, we now own a 100% controlling interest in RHS. As a result, we re-measured the fair value of our previously held equity interest in RHS and recognized a gain on re-measurement of $19,567,000 in our accompanying condensed consolidated statements of operations and comprehensive loss.

~~We accounted for the three acquisitions for the nine months ended September 30, 2022 above as business combinations, which are included within our integrated senior health campuses segment.~~ Based on quantitative and qualitative considerations, such business combinations were not material to us individually or in the aggregate and therefore, pro forma financial information is not provided. ~~We did not complete any acquisitions accounted for as business combinations for~~The fair values of the ~~nine months ended September 30, 2021.~~

assets acquired and liabilities assumed were preliminary estimates at acquisition.Any necessary adjustments are finalized within one year from the date of acquisition. The table below summarizes the acquisition date fair values of the assets acquired and liabilities assumed of our business combinations during the nine months ended September 30, 2023 and 2022 acquisitions accounted for as business combinations. 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.(in thousands):


	2022 Acquisitions
~~Operating lease right-of-use assets~~	$	~~153,777,000~~
~~Building and improvements~~	~~80,533,000~~
~~Goodwill~~	~~44,990,000~~
~~Accounts receivable, net~~	~~19,472,000~~
~~In-place leases~~	~~10,330,000~~
~~Land~~	~~8,755,000~~
~~Cash and restricted cash~~	~~9,723,000~~
~~Certificates of need~~	~~3,567,000~~
~~Furniture, fixtures and equipment~~	~~1,936,000~~
~~Other assets~~	~~1,787,000~~
~~Total assets acquired~~	~~334,870,000~~
~~Operating lease liabilities~~	~~(161,121,000)~~
~~Mortgage loan payable~~	~~(45,300,000)~~
~~Security deposits and other liabilities~~	~~(15,994,000)~~
~~Accounts payable and accrued liabilities~~	~~(15,060,000)~~
~~Financing obligations~~	~~(65,000)~~
~~Total liabilities assumed~~	~~(237,540,000)~~
~~Net assets acquired~~	$	~~97,330,000~~


	2023 Acquisition		2022 Acquisitions
Building and improvements	$	—	$	80,533
Land	—		8,755
In-place leases	—		10,330
Goodwill	3,331		44,990
Furniture, fixtures and equipment	39		1,936
Cash and restricted cash	565		9,723
Certificates of need	—		3,567
Operating lease right-of-use assets	—		153,777
Other assets	66		1,787
Accounts receivable, net	—		19,472
Total assets acquired	4,001		334,870
Security deposits and other liabilities	(812)		(15,994)
Mortgage loans payable	—		(45,300)
Accounts payable and accrued liabilities	(1,676)		(15,060)
Operating lease liabilities	—		(161,121)
Financing obligations	(12)		(65)
Total liabilities assumed	(2,500)		(237,540)
Net assets acquired	$	1,501	$	97,330

5.4. Debt Security Investment, Net

~~On October 15, 2015, we acquired~~Our investment in a commercial mortgage-backed debt security, or ~~debt security, from an unaffiliated third party. The~~ debt security, bears an interest rate on the stated principal amount thereof equal to 4.24% per annum, the terms of which security provide for monthly interest-only payments. The debt security matures on August 25, 2025 at a stated amount of $93,433,000, resulting in an anticipated yield-to-maturity of 10.0% per annum. The debt security was issued by an unaffiliated mortgage trust and represents a 10.0% beneficial ownership interest in such mortgage trust. The debt security is subordinate to all other interests in the mortgage trust and is not guaranteed by a government-sponsored entity.

As of September 30, 2022 and December 31, 2021, the carrying amount of the debt security investment was $82,067,000 and $79,315,000, respectively, net of unamortized closing costs of $830,000 and $1,004,000, respectively. Accretion on the

2021

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

As of September 30, 2023 and December 31, 2022, the carrying amount of the debt security investment was $85,922,000 and $83,000,000, respectively, net of unamortized closing costs of $563,000 and $767,000, respectively. Accretion on the debt security for the three months ended September 30, 2023 and 2022 was $1,060,000 and ~~2021 was~~ $960,000, ~~and $922,000,~~ respectively, and for the nine months ended September 30, 2023 and 2022 was $3,126,000 and ~~2021 was~~ $2,926,000, ~~and $2,710,000,~~ respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss. Amortization expense of closing costs for the three months ended September 30, 2023 and 2022 was $71,000 and ~~2021 was~~ $60,000, ~~and $52,000,~~ respectively, and for the nine months ended September 30, 2023 and 2022 was $204,000 and ~~2021 was~~ $174,000, ~~and $148,000,~~ 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. NoWe did not record a credit loss ~~was recorded~~ for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

~~6. Identified Intangible Assets, Net~~5. Intangibles

Identified intangible assets, net and identified intangible liabilities, net consisted of the following as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022 (dollars in thousands):

September 30,
2022
December 31,
2021
Intangible assets subject to amortization:
In-place leases, net of accumulated amortization of $34,036,000 and $28,120,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 7.4 years and 8.2 years as of September 30, 2022 and December 31, 2021, respectively) $ 74,761,000 $ 81,538,000
Above-market leases, net of accumulated amortization of $5,419,000 and $2,082,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 9.2 years and 9.7 years as of September 30, 2022 and December 31, 2021, respectively) 31,736,000 35,106,000
Customer relationships, net of accumulated amortization of $747,000 and $635,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 13.9 years and 14.7 years as of September 30, 2022 and December 31, 2021, respectively) 2,093,000 2,205,000
Internally developed technology and software, net of accumulated amortization of $399,000 as of December 31, 2021 (with a weighted average remaining life of 0.7 years as of December 31, 2021) — 70,000
Intangible assets not subject to amortization:
Certificates of need 98,592,000 99,165,000
Trade names 30,787,000 30,787,000
$ 237,969,000 $ 248,871,000


	September 30, 2023		December 31, 2022
Amortized intangible assets:
In-place leases, net of accumulated amortization of $45,275 and $38,930 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.5 years and 7.0 years as of September 30, 2023 and December 31, 2022, respectively)	$	47,766	$	75,580
Above-market leases, net of accumulated amortization of $6,676 and $6,360 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.7 years and 9.0 years as of September 30, 2023 and December 31, 2022, respectively)	16,667		30,194
Customer relationships, net of accumulated amortization of $897 and $785 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 12.9 years and 13.7 years as of September 30, 2023 and December 31, 2022, respectively)	1,943		2,055

Unamortized intangible assets:
Certificates of need	99,721		97,667
Trade names	30,787		30,787
Total identified intangible assets, net	$	196,884	$	236,283

Amortized intangible liabilities:
Below-market leases, net of accumulated amortization of $3,187 and $2,508 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.9 years and 8.4 years as of September 30, 2023 and December 31, 2022, respectively)	$	9,346	$	10,837
Total identified intangible liabilities, net	$	9,346	$	10,837

Amortization expense on identified intangible assets for the three months ended September 30, 2023 and 2022 was $15,351,000 and ~~2021 was~~ $5,534,000, ~~and $784,000,~~ respectively, which included ~~$1,113,000~~$3,573,000 and ~~$67,000,~~$1,113,000, respectively, of amortization recorded as a decrease to real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive loss. Amortization expense on identified intangible assets for the nine months ended September 30, 2023 and 2022 was $40,133,000 and ~~2021 was~~ $19,894,000, ~~and $3,481,000,~~ respectively, which included ~~$3,340,000~~$13,515,000 and ~~$407,000,~~$3,340,000, respectively, of amortization recorded as a decrease to real estate revenue for above-market leases in our accompanying condensed consolidated statements of operations and comprehensive loss. On March 1, 2023, we transitioned our SNFs within Central Wisconsin Senior Care Portfolio to a RIDEA structure, which resulted in a full amortization of $8,073,000 of above-market leases and $885,000 of in-place leases. In addition, we fully amortized $2,756,000 of above-market leases and $5,750,000 of in-place leases during the three months ended September 30, 2023 in connection with the transition of our senior housing — leased facilities within Michigan ALF Portfolio to a RIDEA structure.

2122

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Amortization expense on below-market leases for the three months ended September 30, 2023 and 2022 was $470,000 and $413,000, respectively, and for the nine months ended September 30, 2023 and 2022 was $1,282,000 and $1,436,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss. In connection with the transition of our senior housing — leased facilities within Michigan ALF Portfolio to a RIDEA structure, we fully amortized $112,000 of below-market leases during the three months ended September 30, 2023.

The aggregate weighted average remaining life of the identified intangible assets was ~~8.1~~7.7 years as of both September 30, 2023 and December 31, 2022. The aggregate weighted average remaining life of the identified intangible liabilities was 7.9 years and ~~8.8~~8.4 years as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. As of September 30, ~~2022,~~2023, estimated amortization expense on the identified intangible assets and liabilities for the three months ending December 31, ~~2022~~2023 and for each of the next four years ending December 31, and thereafter was as ~~follows:~~follows (in thousands):


					Amortization Expense
Year	Year	Amount		Year	Intangible Assets		Intangible Liabilities
2022		$	8,233,000
2023	2023	21,162,000		2023	$	5,459	$	3,252
2024	2024	13,640,000		2024	11,613		1,072
2025	2025	11,001,000		2025	8,862		956
2026	2026	9,831,000		2026	7,794		840
2027				2027	7,270		825
Thereafter	Thereafter	44,723,000		Thereafter	25,378		2,401
		$	108,590,000
Total				Total	$	66,376	$	9,346

7.6. Other Assets, Net

Other assets, net consisted of the following as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022 (dollars in thousands):

September 30,
2022
December 31,
2021
Deferred rent receivables $ 45,921,000 $ 41,061,000
Prepaid expenses, deposits, other assets and deferred tax assets, net 33,367,000 22,484,000
Lease commissions, net of accumulated amortization of $5,938,000 and $4,911,000 as of September 30, 2022 and December 31, 2021, respectively 19,032,000 16,120,000
Inventory 18,875,000 18,929,000
Investments in unconsolidated entities 9,431,000 15,615,000
Deferred financing costs, net of accumulated amortization of $5,011,000 and $8,469,000 as of September 30, 2022 and December 31, 2021, respectively 4,795,000 3,781,000
Lease inducement, net of accumulated amortization of $2,105,000 and $1,842,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 8.2 years and 8.9 years as of September 30, 2022 and December 31, 2021, respectively) 2,895,000 3,158,000
$ 134,316,000 $ 121,148,000


	September 30, 2023		December 31, 2022
Deferred rent receivables	$	46,944	$	46,867
Prepaid expenses, deposits, other assets and deferred tax assets, net	33,783		25,866
Inventory — finished goods	21,998		19,775
Investments in unconsolidated entities	20,807		9,580
Lease commissions, net of accumulated amortization of $6,794 and $6,260 as of September 30, 2023 and December 31, 2022, respectively	17,538		19,217

Derivative financial instrument	8,200		—
Deferred financing costs, net of accumulated amortization of $8,013 and $5,704 as of September 30, 2023 and December 31, 2022, respectively	3,120		4,334
Lease inducement, net of accumulated amortization of $2,456 and $2,193 as of September 30, 2023 and December 31, 2022, respectively (with a weighted average remaining life of 7.2 years and 7.9 years as of September 30, 2023 and December 31, 2022, respectively)	2,544		2,807
Total	$	154,934	$	128,446

Deferred financing costs included in other assets, net were related to the ~~2018 Credit Facility, 2019 Credit Facility,~~ 2019 Trilogy Credit Facility and the senior unsecured revolving credit facility portion of the 2022 Credit Facility. See Note 9,8, Lines of Credit and Term ~~Loans,~~Loan, for a further discussion. Amortization expense on lease inducement for both the three ~~months ended September 30, 2022~~ and ~~2021 was $87,000, and amortization expense on lease inducement for both the~~ nine months ended September 30, 2023 and 2022 was $87,000 and ~~2021 was~~ $263,000, respectively, which is recorded as a decrease to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

7. Mortgage Loans Payable, Net

AsMortgage loans payable, net consisted of the following as of September 30, ~~2022~~2023 and December 31, 2021, mortgage loans payable were $1,177,244,000 ($1,159,159,000, 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 September 30, 2022 ~~we had 64 fixed-rate mortgage loans payable and 13 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 6.52% per annum based~~(dollars in thousands):


	September 30, 2023		December 31, 2022
Total fixed-rate debt (71 loans and 68 loans as of September 30, 2023 and December 31, 2022, respectively)	$	908,000	$	885,892
Total variable-rate debt (13 loans and 11 loans as of September 30, 2023 and December 31, 2022, respectively)	335,358		368,587
Total fixed- and variable-rate debt	1,243,358		1,254,479
Less: deferred financing costs, net	(8,996)		(8,845)
Add: premium	184		237
Less: discount	(13,308)		(16,024)
Mortgage loans payable, net	$	1,221,238	$	1,229,847

Based on interest rates in effect as of September 30, 2023 and December 31, 2022, effective interest rates ranged from 2.21% to 8.44% per annum and 2.21% to 7.26% per annum, respectively, with a weighted average effective interest rate of ~~3.85%. As of December 31, 2021, we had 66 fixed-rate mortgage loans payable~~4.64% and 12 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 December 31, 2021 and a weighted average effective interest rate of 3.21%.4.29%, respectively. We are required by the terms of certain loan documents to meet certain reporting requirements and covenants, such as net worth ratios, fixed charge coverage ratios and leverage ratios.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~Mortgage loans payable, net consisted of the following as of September 30, 2022 and December 31, 2021:~~

September 30,
2022
December 31,
2021
Total fixed-rate debt $ 805,284,000 $ 845,504,000
Total variable-rate debt 371,960,000 270,712,000
Total fixed- and variable-rate debt 1,177,244,000 1,116,216,000
Less: deferred financing costs, net (8,001,000) (8,680,000)
Add: premium 267,000 397,000
Less: discount (10,351,000) (12,339,000)
Mortgage loans payable, net $ 1,159,159,000 $ 1,095,594,000

The following table reflects the changes in the carrying amount of mortgage loans payable, net for the nine months ended September 30, 2023 and 2022 (in thousands):


	Nine Months Ended September 30,
	2023		2022
Beginning balance	$	1,229,847	$	1,095,594
Additions:
Borrowings under mortgage loans payable	85,477		156,120
Assumption of mortgage loans payable due to acquisition of real estate investments, net	—		45,300
Amortization of deferred financing costs	1,690		1,701
Amortization of discount/premium on mortgage loans payable, net	2,662		1,879
Deductions:
Scheduled principal payments on mortgage loans payable	(59,931)		(53,317)
Early payoff of mortgage loans payable	(9,809)		(78,437)
Payoff of a mortgage loans payable due to disposition of real estate investment	(26,856)		(8,637)
Deferred financing costs	(1,842)		(1,044)
Ending balance	$	1,221,238	$	1,159,159

For the three and ~~2021:~~

Nine Months Ended September 30,
2022 2021
Beginning balance $ 1,095,594,000 $ 810,478,000
Additions:
Borrowings under mortgage loans payable 156,120,000 393,817,000
Assumption of mortgage loans payable 45,300,000 —
Amortization of deferred financing costs 1,701,000 3,436,000
Amortization of discount/premium on mortgage loans payable, net 1,879,000 606,000
Deductions:
Scheduled principal payments on mortgage loans payable (53,317,000) (30,688,000)
Early payoff of mortgage loans payable (78,437,000) (101,734,000)
Payoff of a mortgage loan payable due to disposition of real estate investment (8,637,000) —
Deferred financing costs (1,044,000) (2,210,000)
Ending balance $ 1,159,159,000 $ 1,073,705,000

nine months ended September 30, 2023, we incurred a loss on the early extinguishment of mortgage loan payable of $345,000, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. Such loss was related to the payoff of a mortgage loan payable due to the disposition of a real estate investment in August 2023. For the three and nine months ended September 30, 2022, we incurred an aggregate loss on the early extinguishment of mortgage loans payable of $628,000 and $1,877,000, respectively, which is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss. ~~For the three and nine months ended September 30, 2022, such~~Such aggregate loss ~~on debt extinguishment~~ was primarily related to the payoff of a mortgage loan payable due to the disposition of a real estate investment in September 2022 and the write-off of unamortized loan discount related to eight mortgage loans payable that we refinanced on January 1, 2022 that were due to mature in 2044 through 2052.

For the three and nine months ended September 30, 2021, we incurred an aggregate loss on the extinguishment of mortgage loans payable of $0 and $2,293,000, respectively, 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.

2324

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

As of September 30, ~~2022,~~2023, the principal payments due on our mortgage loans payable for the three months ending December 31, ~~2022~~2023 and for each of the next four years ending December 31, and thereafter were as ~~follows:~~follows (in thousands):


Year	Year	Amount		Year	Amount
2022		$	12,791,000
2023	2023	228,016,000		2023	$	4,862
2024	2024	229,487,000		2024	310,860
2025	2025	29,169,000		2025	166,186
2026	2026	155,249,000		2026	170,035
2027				2027	35,128
Thereafter	Thereafter	522,532,000		Thereafter	556,287
		$	1,177,244,000
Total				Total	$	1,243,358

9.8. 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 bore interest at per annum rates equal to (a)(i) the Eurodollar Rate, as defined in the 2018 Credit Agreement, plus (ii) a margin ranging from 1.70% to 2.20% based on our Consolidated Leverage Ratio, as defined in the 2018 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 2018 Credit Agreement, plus 0.50%, (3) the one-month Eurodollar Rate plus 1.00%, and (4) 0.00%, plus (ii) a margin ranging from 0.70% to 1.20% based on our Consolidated Leverage Ratio.

The 2018 Credit Facility was 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 December 31, 2021, borrowings outstanding totaled $441,900,000 and the weighted average interest rate on such borrowings outstanding was 2.27% per annum. On January 19, 2022, we terminated the 2018 Credit Agreement and entered into the 2022 Credit Agreement, as defined and discussed below.

~~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

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~amended and restated the 2019 Corporate Credit Agreement in its entirety, or the 2022 Credit Agreement. See below for a further discussion.~~Loan

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 an agreement, or the 2022 Credit Agreement, ~~that amended, restated, superseded~~to amend and ~~replaced~~restate the ~~2019 Corporate~~credit agreement for our existing credit facility with Bank of America, N.A., or Bank of America, KeyBank National Association, Citizens Bank, National Association, and the lenders named therein. The 2022 Credit Agreement ~~and the 2018 Credit Agreement~~provides for a credit facility with an aggregate maximum principal amount up to $1,050,000,000~~$1,050,000,000,~~, or the 2022 Credit ~~Facility. The 2022 Credit~~ Facility, which 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 refinancing existing indebtedness and for general corporate purposes including for working capital, capital expenditures and other corporate purposes not inconsistent with obligations under the 2022 Credit Agreement. We may also obtain up to $25,000,000 in the form of standby letters of credit pursuant to the 2022 Credit Facility. Unless defined herein, all capitalized terms under this “2022 Credit Facility” subsection are defined in the 2022 Credit Agreement.

Under the terms of the 2022 Credit Agreement, the revolving loans mature on January 19, 2026, and may be extended for one 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 option, (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 the 2022 Credit Agreement, there is an inability to determine the Daily SOFR or the Term SOFR then the 2022 Credit Facility will bear interest at a rate per annum 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. On March 1, 2023, we entered into an amendment to the 2022 Credit Agreement, or the First Amendment. The material terms of the First Amendment provided for revisions to certain financial covenants for a limited period of time. Except as modified by the terms of the First Amendment, the material terms of the 2022 Credit Agreement remain in full force and effect.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

As of both September 30, 2023 and December 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 September 30, 2023 and December 31, 2022, borrowings outstanding under the 2022 Credit Facility totaled ~~$963,900,000~~$910,900,000 ($~~963,008,000,~~910,076,000, net of deferred financing costs related to the senior unsecured term loan facility portion of the 2022 Credit Facility) and $965,900,000 ($965,060,000, net of deferred financing costs related to the senior unsecured term loan facility portion of the 2022 Credit Facility), respectively, and the weighted average interest rate on such borrowings outstanding was ~~4.76%~~7.07% and 6.07% per ~~annum.~~annum, respectively. As of September 30, 2023, we have entered into interest rate swaps to mitigate the risk associated with the entire $550,000,000 outstanding borrowing amount of our term loan. See Note 9, Derivative Financial Instruments, for a further discussion.

In January 2022, in connection with the 2022 Credit Agreement, we incurred an aggregate $3,161,000 loss on the extinguishment of a portion of senior unsecured term ~~loans which formed part of the 2018 Credit Facility and the 2019 Credit Facility.~~loan related to former credit facilities. Such loss on extinguishment of debt is recorded as an increase to interest expense in our accompanying condensed consolidated statements of operations and comprehensive loss, and primarily consisted of lender fees we paid to obtain the 2022 Credit Facility.

2019 Trilogy Credit Facility

~~On October 1, 2021, upon consummation of the Merger,~~We, through Trilogy RER, LLC, ~~we became subject~~are party to an amended and restated loan agreement, or the 2019 Trilogy Credit Agreement, among certain subsidiaries of Trilogy OpCo, LLC, Trilogy RER, LLC, and Trilogy Pro Services, LLC; KeyBank; CIT Bank, N.A.; Regions Bank; KeyBanc Capital Markets, Inc.; Regions Capital Markets; Bank of America; The Huntington National Bank; and a syndicate of other banks, as lenders named therein, with respect to a senior secured revolving credit facility ~~with~~that had an aggregate maximum principal amount of $360,000,000, consisting of: (i) a $325,000,000 secured revolver supported by real estate assets and ancillary business cash flow and (ii) a $35,000,000 accounts receivable revolving credit facility supported by eligible accounts receivable, or the 2019 Trilogy Credit Facility. The proceeds of the 2019 Trilogy Credit Facility may be used for acquisitions, debt repayment and general corporate purposes. The maximum principal amount of the 2019 Trilogy Credit Facility ~~may be~~could have been increased by up to $140,000,000, for a total principal amount of $500,000,000, subject to certain conditions.

On December 20, 2022, we entered into an amendment to the 2019 Trilogy Credit Agreement, or the 2019 Trilogy Credit Amendment. The material terms of the 2019 Trilogy Credit Amendment provided for an increase to the secured revolver amount from $325,000,000 to $365,000,000, thereby increasing our aggregate maximum principal amount under the credit facility from $360,000,000 to $400,000,000. In addition, all references to LIBOR were replaced with the Secured Overnight Financing Rate, or SOFR. On March 30, 2023, we further amended the 2019 Trilogy Credit Agreement to update the definition of Implied Debt Service, which is used to calculate the Real Estate Borrowing Base Availability, for interest rate changes and to add an annual interest-only payment calculation option. Except as modified by the terms of the amendments, the material terms of the 2019 Trilogy Credit Agreement remain in full force and effect. Unless defined herein, all capitalized terms under this “2019 Trilogy Credit Facility” subsection are defined in the 2019 Trilogy Credit Amendment.

The 2019 Trilogy Credit Facility was due to mature on September 5, 2023; however, pursuant to the terms of the 2019 Trilogy Credit Agreement, at such time we extended the maturity date for one 12-month period to mature on September 4, 2024, and paid an extension fee of $600,000. At our option, the 2019 Trilogy Credit Facility bears interest at per annum rates equal to (a) SOFR, plus 2.75% for SOFR Rate Loans and (b) for Base Rate Loans, 1.75% plus the highest of: (i) the fluctuating rate per annum of interest in effect for such day as established from time to time by KeyBank as its prime rate, (ii) 0.50% above the Federal Funds Effective Rate and (iii) 1.00% above one-month Adjusted Term SOFR.

As of both September 30, 2023 and December 31, 2022, our aggregate borrowing capacity under the 2019 Trilogy Credit Facility was $400,000,000. As of September 30, 2023 and December 31, 2022, borrowings outstanding under the 2019 Trilogy Credit Facility totaled $367,000,000 and $316,734,000, respectively, and the weighted average interest rate on such borrowings outstanding was 8.18% and 7.17% per annum, respectively.

2526

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

matures on September 5, 2023 and may be extended for one 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 September 30, 2022 and December 31, 2021, our aggregate borrowing capacity under the 2019 Trilogy Credit Facility was $360,000,000. As of September 30, 2022 and December 31, 2021, borrowings outstanding under the 2019 Trilogy Credit Facility totaled $329,035,000 and $304,734,000, respectively, and the weighted average interest rate on such borrowings outstanding was 5.84% and 2.85% per annum, respectively.

~~10.~~9. Derivative Financial Instruments

We ~~have used~~use derivative financial instruments to manage interest rate risk associated with our variable-rate ~~debt. We recorded~~term loan pursuant to our 2022 Credit Facility and we record such derivative financial instruments in our accompanying condensed consolidated balance sheets as either an asset or a liability measured at fair value. We did not have any derivative financial instruments as of ~~September 30,~~December 31, 2022. The following table ~~lists~~provides information with respect to the derivative financial instruments held by us as of ~~December 31, 2021,~~September 30, 2023, which were included in ~~security deposits, prepaid rent and~~ other ~~liabilities~~assets, net in our accompanying condensed consolidated balance ~~sheets:~~sheet (dollars in thousands):


Instrument	Instrument	Notional Amount		Index	Interest Rate	Maturity Date	Fair Value December 31, 2021		Instrument	Notional Amount		Index	Interest Rate	Effective Date	Maturity Date	Fair Value September 30, 2023
Swap	Swap	$	250,000,000	one month LIBOR	2.10%	01/25/22	$	332,000	Swap	$	275,000	one month Term SOFR	3.74%	02/01/23	01/19/26	$	6,125
Swap	Swap	$	130,000,000	one month LIBOR	1.98%	01/25/22	162,000		Swap	275,000		one month Term SOFR	4.41%	08/08/23	01/19/26	2,075
Swap		$	100,000,000	one month LIBOR	0.20%	01/25/22	6,000
							$	500,000		$	550,000					$	8,200

As of ~~December 31, 2021, none of~~September 30, 2023, our derivative financial instruments were not designated as hedges. Derivative financial instruments not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements. ~~On January 25, 2022, our interest rate swap contracts matured.~~ For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recorded $0$3,402,000 and ~~$1,860,000,~~$0, respectively, and for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recorded ~~$500,000~~$8,200,000 and ~~$5,456,000,~~$500,000, respectively, as a decrease to total 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,~~13, Fair Value Measurements, for a further discussion of ~~the fair value of~~ our derivative financial instruments.

~~11. Identified Intangible Liabilities, Net~~

As of September 30, 2022 and December 31, 2021, identified intangible liabilities, net consisted of below-market leases of $11,249,000 and $12,715,000, respectively, net of accumulated amortization of $2,113,000 and $1,047,000, respectively. Amortization expense on below-market leases for the three months ended September 30, 2022 and 2021 was $413,000 and $45,000, respectively, and for the nine months ended September 30, 2022 and 2021 was $1,436,000 and $137,000, respectively, which is recorded as an increase to real estate revenue in our accompanying condensed consolidated statements of operations and comprehensive loss.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

The weighted average remaining life of below-market leases was 8.6 years and 9.1 years as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, estimated amortization expense on below-market leases for the three months ending December 31, 2022 and for each of the next four years ending December 31 and thereafter was as follows:

Year Amount
2022 $ 411,000
2023 1,596,000
2024 1,475,000
2025 1,347,000
2026 1,198,000
Thereafter 5,222,000
$ 11,249,000

~~12.~~10. Commitments and Contingencies

Litigation

We are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us, which if determined unfavorably to us, would have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Environmental Matters

We follow a policy of monitoring our properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at our properties, we are not currently aware of any environmental liability with respect to our properties that would have a material effect on our consolidated financial position, results of operations or cash flows. Further, we are not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that we believe would require additional disclosure or the recording of a loss contingency.

Other

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

~~13.~~11. Redeemable Noncontrolling Interests

As ~~a result~~ of ~~the Merger and the AHI Acquisition, as of~~both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we, through our direct and indirect subsidiaries, ~~own an approximately~~owned a 95.0% ~~and 94.9%~~ general partnership interest ~~respectively,~~ in our operating partnership and the remaining ~~approximate~~ 5.0% ~~and 5.1%~~ limited partnership interest ~~respectively,~~ in our operating partnership iswas owned by the NewCo Sellers. Some of the limited partnership units outstanding, which account for approximately 1.0% of our total operating partnership units outstanding, have redemption features outside of our control and are accounted for as redeemable noncontrolling interests presented outside of permanent equity in our accompanying condensed consolidated balance sheets.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

As of both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we, through Trilogy REIT Holdings LLC, or Trilogy REIT Holdings, in which we indirectly hold a 76.0% ownership interest, owned ~~95.9%~~approximately 97.4% and 96.2%, respectively, of the outstanding equity interests of Trilogy. As of ~~both~~ September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, certain members of Trilogy’s management and certain members of an advisory committee to Trilogy’s board of directors owned approximately ~~4.1%~~2.6% and 3.8%, respectively, of the outstanding equity interests of Trilogy. ~~The noncontrolling~~We account for such equity 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.~~sheets in accordance with FASB Accounting Standards Codification Topic 480-10-S99-3A given certain features associated with such equity interests. For the nine months ended September 30, 2023, we redeemed a portion of the equity interests owned by current members of Trilogy’s management for an aggregate of $15,954,000. For the nine months ended September 30, 2022, we did not redeem any equity interests of Trilogy.

As ~~a result~~ of ~~the Merger~~September 30, 2023 and December 31, 2022, we own, through our operating partnership, ~~as of September 30, 2022 and December 31, 2021, we own~~ approximately 98.0% of the joint ventures with an affiliate of Meridian Senior Living, LLC, or Meridian, that own Central Florida Senior Housing Portfolio, Pinnacle Beaumont ALF and Pinnacle Warrenton ALF. Also as a result of the Merger, as of September 30, 2022 and December 31, 2021, we also own approximately 90.0% of the joint venture with Avalon Health Care, Inc., or Avalon, that owns Catalina West Haven ALF and Catalina Madera ALF. The noncontrolling interests held by Meridian

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~and Avalon~~ have redemption features outside of our control and are accounted for as redeemable noncontrolling interests in our accompanying condensed consolidated balance sheets. ~~Both~~See Note 3, Real Estate Investments, Net and Business Combinations — Dispositions of Real Estate Investments, for dispositions within our Central Florida Senior Housing Portfolio in 2023.

We previously owned 90.0% of the joint venture with Avalon Health Care, Inc., or Avalon, that owned Catalina West Haven ALF and Catalina Madera ALF. The noncontrolling interests held by Avalon had redemption features outside of our control and were accounted for as redeemable noncontrolling interests until December 1, 2022, when we exercised our right to purchase the remaining 10.0% of the joint ~~ventures with an affiliate of Meridian and~~venture with Avalon ~~described above were acquired on October 1, 2021, upon consummation~~for a contract purchase price of $295,000. As such, 10.0% of the ~~Merger.~~net earnings of such joint venture were allocated to redeemable noncontrolling interests in our accompanying consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022.

We record the carrying amount of redeemable noncontrolling interests at the greater of: (i) the initial carrying amount, increased or decreased for the noncontrolling interests’ share of net income or loss and distributions or (ii) the redemption value. The changes in the carrying amount of redeemable noncontrolling interests consisted of the following for the nine months ended September 30, 2023 and 2022 ~~and 2021:~~(in thousands):


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Beginning balance	Beginning balance	$	72,725,000	$	40,340,000	Beginning balance	$	81,598	$	72,725
Additional redeemable noncontrolling interest	Additional redeemable noncontrolling interest	273,000		132,000		Additional redeemable noncontrolling interest	—		273
Reclassification from equity	Reclassification from equity	62,000		—		Reclassification from equity	62		62
Distributions	Distributions	(2,108,000)		(550,000)		Distributions	(1,083)		(2,108)
Repurchase of redeemable noncontrolling interests	Repurchase of redeemable noncontrolling interests	—		(166,000)		Repurchase of redeemable noncontrolling interests	(15,954)		—
Adjustment to redemption value	Adjustment to redemption value	14,594,000		810,000		Adjustment to redemption value	(4,098)		14,594
Net income (loss) attributable to redeemable noncontrolling interests		323,000		(397,000)
Net (loss) income attributable to redeemable noncontrolling interests						Net (loss) income attributable to redeemable noncontrolling interests	(564)		323
Ending balance	Ending balance	$	85,869,000	$	40,169,000	Ending balance	$	59,961	$	85,869

~~14.~~12. Equity

Preferred Stock

Pursuant to our charter, we are authorized to issue 200,000,000 shares of our preferred stock, par value $0.01 per share. As of both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, no shares of 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 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, to offer up to $100,000,000 of shares of our common stock pursuant to a Registration Statement on Form S-3 under the Securities Act filed by GAHR IV, or the AHR DRIP Offering. On November 14, 2022, our board suspended the AHR DRIP Offering beginning with the distributions declared, if any, for the quarter ending December 31, 2022. See Note 22, Subsequent Events. 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.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~Also, on October 1, 2021, we filed the Fourth Articles of Amendment and Restatement~~Pursuant to our charter, ~~or the Charter Amendment, which among other things,~~as 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 200,000,000 shares are classified as Class T common stock and 800,000,000 shares are classified as Class I common stock.

~~Distribution Reinvestment Plan~~

~~Following~~ As of September 30, 2023, after taking into consideration the ~~deregistration~~Merger and the impact of the ~~Initial~~reverse stock split as discussed below, we had issued 65,445,557 shares for a total of $2,737,716,000 of common stock since February 26, 2014 in our initial public offerings and DRIP ~~on April 22, 2015,~~offerings (includes historical offering amounts sold by GAHR III and GAHR IV prior to the Merger). See “Distribution Reinvestment Plan” section below for further discussion.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

On November 15, 2022 we ~~continued to offer~~effected a one-for-four reverse split of our common stock and a corresponding reverse split of the partnership units in our operating partnership. As a result of the Reverse Splits, every four shares of our common stock, ~~pursuant~~or four partnership units in our operating partnership, were automatically combined and converted into one issued and outstanding share of our common stock of like class, or one partnership unit of like class, as applicable, rounded to the ~~2015 GAHR III~~nearest 1/100th share or unit. The Reverse Splits impacted all classes of common stock and partnership units proportionately and had no impact on any stockholder’s or partner’s ownership percentage. Neither the number of authorized shares nor the par value of the Class T common stock and Class I common stock were ultimately impacted. All numbers of common shares and per share data, as well as partnership units in our operating partnership, in our accompanying condensed consolidated financial statements and related notes have been retroactively adjusted for all periods presented to give effect to the Reverse Splits.

Distribution Reinvestment Plan

Our DRIP ~~Offering and 2019 GAHR III DRIP Offering which resulted in a total of $308,501,000 in~~allowed our stockholders to elect to reinvest an amount equal to the distributions ~~being reinvested that resulted in 33,110,893~~declared on their shares of common stock ~~being issued.~~

As a result of the Merger, we deregistered the 2019 GAHR III DRIP Offering on October 4, 2021. Further, on October 4, 2021, our board reinstated distributions and authorized the reinstatement of the AHR DRIP Offering. As a result, beginning with the October 2021 distribution, which was paid in ~~November 2021, stockholders who previously enrolled as participants in the AHR DRIP received distributions in~~additional shares of our common stock ~~pursuant to the terms~~in lieu of ~~the AHR DRIP, instead of~~receiving cash distributions. ~~As of September 30, 2022, a total of $80,754,000~~However, in ~~distributions were reinvested that resulted in 8,575,687 shares of common stock being issued pursuant to~~connection with the ~~AHR DRIP Offering. On~~Proposed Listing, on November 14, 2022, our board suspended the ~~AHR~~ DRIP ~~Offering~~offering beginning with the distributions declared ~~if any,~~ for the quarter ~~ending~~ended December 31, 2022. ~~See Note 22, Subsequent Events.~~

~~Since October 5, 2016,~~As a result of the suspension of the DRIP offering, unless and until our board ~~had approved and established~~reinstates the DRIP offering, stockholders who are current participants in the DRIP were or will be paid distributions in cash.

Our board has been establishing an estimated per share net asset value, or NAV, annually. ~~Commencing with the distribution payment to stockholders paid in the month following such board approval, shares~~Shares of our common stock issued pursuant to our ~~distribution reinvestment plan~~DRIP are issued at the current estimated per share NAV until such time as our board determined an updated estimated per share NAV.

The following is a summary of the historical estimated per share ~~NAV for GAHR III and the Combined Company, as applicable:~~NAV:


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~~37.16
03/15/23	$	31.40

For both the three and nine months ended September 30, 2023, there were no distributions reinvested and no shares of our common stock were issued pursuant to our DRIP offerings. For the three and nine months ended September 30, 2022, $3,671,000 and $26,118,000, respectively, in distributions were reinvested and ~~395,174~~98,794 and ~~2,820,674~~705,169 shares of our common stock, respectively, were issued pursuant to our DRIP ~~Offerings. For both the three and nine months ended September 30, 2021, there were no distributions reinvested pursuant to our DRIP Offerings.~~offerings.

Share Repurchase Plan

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

Pursuant to our share repurchase plan, 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 most recent estimated value of one share of our common stock, as determined by our board, except that the repurchase price with respect to repurchases resulting from the death or qualifying disability of 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 rejected. On November 14, 2022, our board suspended our share repurchase plan beginning with share repurchase requests for the quarter ending December 31, 2022. All share repurchase requests, including requests resulting from the death or qualifying disability of stockholders, received commencing with the quarter ended December 31, 2022, will not be processed, will be considered canceled in full and ~~shall~~will not be ~~rejected.~~considered outstanding repurchase requests.

Funds for the repurchase of shares of our common stock were derived from the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP offerings. Pursuant to our share repurchase plan, the repurchase price with respect to repurchases resulting from the death or qualifying disability of stockholders was equal to the most recently published estimated per share NAV.

We did not repurchase any shares of our common stock pursuant to our share repurchase plan for the three months ended September 30, 2023. For the nine months ended September 30, 2023, pursuant to our share repurchase plan, we repurchased 1,681 shares of common stock for $62,000, at a repurchase price of $37.16 per share. For the three and nine months ended September 30, 2022, pursuant to our share repurchase plan, we repurchased 152,035 and 438,994 shares of common stock, respectively, for an aggregate of $5,650,000 and $16,233,000, respectively, at a repurchase price of $37.16 and $36.98 per share, respectively. Such repurchase requests were submitted prior to the suspension of our share repurchase plan.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

During the three and nine months ended September 30, 2022, we repurchased 608,138 and 1,755,973 shares of our common stock, respectively, for an aggregate of $5,650,000 and $16,233,000, respectively, at an average repurchase price of $9.29 and $9.24 per share, respectively. During the three and nine months ended September 30, 2021, we did not repurchase any shares of common stock. In October 2022, we repurchased 478,136 shares of our common stock, for an aggregate of $4,442,000, at a repurchase price of $9.29 per 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. On November 14, 2022, our board suspended the share repurchase plan for all repurchases, including repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchase requests for the quarter ending December 31, 2022. See Note 22, Subsequent Events.

Noncontrolling Interests in Total Equity

As of ~~both~~ September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, Trilogy REIT Holdings owned approximately ~~95.9%~~97.4% and 96.2%, respectively, of Trilogy. ~~Prior to October 1, 2021, we were~~We are the indirect owner of a ~~70.0%~~76.0% interest in Trilogy REIT Holdings pursuant to an amended joint venture agreement with an indirect, wholly owned subsidiary of NorthStar Healthcare Income, Inc., or ~~NHI, and a wholly owned subsidiary of GAHR IV Operating Partnership.~~NHI. We serve as the managing member of Trilogy REIT Holdings. As ~~part~~ of ~~the Merger on October 1, 2021, the wholly~~both September 30, 2023 and December 31, 2022, NHI indirectly owned ~~subsidiary of GAHR IV Operating Partnership sold its 6.0%~~a 24.0% membership interest in Trilogy REIT Holdings ~~to GAHR III, thereby increasing our indirect ownership in Trilogy REIT Holdings to 76.0%. Through~~and as such, for the three and nine months ended September 30, ~~2021, 30.0%~~2023 and 2022, 24.0% of the net earnings of Trilogy REIT Holdings were allocated to noncontrolling ~~interests, and since October 1, 2021, 24.0%~~interests. See Note 19, Subsequent Event, for a further discussion of ~~the net earnings of~~our ownership in Trilogy REIT ~~Holdings were allocated to a noncontrolling interest.~~Holdings.

In connection with our ~~acquisition and~~ operation of Trilogy, time-based profit interest units in Trilogy, or the Profit Interests, were issued to Trilogy Management Services, LLC and antwo independent ~~director~~directors 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~~are measured at their grant date fair value and vest in increments of 20.0% on each anniversary of the respective grant date over a ~~five year~~five-year period. We ~~amortized~~amortize the ~~time-based~~ Profit Interests on a straight-line basis over the vesting periods, which are recorded to general and administrative expenses in our accompanying condensed consolidated statements of operations and comprehensive loss. The ~~performance-based~~nonvested 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 ASU 2018-07, ~~Improvements to Nonemployee Share-Based Payment Accounting, using a modified retrospective approach. The nonvested awards were~~are presented as noncontrolling interests in total equity in our accompanying condensed consolidated balance sheets, and ~~were~~are re-classified to redeemable noncontrolling interests upon vesting as they ~~had~~have redemption features outside of our control, similar to the common stock units held by Trilogy’s management. See Note ~~13,~~11, Redeemable Noncontrolling Interests, for a further discussion.

In 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 accompanying condensed consolidated balance sheets. There were no canceled, expired or exercised Profit Interests during the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized stock compensation expense related to the time-based Profit Interests of $21,000 and $20,000, ~~and $0, respectively, and for~~respectively. For both the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized stock compensation expense related to the time-based Profit Interests of ~~$62,000 and $(14,000), respectively.~~$62,000.

One of our consolidated subsidiaries issued non-voting preferred shares of beneficial interests to qualified investors for total proceeds of $125,000. These preferred shares of beneficial interests are entitled to receive cumulative preferential cash dividends at the rate of 12.5% per annum. We classify the value of ~~the~~our subsidiary’s preferred shares of beneficial interests as noncontrolling interests in our accompanying condensed consolidated balance sheets and the dividends of the preferred shares of beneficial interests in net income or loss attributable to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss.

As of both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we owned an 86.0% interest in a consolidated limited liability company that owns Lakeview IN Medical Plaza. As such, 14.0% of the net earnings of Lakeview IN Medical Plaza were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

As of both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we owned a 90.6% membership interest in a consolidated limited liability company that owns Southlake TX Hospital. As such, 9.4% of the net earnings of Southlake TX Hospital were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022.

As of both September 30, 2023 and December 31, 2022, ~~and 2021.~~

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~On October 1, 2021, upon consummation of the Merger, through our operating partnership,~~ we ~~acquired an approximate~~owned a 90.0% interest in a joint venture that owns the Louisiana Senior Housing Portfolio. As such, 10.0% of the net earnings of the joint venture were allocated to noncontrolling interests in our accompanying condensed consolidated statements of operations and comprehensive loss ~~during~~for the three and nine months ended September 30, 2023 and 2022.

As discussed in Note 1, Organization and Description of Business, as ~~a result~~ of ~~the Merger and the AHI Acquisition, as of~~both September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we, through our direct and indirect subsidiaries, own ~~an approximately~~a 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 both September 30, ~~2022~~2023 and December 31, ~~2021, approximately~~2022, 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. See Note ~~13,~~11, Redeemable Noncontrolling Interests, for a further discussion.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

AHR 2015 Incentive Plan

~~Upon consummation of~~Pursuant to the ~~Merger, we adopted the~~Amended and Restated 2015 Incentive Plan, ~~as amended and restated, or our incentive plan, pursuant to which~~ our board (with respect to options and restricted shares of common stock granted to independent directors), or our compensation committee (with respect to any other award), may ~~make grants of~~grant options, restricted shares of common stock, stock purchase rights, stock appreciation rights or other awards to our independent directors, officers, employees and consultants. ~~The~~On June 15, 2023, we adopted the Second Amended and Restated 2015 Incentive Plan, or the AHR Incentive Plan, which, among other things, increased the maximum number of shares of our common stock that may be issued pursuant to ~~our incentive~~such plan isfrom 1,000,000 to 4,000,000 ~~shares.~~shares, extended the term of such plan to June 15, 2033 and made certain administrative changes to the Amended and Restated 2015 Incentive Plan.

~~Through~~Restricted common stock

Pursuant to the AHR Incentive Plan, through September 30, ~~2022,~~2023, we granted an aggregate of ~~1,157,213~~315,459 shares of our restricted common stock, ~~under our incentive plan. Such amount includes: (i) 222,458 shares of our~~or RSAs, which include restricted Class T common stock ~~at a weighted average grant date fair value of $9.52 per share,~~and restricted Class I common stock, as defined in the AHR Incentive Plan. RSAs were granted to our independent ~~directors; (ii) 490,515 time-based shares~~directors in connection with their initial election or re-election to our board or in consideration of ~~our restricted Class T common stock, at a grant date fair value of $9.22 per share or $9.29 per share, as applicable, to~~their past services rendered. In addition, certain executive officers and key ~~employees; (iii) 319,149 shares~~employees received grants of ~~our~~ restricted Class T common stock. RSAs generally have a vesting period ranging from one to four years and are subject to continuous service through the vesting dates.

Restricted stock at a grant date fair value of $9.22 per share, to certain of our key employees; and (iv) 125,091 shares of our restricted Class I common stock issued upon the conversion of restricted common stock that GAHR III granted priorunits

Pursuant to the ~~Merger. Also,~~AHR Incentive Plan, through September 30, ~~2022,~~2023, we granted ~~117,410~~our executive officers an aggregate 70,751 of performance-based restricted stock units, ~~pursuant to our incentive plan to certain executive officers~~or PBUs, representing the right to receive shares of our Class T common stock upon vesting, at a grant date fair value of $9.29 per unit, net of 46,096 performance-based restricted stock units that were forfeited during the nine months ended September 30, 2022. Further, for the nine months ended September 30, 2022, wevesting. We also granted ~~76,800~~to our executive officers and certain employees 169,529 time-based restricted stock units, ~~under our incentive plan, at a grant date fair value of $9.29 per share, to certain employees~~or TBUs, representing the right to receive shares of our Class T common stock upon vesting. PBUs and TBUs are collectively referred to as RSUs. RSUs granted to executive officers and employees generally have a vesting period of up to three years and are subject to continuous service through the vesting dates, and any performance conditions, as applicable.

A summary of the status of our nonvested RSAs and RSUs as of September 30, 2023 and December 31, 2022 and the changes for the nine months ended September 30, 2023 is presented below:


	Number of Nonvested RSAs	Weighted Average Grant Date Fair Value - RSAs		Number of Nonvested RSUs		Weighted Average Grant Date Fair Value - RSUs




Balance — December 31, 2022	183,240	$	36.97	48,553		$	37.16
Granted	26,156	$	31.83	191,728		$	31.40
Vested	(22,528)	$	37.52	(6,400)	(1)	$	37.16
Forfeited	—	$	—	(3,452)		$	31.40
Balance — September 30, 2023	186,868	$	36.18	230,429		$	32.45

___________

(1)Amount includes 2,280 shares of common stock that were withheld from issuance to satisfy employee minimum tax withholding requirements associated with the vesting of RSUs during the nine months ended September 30, 2023.

For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized $1,558,000 and $914,000, respectively, and for the nine months ended September 30, 2023 and 2022, we recognized $4,173,000 and $2,705,000, respectively, in stock ~~based~~ compensation expense related to awards granted pursuant to ~~our incentive plan of $914,000 and $13,000, respectively. For~~ the ~~nine months ended September 30, 2022 and 2021, we recognized~~AHR Incentive Plan. Such stock ~~based~~ compensation expense ~~related~~is based on the grant date fair value for time based awards and for performance-based awards that are probable of vesting, which grant date fair value is equal to ~~awards granted pursuant to our incentive plan of $2,705,000 and $66,000, respectively. Such stock based~~the most recently published estimated per share NAV. Stock compensation expense ~~was~~is included in ~~general and administrative in our accompanying condensed consolidated statements of operations and comprehensive loss.~~

~~15. Related Party Transactions~~

~~Fees and Expenses Paid to Affiliates~~

Prior 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 former co-sponsors and other affiliates of our former advisor.

On December 20, 2021, the Advisory Agreement was assigned to NewCo and as 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 any fees or expense reimbursements arising from the Advisory Agreement.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

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

Three Months Ended
September 30, 2021 Nine Months Ended
September 30, 2021
Asset management fees(1) $ 5,424,000 $ 16,187,000
Property management fees(2) 674,000 2,009,000
Development fees(3) 214,000 854,000
Operating expenses(4) 44,000 160,000
Construction management fees(5) 38,000 118,000
Lease fees(6) 25,000 410,000
Acquisition fees(7) 19,000 1,363,000
$ 6,438,000 $ 21,101,000
~~___________~~

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

~~(2)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)Development fees were capitalized as part of the associated investments in our accompanying condensed consolidated balance sheets.~~

~~(4)~~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 September 30, 2021, our operating expenses did not exceed such limitations. Operating expenses were generally included in general and administrative in our accompanying condensed consolidated statements of operations and comprehensive loss.

~~(5)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.~~

~~(6)Lease fees were capitalized as costs of entering into new leases and included in other assets, net in our accompanying condensed consolidated balance sheets.~~

~~(7)~~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.

~~Accounts Payable Due to Affiliates~~

~~We did not have any amounts outstanding to our affiliates as of September 30, 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~~

3231

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

~~16.~~13. Fair Value Measurements

Assets and Liabilities Reported at Fair Value

The table below presents our assets and liabilities measured at fair value on a recurring basis as of September 30, ~~2022,~~2023, aggregated by the level in the fair value hierarchy within which those measurements ~~fall:~~fall (in thousands):

Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Liabilities:
Warrants $ — $ — $ 678,000 $ 678,000
Total liabilities at fair value $ — $ — $ 678,000 $ 678,000

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


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



Assets:
Derivative financial instruments	$	—	$	8,200	$	—	$	8,200

Total assets at fair value	$	—	$	8,200	$	—	$	8,200

There were no transfers into and out of fair value measurement levels during the nine months ended September 30, ~~2022~~2023 and ~~2021.~~

~~Warrants~~

As2022. We did not have any assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2022 and~~ December 31, 2021, we have recorded $678,000 and $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 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 Noncontrolling Interests, for a further discussion. As of September 30, 2022 and December 31, 2021, the carrying value is a reasonable estimate of fair value.~~2022.

Derivative Financial Instruments

We ~~used~~entered into interest rate swaps ~~and interest rate caps~~ to manage interest rate risk associated with variable-rate debt. We also previously used interest rate swaps or interest rate caps to manage such interest rate risk. The valuation of these instruments was determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of each derivative. ~~This analysis~~Such valuation reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, as well as option volatility. The fair values of our interest rate swaps were determined by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts were based on an expectation of future interest rates derived from observable market interest rate curves.

We 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 considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although we determined that the majority of the inputs used to value our derivative financial instruments fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with ~~these instruments~~this instrument 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 ~~December 31, 2021,~~September 30, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. AsOn January 25, 2022, our prior interest rate swap contracts matured and as of ~~September 30,~~December 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 our lines of credit and term ~~loans.~~loan.

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 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~~

Table of accounts payable due to affiliates is not determinable due to the related party nature of the accounts payable. The fair values of the other financial instruments are classified in Level 2 of the fair value hierarchy.Contents

AMERICAN HEALTHCARE REIT, INC.

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

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 our lines of credit and term ~~loans~~loan 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 lines of credit and term ~~loans~~loan are classified in Level 2 within the fair value hierarchy. The carrying amounts and estimated fair values of such financial instruments as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as ~~follows:~~follows (in thousands):


		September 30, 2022				December 31, 2021					September 30, 2023				December 31, 2022
		Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value			Carrying Amount(1)		Fair Value		Carrying Amount(1)		Fair Value
Financial Assets:	Financial Assets:									Financial Assets:

Debt security investment	Debt security investment	$	82,067,000	$	92,831,000	$	79,315,000	$	93,920,000	Debt security investment	$	85,922	$	93,047	$	83,000	$	93,230
Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Mortgage loans payable	Mortgage loans payable	$	1,159,159,000	$	1,022,541,000	$	1,095,594,000	$	1,075,729,000	Mortgage loans payable	$	1,221,238	$	1,057,769	$	1,229,847	$	1,091,667
Lines of credit and term loans		$	1,287,248,000	$	1,294,231,000	$	1,222,853,000	$	1,226,636,000
Lines of credit and term loan										Lines of credit and term loan	$	1,273,956	$	1,278,709	$	1,277,460	$	1,285,205

___________

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

~~17.~~14. Income Taxes

As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. We have elected to treat certain of our 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.

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 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, ~~2022~~2023 and December 31, ~~2021,~~

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

2022, 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, ~~2022~~2023 and December 31, ~~2021,~~2022, our valuation allowance fully reserves the net deferred tax assets due to historical losses and inherent uncertainty of future income. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance in the future.

~~18.~~

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

15. Leases

Lessor

We have operating leases with tenants that expire at various dates through 2050. For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$50,041,000~~$45,582,000 and ~~$28,320,000,~~$50,041,000, respectively, of revenues related to operating lease payments, of which ~~$9,522,000~~$9,800,000 and ~~$4,181,000,~~$9,522,000, respectively, was for variable lease payments. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$150,860,000~~$137,101,000 and ~~$86,258,000,~~$150,860,000, respectively, of revenues related to operating lease payments, of which ~~$29,598,000~~$29,551,000 and ~~$13,835,000,~~$29,598,000, respectively, was for variable lease payments. As of September 30, ~~2022,~~2023, the following table sets forth the undiscounted cash flows for future minimum base rents due under operating leases for the three months ending December 31, ~~2022~~2023 and for each of the next four years ending December 31 and thereafter for properties that we wholly ~~own:~~own (in thousands):


Year	Year	Amount		Year	Amount
2022		$	38,476,000
2023	2023	150,888,000		2023	$	34,625
2024	2024	141,860,000		2024	132,971
2025	2025	128,746,000		2025	120,998
2026	2026	118,101,000		2026	110,939
2027				2027	105,771
Thereafter	Thereafter	693,229,000		Thereafter	534,266
Total	Total	$	1,271,300,000	Total	$	1,039,570

Lessee

We lease certain land, buildings, furniture, fixtures, campus ~~equipment,~~and office equipment and automobiles. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Most leases include one or more options to renew, with renewal terms that generally can extend at various dates through 2107, excluding extension options. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. As of September 30, 2022, we had future lease payments of $28,747,000 for an operating lease that had not yet commenced. Such operating lease will commence in fiscal year 2022 with a lease term of 15 years.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments that are adjusted periodically based on the United States Bureau of Labor Statistics’ Consumer Price Index, and may also include other variable lease costs (i.e., common area maintenance, property taxes and insurance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs were as follows (in thousands):


		Three Months Ended September 30,
Lease Cost	Classification	2023		2022
Operating lease cost(1)	Property operating expenses, rental expenses or general and administrative expenses	$	11,049	$	9,322
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	334		310
Interest on lease liabilities	Interest expense	82		43
Sublease income	Resident fees and services revenue or other income	(97)		(156)
Total lease cost		$	11,368	$	9,519

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

~~The components of lease costs were as follows:~~

Three Months Ended September 30,
Lease Cost Classification 2022 2021
Operating lease cost(1) Property operating expenses, rental expenses or general and administrative expenses $ 9,322,000 $ 5,530,000
Finance lease cost:
Amortization of leased assets Depreciation and amortization 310,000 332,000
Interest on lease liabilities Interest expense 43,000 81,000
Sublease income Resident fees and services revenue or other income (156,000) (57,000)
Total lease cost $ 9,519,000 $ 5,886,000


			Nine Months Ended September 30,						Nine Months Ended September 30,
Lease Cost	Lease Cost	Classification	2022		2021		Lease Cost	Classification	2023		2022
Operating lease cost(1)	Operating lease cost(1)	Property operating expenses, rental expenses or general and administrative expenses	$	21,086,000	$	17,365,000	Operating lease cost(1)	Property operating expenses, rental expenses or general and administrative expenses	$	34,445	$	21,086
Finance lease cost:	Finance lease cost:						Finance lease cost:
Amortization of leased assets	Amortization of leased assets	Depreciation and amortization	939,000		1,125,000		Amortization of leased assets	Depreciation and amortization	934		939
Interest on lease liabilities	Interest on lease liabilities	Interest expense	183,000		273,000		Interest on lease liabilities	Interest expense	239		183
Sublease income	Sublease income	Resident fees and services revenue or other income	(538,000)		(63,000)		Sublease income	Resident fees and services revenue or other income	(425)		(538)
Total lease cost	Total lease cost		$	21,670,000	$	18,700,000	Total lease cost		$	35,193	$	21,670

___________

(1)Includes short-term leases and variable lease costs, which are immaterial.

Additional information related to our leases for the periods presented below was as ~~follows:~~follows (dollars in thousands):


Lease Term and Discount Rate	Lease Term and Discount Rate	September 30, 2022		December 31, 2021		Lease Term and Discount Rate	September 30, 2023		December 31, 2022
Weighted average remaining lease term (in years):	Weighted average remaining lease term (in years):					Weighted average remaining lease term (in years):
Operating leases	Operating leases	12.8		16.9		Operating leases	12.3		12.8
Finance leases	Finance leases	2.5		3.6		Finance leases	1.7		2.3
Weighted average discount rate:	Weighted average discount rate:					Weighted average discount rate:
Operating leases	Operating leases	5.60	%	5.52	%	Operating leases	5.76	%	5.69	%
Finance leases	Finance leases	7.62	%	7.68	%	Finance leases	7.76	%	7.66	%

Nine Months Ended September 30,
Supplemental Disclosure of Cash Flows Information 2022 2021
Operating cash outflows related to finance leases $ 183,000 $ 273,000
Financing cash outflows related to finance leases $ 40,000 $ 159,000
Right-of-use assets obtained in exchange for operating lease liabilities $ — $ 125,000

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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


	Nine Months Ended September 30,
Supplemental Disclosure of Cash Flows Information	2023		2022

Operating cash outflows related to finance leases	$	239	$	183
Financing cash outflows related to finance leases	$	50	$	40

Right-of-use assets obtained in exchange for operating lease liabilities	$	6,153	$	153,777

Operating Leases

As of September 30, ~~2022,~~2023, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, ~~2022~~2023 and for each of the next four years ending December 31 and thereafter, as well as the reconciliation of those cash flows to operating lease liabilities on our accompanying condensed consolidated balance ~~sheet:~~sheet (in thousands):


Year	Year	Amount		Year	Amount
2022		$	9,137,000
2023	2023	36,444,000		2023	$	8,972
2024	2024	35,781,000		2024	35,818
2025	2025	35,109,000		2025	35,119
2026	2026	35,092,000		2026	35,073
2027				2027	35,618
Thereafter	Thereafter	244,392,000		Thereafter	202,020
Total undiscounted operating lease payments	Total undiscounted operating lease payments	395,955,000		Total undiscounted operating lease payments	352,620
Less: interest	Less: interest	135,575,000		Less: interest	121,472
Present value of operating lease liabilities	Present value of operating lease liabilities	$	260,380,000	Present value of operating lease liabilities	$	231,148

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Finance Leases

As of September 30, ~~2022,~~2023, the following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments for the three months ending December 31, ~~2022~~2023 and for each of the next four years ending December 31 and thereafter, as well as a reconciliation of those cash flows to finance lease ~~liabilities:~~liabilities (in thousands):


Year	Year	Amount		Year	Amount
2022		$	17,000
2023	2023	61,000		2023	$	13
2024	2024	75,000		2024	76
2025	2025	31,000		2025	32
2026	2026	—		2026	—
2027				2027	—
Thereafter	Thereafter	—		Thereafter	—
Total undiscounted finance lease payments	Total undiscounted finance lease payments	184,000		Total undiscounted finance lease payments	121
Less: interest	Less: interest	20,000		Less: interest	8
Present value of finance lease liabilities	Present value of finance lease liabilities	$	164,000	Present value of finance lease liabilities	$	113

~~19.~~16. Segment Reporting

As of September 30, ~~2022,~~2023, we evaluated our business and made resource allocations based on six reportable business segments: integrated senior health campuses, ~~medical office buildings, skilled nursing facilities,~~MOBs, SHOP, SNFs, senior housing — leased ~~hospitals~~ and ~~SHOP.~~ hospitals.Our ~~medical office buildings~~MOBs 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~~each provide a range of independent living, assisted living, memory care, ~~independent living,~~ skilled nursing services and certain ancillary businesses that are owned and operated utilizing a RIDEA structure. Our senior housing — leased and skilled nursing ~~and senior housing~~ facilities are 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. In addition, our senior housing ~~—leased~~— leased segment includes our debt security investment. Our hospital investments are similarly structured to our leased skilled nursing and senior housing facilities. Our SHOP segment includes senior housing facilities, which may provide assisted living care, independent living, memory care or skilled nursing services, that are owned and operated utilizing a RIDEA structure.

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 loss, or NOI. We define segment NOI as total revenues and grant income, less property operating expenses and rental expenses, which excludes depreciation and amortization, general and administrative expenses, business acquisition expenses, interest expense, gain or loss on dispositions

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

of real estate investments, impairment of real estate investments, income or loss from unconsolidated entities, impairment of goodwill, foreign currency gain or loss, gain on re-measurement of previously held equity interests, other income and income tax benefit or expense for each segment. We believe that segment NOI serves as an appropriate supplemental performance measure to net income (loss) because it allows investors and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies and between periods on a consistent basis.

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

On October 1, 2021, as part of the Merger, we acquired 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.

3836

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Summary information for the reportable segments during the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 was as ~~follows:~~follows (in thousands):


		Integrated Senior Health Campuses		SHOP		Medical Office Buildings		Senior Housing — Leased		Skilled Nursing Facilities		Hospitals		Three Months Ended September 30, 2022			Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Three Months Ended September 30, 2023
Revenues and grant income:	Revenues and grant income:															Revenues and grant income:
Resident fees and services	Resident fees and services	$	328,751,000	$	39,555,000	$	—	$	—	$	—	$	—	$	368,306,000	Resident fees and services	$	372,291	$	43,915	$	—	$	—	$	—	$	—	$	416,206
Real estate revenue	Real estate revenue	—		—		37,128,000		5,143,000		6,633,000		2,419,000		51,323,000		Real estate revenue	—		—		35,688		2,684		6,175		2,423		46,970
Grant income	Grant income	5,796,000		737,000		—		—		—		—		6,533,000		Grant income	1,064		—		—		—		—		—		1,064
Total revenues and grant income	Total revenues and grant income	334,547,000		40,292,000		37,128,000		5,143,000		6,633,000		2,419,000		426,162,000		Total revenues and grant income	373,355		43,915		35,688		2,684		6,175		2,423		464,240
Expenses:	Expenses:															Expenses:
Property operating expenses	Property operating expenses	299,197,000		38,290,000		—		—		—		—		337,487,000		Property operating expenses	335,563		39,040		—		—		—		—		374,603
Rental expenses	Rental expenses	—		—		14,155,000		160,000		437,000		98,000		14,850,000		Rental expenses	—		—		13,690		446		352		86		14,574
Segment net operating income	Segment net operating income	$	35,350,000	$	2,002,000	$	22,973,000	$	4,983,000	$	6,196,000	$	2,321,000	$	73,825,000	Segment net operating income	$	37,792	$	4,875	$	21,998	$	2,238	$	5,823	$	2,337	$	75,063
Expenses:	Expenses:															Expenses:
General and administrative	General and administrative													$	9,626,000	General and administrative													$	11,342
Business acquisition expenses	Business acquisition expenses													231,000		Business acquisition expenses													1,024
Depreciation and amortization	Depreciation and amortization													40,422,000		Depreciation and amortization													49,273
Other income (expense):	Other income (expense):															Other income (expense):
Interest expense:																Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)																Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)													(42,005)
Gain in fair value of derivative financial instruments																Gain in fair value of derivative financial instruments													3,402
Gain on dispositions of real estate investments, net																Gain on dispositions of real estate investments, net													31,981
Impairment of real estate investments																Impairment of real estate investments													(12,510)
Loss from unconsolidated entities																Loss from unconsolidated entities													(505)

Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments)														(27,524,000)

Gain on dispositions of real estate investments														2,113,000
Impairment of real estate investments														(21,851,000)
Loss from unconsolidated entities														(344,000)
Gain on re-measurement of previously held equity interest														19,567,000
Foreign currency loss														(3,695,000)
Foreign currency loss																Foreign currency loss													(1,704)
Other income	Other income													670,000		Other income													1,755
Total net other expense	Total net other expense													(31,064,000)		Total net other expense													(19,586)
Loss before income taxes														(7,518,000)
Income tax expense														(126,000)

Net loss														$	(7,644,000)
Loss before income taxes																Loss before income taxes													(6,162)
Income tax expense																Income tax expense													(284)
Net loss																Net loss													$	(6,446)

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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


	Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Three Months Ended September 30, 2022
Revenues and grant income:
Resident fees and services	$	328,751	$	39,555	$	—	$	—	$	—	$	—	$	368,306
Real estate revenue	—		—		37,128		5,143		6,633		2,419		51,323
Grant income	5,796		737		—		—		—		—		6,533
Total revenues and grant income	334,547		40,292		37,128		5,143		6,633		2,419		426,162
Expenses:
Property operating expenses	299,197		38,290		—		—		—		—		337,487
Rental expenses	—		—		14,155		160		437		98		14,850
Segment net operating income	$	35,350	$	2,002	$	22,973	$	4,983	$	6,196	$	2,321	$	73,825
Expenses:
General and administrative													$	9,626
Business acquisition expenses													231
Depreciation and amortization													40,422
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)													(27,524)

Gain on dispositions of real estate investments													2,113
Impairment of real estate investments													(21,851)
Loss from unconsolidated entities													(344)
Gain on re-measurement of previously held equity interest													19,567
Foreign currency loss													(3,695)
Other income													670
Total net other expense													(31,064)
Loss before income taxes													(7,518)
Income tax expense													(126)
Net loss													$	(7,644)

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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


	Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Nine Months Ended September 30, 2023
Revenues and grant income:
Resident fees and services	$	1,096,917	$	138,541	$	—	$	—	$	—	$	—	$	1,235,458
Real estate revenue	—		—		109,811		13,352		10,633		7,338		141,134
Grant income	7,445		—		—		—		—		—		7,445
Total revenues and grant income	1,104,362		138,541		109,811		13,352		10,633		7,338		1,384,037
Expenses:
Property operating expenses	992,620		124,678		—		—		—		—		1,117,298
Rental expenses	—		—		42,025		874		1,199		324		44,422
Segment net operating income	$	111,742	$	13,863	$	67,786	$	12,478	$	9,434	$	7,014	$	222,317
Expenses:
General and administrative													$	36,169
Business acquisition expenses													2,244
Depreciation and amortization													138,644
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium, and loss on debt extinguishments)													(122,006)
Gain in fair value of derivative financial instruments													8,200
Gain on dispositions of real estate investments, net													29,777
Impairment of real estate investments													(12,510)
Loss from unconsolidated entities													(924)
Gain on re-measurement of previously held equity interest													726
Foreign currency gain													372
Other income													5,952
Total net other expense													(90,413)
Loss before income taxes													(45,153)
Income tax expense													(775)


Net loss													$	(45,928)

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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


		Integrated Senior Health Campuses		SHOP		Medical Office Buildings		Senior Housing — Leased		Skilled Nursing Facilities		Hospitals		Three Months Ended September 30, 2021			Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Nine Months Ended September 30, 2022
Revenues and grant income:	Revenues and grant income:															Revenues and grant income:
Resident fees and services	Resident fees and services	$	265,343,000	$	21,539,000	$	—	$	—	$	—	$	—	$	286,882,000	Resident fees and services	$	897,345	$	116,160	$	—	$	—	$	—	$	—	$	1,013,505
Real estate revenue	Real estate revenue	—		—		19,677,000		3,622,000		3,665,000		2,704,000		29,668,000		Real estate revenue	—		—		111,798		15,703		19,625		7,245		154,371
Grant income	Grant income	936,000		—		—		—		—		—		936,000		Grant income	21,861		855		—		—		—		—		22,716
Total revenues and grant income	Total revenues and grant income	266,279,000		21,539,000		19,677,000		3,622,000		3,665,000		2,704,000		317,486,000		Total revenues and grant income	919,206		117,015		111,798		15,703		19,625		7,245		1,190,592
Expenses:	Expenses:															Expenses:
Property operating expenses	Property operating expenses	239,151,000		17,670,000		—		—		—		—		256,821,000		Property operating expenses	811,281		109,425		—		—		—		—		920,706
Rental expenses	Rental expenses	—		—		7,629,000		71,000		364,000		124,000		8,188,000		Rental expenses	—		—		42,259		551		1,644		346		44,800
Segment net operating income	Segment net operating income	$	27,128,000	$	3,869,000	$	12,048,000	$	3,551,000	$	3,301,000	$	2,580,000	$	52,477,000	Segment net operating income	$	107,925	$	7,590	$	69,539	$	15,152	$	17,981	$	6,899	$	225,086
Expenses:	Expenses:															Expenses:
General and administrative	General and administrative													$	9,008,000	General and administrative													$	31,673
Business acquisition expenses	Business acquisition expenses													3,633,000		Business acquisition expenses													2,161
Depreciation and amortization	Depreciation and amortization													26,334,000		Depreciation and amortization													122,704
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)														(18,885,000)
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)													(71,194)
Gain in fair value of derivative financial instruments	Gain in fair value of derivative financial instruments													1,860,000		Gain in fair value of derivative financial instruments													500
Gain on dispositions of real estate investments														276,000

Gain on dispositions of real estate investments, net																Gain on dispositions of real estate investments, net													2,796
Impairment of real estate investments																Impairment of real estate investments													(39,191)
Income from unconsolidated entities	Income from unconsolidated entities													384,000		Income from unconsolidated entities													1,680
Gain on re-measurement of previously held equity interest																Gain on re-measurement of previously held equity interest													19,567
Foreign currency loss	Foreign currency loss													(1,394,000)		Foreign currency loss													(8,689)
Other income	Other income													348,000		Other income													2,399
Total net other expense	Total net other expense													(17,411,000)		Total net other expense													(92,132)
Loss before income taxes	Loss before income taxes													(3,909,000)		Loss before income taxes													(23,584)
Income tax expense	Income tax expense													(127,000)		Income tax expense													(499)

Net loss	Net loss													$	(4,036,000)	Net loss													$	(24,083)

Total assets by reportable segment as of September 30, 2023 and December 31, 2022 were as follows (in thousands):


	September 30, 2023		December 31, 2022
Integrated senior health campuses	$	2,178,158	$	2,157,748
MOBs	1,253,406		1,379,502
SHOP	572,960		635,190
Senior housing — leased	240,123		249,576
SNFs	216,507		245,717
Hospitals	105,045		106,067
Other	22,718		12,898
Total assets	$	4,588,917	$	4,786,698

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Integrated
Senior Health
Campuses SHOP Medical
Office
Buildings Senior
Housing —
Leased Skilled
Nursing
Facilities Hospitals
Nine Months
Ended
September 30, 2022
Revenues and grant income:
Resident fees and services $ 897,345,000 $ 116,160,000 $ — $ — $ — $ — $ 1,013,505,000
Real estate revenue — — 111,798,000 15,703,000 19,625,000 7,245,000 154,371,000
Grant income 21,861,000 855,000 — — — — 22,716,000
Total revenues and grant income 919,206,000 117,015,000 111,798,000 15,703,000 19,625,000 7,245,000 1,190,592,000
Expenses:
Property operating expenses 811,281,000 109,425,000 — — — — 920,706,000
Rental expenses — — 42,259,000 551,000 1,644,000 346,000 44,800,000
Segment net operating income $ 107,925,000 $ 7,590,000 $ 69,539,000 $ 15,152,000 $ 17,981,000 $ 6,899,000 $ 225,086,000
Expenses:
General and administrative $ 31,673,000
Business acquisition expenses 2,161,000
Depreciation and amortization 122,704,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishments) (71,194,000)
Gain in fair value of derivative financial instruments 500,000
Gain on dispositions of real estate investments
2,796,000
Impairment of real estate investments (39,191,000)
Income from unconsolidated entities
1,680,000
Gain on re-measurement of previously held equity interest 19,567,000
Foreign currency loss
(8,689,000)
Other income 2,399,000
Total net other expense (92,132,000)
Loss before income taxes
(23,584,000)
Income tax expense
(499,000)
Net loss
$ (24,083,000)

~~Table~~As of ~~Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

Integrated
Senior Health
Campuses SHOP Medical
Office
Buildings Senior
Housing —
Leased Skilled
Nursing
Facilities Hospitals
Nine Months
Ended
September 30, 2021
Revenues and grant income:
Resident fees and services $ 754,384,000 $ 61,876,000 $ — $ — $ — $ — $ 816,260,000
Real estate revenue — — 60,335,000 10,798,000 10,993,000 8,207,000 90,333,000
Grant income 10,063,000 201,000 — — — — 10,264,000
Total revenues and grant income 764,447,000 62,077,000 60,335,000 10,798,000 10,993,000 8,207,000 916,857,000
Expenses:
Property operating expenses 700,781,000 51,608,000 — — — — 752,389,000
Rental expenses — — 22,754,000 116,000 1,108,000 384,000 24,362,000
Segment net operating income $ 63,666,000 $ 10,469,000 $ 37,581,000 $ 10,682,000 $ 9,885,000 $ 7,823,000 $ 140,106,000
Expenses:
General and administrative $ 23,608,000
Business acquisition expenses 7,631,000
Depreciation and amortization 78,414,000
Other income (expense):
Interest expense:
Interest expense (including amortization of deferred financing costs, debt discount/premium and loss on debt extinguishment) (57,740,000)
Gain in fair value of derivative financial instruments 5,456,000
Loss on dispositions of real estate investments (101,000)
Impairment of real estate investments (3,335,000)
Loss from unconsolidated entities (2,288,000)
Foreign currency loss (741,000)
Other income 811,000
Total net other expense (57,938,000)
Loss before income taxes (27,485,000)
Income tax expense (785,000)
Net loss $ (28,270,000)

~~Total assets by reportable segment as of September 30, 2022~~ and ~~December 31, 2021 were as follows:~~

September 30,
2022
December 31,
2021
Integrated senior health campuses $ 2,167,850,000 $ 1,896,608,000
Medical office buildings 1,392,302,000 1,412,247,000
SHOP 576,181,000 625,164,000
Skilled nursing facilities 248,141,000 252,869,000
Senior housing — leased 245,429,000 255,555,000
Hospitals 106,859,000 109,834,000
Other 21,884,000 28,062,000
Total assets $ 4,758,646,000 $ 4,580,339,000

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

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 Combinations, in connection with the acquisitions we completed duringfor the nine months ended September 30, ~~2022 that were accounted for as business combinations, we recorded an aggregate goodwill of $44,990,000, which was allocated to our integrated senior health campuses segment. As of September 30,~~2023 and 2022, goodwill by reportable segment was as follows (in thousands):


	Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Total






Balance — December 31, 2022	$	164,846	$	—	$	47,812	$	5,924	$	8,640	$	4,389	$	231,611
Goodwill acquired	3,331		—		—		—		—		—		3,331




Balance — September 30, 2023	$	168,177	$	—	$	47,812	$	5,924	$	8,640	$	4,389	$	234,942


	Integrated Senior Health Campuses		SHOP		MOBs		Senior Housing — Leased		SNFs		Hospitals		Total






Balance — December 31, 2021	$	119,856	$	23,277	$	47,812	$	5,924	$	8,640	$	4,389	$	209,898
Goodwill acquired	44,990		—		—		—		—		—		44,990




Balance — September 30, 2022	$	164,846	$	23,277	$	47,812	$	5,924	$	8,640	$	4,389	$	254,888

See Note 3, Real Estate Investments, Net and Business Combinations, for a further discussion of ~~$164,846,000, $47,812,000, $23,277,000, $8,640,000, $5,924,000 and $4,389,000 was allocated to~~goodwill recognized in connection with our integrated senior health campuses, medical office buildings, SHOP, skilled nursing facilities, senior housing — leased and hospitals segments, respectively. As of December 31, 2021, goodwill of $119,856,000, $47,812,000, $23,277,000, $8,640,000, $5,924,000 and $4,389,000 was allocated to our integrated senior health campuses, medical office buildings, SHOP, skilled nursing facilities, senior housing — leased and hospitals segments, respectively.business combinations.

Our portfolio of properties and other investments are located in the United States, the UK and Isle of Man. Revenues and grant income and assets are attributed to the country in which the property is physically located. The following is a summary of geographic information for our operations for the periods ~~presented:~~presented (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues and grant income:	Revenues and grant income:									Revenues and grant income:
United States	United States	$	425,070,000	$	316,192,000	$	1,187,069,000	$	912,964,000	United States	$	463,053	$	425,070	$	1,380,542	$	1,187,069
International	International	1,092,000		1,294,000		3,523,000		3,893,000		International	1,187		1,092		3,495		3,523
		$	426,162,000	$	317,486,000	$	1,190,592,000	$	916,857,000		$	464,240	$	426,162	$	1,384,037	$	1,190,592

The following is a summary of real estate investments, net by geographic regions as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022 (in thousands):


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Real estate investments, net:	Real estate investments, net:					Real estate investments, net:
United States	United States	$	3,487,451,000	$	3,466,019,000	United States	$	3,388,749	$	3,539,453
International	International	39,140,000		48,667,000		International	41,891		42,156
		$	3,526,591,000	$	3,514,686,000		$	3,430,640	$	3,581,609

~~20.~~17. Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk are primarily our debt security investment, cash and cash equivalents, restricted cash and accounts and other receivables. 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, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 and residents is limited. We perform credit evaluations of prospective tenants and security deposits are obtained at the time of property acquisition and upon lease execution.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

Based on leases ~~in effect~~ as of September 30, ~~2022,~~2023, properties in ~~one state~~two states in the United States accounted for 10.0% or more of our total consolidated property portfolio’s annualized base rent or annualized NOI, which is based on contractual base rent from leases in effect for our non-RIDEA properties and annualized NOI for our SHOP and integrated senior health campuses as of September 30, ~~2022.~~2023. Properties located in Indiana and Ohio accounted for ~~42.3%~~31.3% and 12.5%, respectively, of our total consolidated property portfolio’s annualized base rent or annualized NOI. Accordingly, there is a geographic concentration of risk subject to fluctuations in ~~such~~each state’s economy.

Based on leases in effect as of September 30, ~~2022,~~2023, our six reportable business segments, integrated senior health campuses, ~~medical office buildings, skilled nursing facilities,~~MOBs, SHOP, SNFs, senior housing — leased ~~hospitals~~ and ~~SHOP~~hospitals accounted for ~~45.3%~~47.6%, ~~37.9%~~31.5%, ~~7.8%~~7.1%, ~~3.8%~~7.0%, ~~3.0%~~3.9% and ~~2.2%~~2.9%, respectively, of our total consolidated property portfolio’s annualized base rent or annualized NOI. As of September 30, ~~2022,~~2023, none of our tenants at our properties accounted for 10.0% or more of our total consolidated property portfolio’s annualized base rent or annualized NOI.

~~Table of Contents~~

~~AMERICAN HEALTHCARE REIT, INC.~~

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

~~21.~~18. 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 ~~$1,497,000~~$963,000 and ~~$1,000, respectively,~~$1,497,000 for the three months ended September 30, 2023 and 2022, respectively, and ~~2021,~~$2,851,000 and $4,485,000 ~~and $2,000, respectively,~~ for the nine months ended September 30, 2023 and 2022, ~~and 2021.~~respectively. Diluted earnings (loss) per share are computed based on the weighted average number of shares of our common stock and all potentially dilutive securities, if any. ~~Time-based restricted stock units,~~TBUs, nonvested shares of our ~~restricted common stock~~RSAs and 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, ~~2022~~2023 and ~~2021,~~2022, there were ~~892,258~~186,868 and ~~16,679~~223,064 nonvested shares, respectively, of our ~~restricted common stock~~RSAs outstanding, but such shares were excluded from the computation of diluted earnings (loss) per share because such shares were anti-dilutive during these periods. As of both September 30, ~~2022~~2023 and ~~2021,~~2022, there were ~~14,007,903 and 206~~3,501,976 limited partnership units ~~respectively,~~ of our operating partnership outstanding, but such units were also excluded from the computation of diluted earnings (loss) per share because such units were anti-dilutive during these periods. As of September 30, 2023 and 2022, there were ~~76,800~~159,678 and 19,200 nonvested time-based restricted stock units outstanding, ~~which were granted on April 1, 2022,~~respectively, but such units were excluded from the computation of diluted earnings (loss) per share because such restricted stock units were anti-dilutive during the period.

As of September 30, ~~2022,~~2023, there were ~~117,410~~70,751 nonvested performance-based restricted stock units outstanding, ~~of which 113,205 were awarded in October 2021 and 4,205 were awarded in August 2022, with a grant date in April 2022 and August 2022, respectively,~~ which were treated as contingently issuable shares pursuant to ASC Topic 718, Compensation — Stock Compensation. Such contingently issuable shares were excluded from the computation of diluted earnings (loss) per share because they were anti-dilutive during the period.

~~22.~~19. Subsequent ~~Events~~Event

~~In connection~~Option to Acquire Minority Joint Venture Partner’s Membership Interest in Trilogy REIT Holdings

On November 3, 2023, we entered into a Membership Interest Purchase Agreement, or the MIPA, with subsidiaries of NHI, which provides us with the ~~filing~~option to purchase their 24.0% minority membership interest in Trilogy REIT Holdings. If we exercise this purchase option, we will own 100% of Trilogy REIT Holdings, which (assuming that there are no changes in the equity capitalization of Trilogy prior to consummation of the ~~Registration Statement on Form S-11~~purchase) will in turn cause us to indirectly own approximately 97.4% of Trilogy. Subject to our first satisfying certain closing conditions, the option is exercisable for a ~~proposed public offering~~closing before September 30, 2025 assuming that we exercise both extension options described below. If we exercise our purchase option, the all cash purchase price would be $240,500,000 if we consummate the purchase on or before March 31, 2024, would increase to $247,000,000 if we consummate the purchase from April 1, 2024 to and including December 31, 2024 and would further increase to $260,000,000 if we consummate the purchase on or after January 1, 2025.

Table of Contents

AMERICAN HEALTHCARE REIT, INC.

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

The MIPA also allows us (at our election), instead of paying all cash, to consummate the purchase transaction by using a combination of cash and the issuance of new Series A Cumulative Convertible Preferred Stock, $0.01 par value per share, or our Convertible Preferred Stock, as purchase price consideration. We must pay at least a minimum amount of the purchase price in cash, in which case we would pay the remaining amount in shares of our Convertible Preferred Stock. The minimum cash amount will be $24,050,000 if we consummate the purchase on or before March 31, 2024, $24,700,000 if we consummate the purchase from April 1, 2024 to and including December 31, 2024, or $26,000,000 if we consummate the purchase on or after January 1, 2025, or the Minimum Cash Consideration. If issued, our Convertible Preferred Stock will be perpetual, will have a cumulative cash dividend with an initial annual rate of 4.75% (on the liquidation preference per share of $25.00 of our Convertible Preferred Stock) and will be redeemable by us at any time. The annual dividend rate will increase over time, and the redemption price will vary based on the date of redemption. In addition, holders of shares of ~~common stock in conjunction with a contemplated listing~~our Convertible Preferred Stock will have the right, at any time on or after July 1, 2026 and from time to time, to convert some or all of such shares into shares of our common stock, ~~on the New York Stock Exchange, as discussed in Note 1, Organization and Description of Business — Public Offerings, our board approved the following:~~

~~Reverse Stock Split~~

~~On November 10, 2022, our board approved the following charter amendments~~subject to effect on November 15, 2022: (i) a one-for-four reverse stock split of each issued and outstanding share of Class T common stock, par value $0.01 per share, and Class I common stock, par value $0.01 per share, which resulted in a par value of $0.04 per share for each class of shares of our common stock; and (ii) a decrease to the par value per share of each share of our common stock outstanding as a result of the reverse stock split from $0.04 to $0.01.

~~Suspension of DRIP~~

On November 14, 2022, our board approved the suspension of the AHR DRIP Offering beginning with the distributions declared, if any, for the quarter ending December 31, 2022. As a result of the suspension of the AHR DRIP, there will be no further issuances of shares of our Class T or Class I common stock pursuant to the AHR DRIP unless and until our board reinstates the AHR DRIP Offering, and stockholders who are current participants in the AHR DRIP will receive cash distributions instead.

~~Suspension of Share Repurchase Plan~~

On November 14, 2022, our board approved the suspension of our share repurchase plan beginning with share repurchase requests for the quarter ending December 31, 2022. All share repurchase requests outstanding as of the quarter ending December 31, 2022, including requests resulting from the death or qualifying disability of stockholders, shall not be processed, shall be considered canceled in full and shall not be considered outstanding repurchase requests.certain customary exceptions.

4443

Table of Contents

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

The following ~~Management's~~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~~Such discussion is provided as a supplement to, and should be read in conjunction with our accompanying condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and in our ~~2021~~2022 Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission, or SEC, on March ~~25, 2022.~~17, 2023. Such condensed consolidated financial statements and information have been prepared to reflect our financial position as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, together with our results of operations and cash flows for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022. Our results of operations and financial condition, as reflected in the accompanying condensed consolidated financial statements and related notes, are subject to management’s evaluation and interpretation of business conditions, changing capital market conditions, and other factors that could affect the ongoing viability of our tenants and residents.

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

Certain statements contained in this report, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995 (collectively with the ~~“Acts”~~“Securities Act and Exchange Act, or the Acts”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “can,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “possible,” “initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC.

Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to: ~~(1)~~(i) statements about our plans, strategies, initiatives and ~~prospects; (2) statements about~~prospects, including our proposed listing and future capital-raising initiatives and planned or future acquisitions or dispositions of properties and other assets, including our option to purchase the ~~impact of the Merger; (3)~~minority membership interest in Trilogy REIT Holdings; (ii) statements about the coronavirus, or COVID-19, pandemic, including its duration and potential or expected impact on our business and our view on forward ~~trends;~~trends as well as the termination of the federally declared public health emergency; and ~~(4)~~(iii) statements about our future results of operations, capital expenditures and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: changes in economic conditions generally and the real estate market specifically; the continuing adverse effects of the COVID-19 pandemic, including its effects on the healthcare industry, senior housing and skilled nursing facilities, or SNFs, and the economy in general; legislative and regulatory changes, including changes to laws governing the taxation of real estate investment trusts, or REITs; the availability of capital; our ability to pay down, refinance, restructure or extend our indebtedness as it becomes ~~due;~~due, including our ability to refinance the 2019 Trilogy Credit Facility on acceptable terms, or at all; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; changes in interest rates, including uncertainties about whether and when interest rates will continue to increase, and foreign currency risk; ~~uncertainty from the discontinuance of the London Inter-bank Offered Rate, or LIBOR, and the transition to the Secured Overnight Financing Rate, or SOFR;~~ competition in the real estate industry; changes in GAAP policies and guidelines applicable to REITs; the success of our investment strategy; cybersecurity incidents and information technology ~~security breaches;~~failures, including unauthorized access to our computer systems and/or our vendors’ computer systems, and our third-party management companies’ computer systems and/or their vendors’ computer systems; our ability to retain our ~~executives~~executive officers 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.

4544

Table of Contents

Overview and Background

American Healthcare REIT, Inc., a Maryland corporation, is a ~~leading internally-managed real estate investment trust, or~~self-managed REIT that owns a diversified portfolio of clinical healthcare real estate properties, focusing primarily on medical office buildings, ~~skilled nursing facilities,~~or MOBs, senior housing, SNFs, hospitals and other healthcare-related facilities. We have built a fully-integrated management platform, with approximately 113 employees, that operates clinical healthcare properties throughout the United States, the United Kingdom, and the Isle of Man. 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~~have elected to be taxed as a REIT ~~under the Code~~ for U.S. federal income tax ~~purposes,~~purposes. We believe that we have been organized and operated, and we intend to continue to ~~qualify to be taxed~~operate, in conformity with the requirements for qualification and taxation as a ~~REIT.~~ REIT under the Code.

~~Merger of~~On October 1, 2021, Griffin-American Healthcare REIT III, Inc. ~~and Griffin-American Healthcare REIT IV, Inc.~~

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. 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 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~~LP, or our operating partnership.

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

~~Table of Contents~~

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.Acquisition. Following ~~the consummation of~~ the Merger and the AHI Acquisition, ~~the Combined Company~~our company became self-managed. 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 wholly owned subsidiary of Griffin Capital, or collectively, the NewCo Sellers.

The AHI Acquisition was treated as a business combination for accounting purposes, with GAHR III as both the legal and accounting acquiror of NewCo. While 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 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. Thus, the financial information set forth herein subsequent to the consummation of the Merger and the AHI Acquisition reflects results of the Combined Company, and the financial information set forth herein prior to the Merger and the AHI Acquisition reflects GAHR III’s results. For this reason, period to period comparisons may not be meaningful.

Operating Partnership ~~and Former Advisor~~

We conduct substantially all of our operations through our operating partnership, and we are the sole general partner of our operating partnership. ~~Through~~As of both September 30, ~~2021,~~ 2023 and December 31, 2022, we owned 95.0% of the partnership units, or OP units, in our operating partnership, and the remaining 5.0% limited OP units, were ~~externally advised~~owned by ~~our former advisor pursuant to an advisory agreement, as amended, or~~AHI Group Holdings, LLC, which is owned and controlled by Jeffrey T. Hanson, the ~~Advisory Agreement, between us and our former advisor. Our former advisor, subject to the oversight and review~~non-executive Chairman of our board of directors, or our board, ~~provided asset management, property management, acquisition, disposition~~Danny Prosky, our Chief Executive Officer and ~~other advisory services on our behalf consistent with our investment policies~~President, 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 sharesMathieu B. Streiff, one of our ~~common stock owned by our former advisor~~directors; Platform Healthcare Investor TII, LLC; Flaherty Trust; 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 Company, LLC, 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 DigitalBridge Group, Inc. (NYSE: DBRG), or DigitalBridge, and 7.8% owned by James F. Flaherty III. We were not affiliated with Griffin Capital, DigitalBridge 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 Griffin-American Healthcare REIT IV, Inc.” and “AHI Acquisition” sections above for a further discussion of our operations effective October 1, 2021.NewCo Sellers. See Note ~~13,~~11, Redeemable Noncontrolling Interests, and Note ~~14,~~12, 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 Offerings

~~GAHR IV raised $754,118,000 through a best efforts initial public offering, or~~As of September 30, 2023, after taking into consideration the ~~initial offering,~~Merger and the impact of the reverse stock split as discussed below, we had issued ~~75,639,681 aggregate~~65,445,557 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 reinvested distributions. Following the deregistration of the initial offering, GAHR IV continued issuing shares of its common stock up to $100,000,000 pursuant to the DRIP through a subsequent offering, or the 2019 GAHR IV DRIP Offering, pursuant to a Registration Statement on Form S-3 under the Securities Act. 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, to offer up to $100,000,000 of shares of our common stock pursuant to a Registration Statement on Form S-3 under the Securities Act previously filed by GAHR IV, or the AHR DRIP Offering. On November 14, 2022, our board suspended the AHR DRIP Offering beginning with the distributions declared, if any, for the quarter ending December 31, 2022. See Note 22, Subsequent Events, to our accompanying condensed consolidated financial statements. As of September 30, 2022, a total of $80,754,000 in distributions were reinvested that resulted in 8,575,687 shares$2,737,716,000 of common stock ~~being issued pursuant~~since February 26, 2014 in our initial public offerings and our distribution reinvestment plan, or DRIP, offerings (includes historical offering amounts sold by GAHR III and GAHR IV prior to the ~~AHR DRIP. See Note 14, Equity — Distribution Reinvestment Plan,~~ ~~to our accompanying condensed consolidated financial statements~~ ~~for a further discussion.~~

~~Table of Contents~~

Merger).

On September 16, 2022, we filed with the SEC a Registration Statement on Form S-11 (File No. 333-267464), which was last amended on November 7, 2023 upon filing with the SEC Amendment No. 2 to the Registration Statement on Form S-11, with respect to a proposed ~~primary~~ public offering by us of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock ~~Exchange.~~Exchange, or the Proposed Listing. Such registration statement and contemplated listing are not yet effective. ~~The potential public offering is subject~~

Table of Contents

On November 15, 2022 we effected a one-for-four reverse stock split of our common stock and a corresponding reverse split of the OP units, or the Reverse Splits. All numbers of common shares and per share data, as well as the OP units, in our accompanying condensed consolidated financial statements and related notes have been retroactively adjusted for all periods presented to ~~market conditions, and there can be no assurance as to whether, or when, any such offering may be completed, or as~~give effect to the ~~size,~~Reverse Splits. See Note 12, Equity, to our accompanying condensed consolidated financial statements, for a further discussion of our public ~~offering price or other terms of such offering.~~offerings.

On March ~~24, 2022,~~15, 2023, our board, at the recommendation of the audit committee of our board, which is comprised solely of independent directors, unanimously approved and established an updated estimated per share net asset value, or NAV, of our common stock of ~~$9.29 as of December 31, 2021.~~$31.40. 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.~~2022. The valuation was performed in accordance with the methodology provided in Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Institute for Portfolio Alternatives, or the IPA, in April 2013, in addition to guidance from the SEC. See our Current Report on Form 8-K filed with the SEC on March ~~25, 2022~~17, 2023 for more information on the methodologies and assumptions used to determine, and the limitations and risks of, our updated estimated per share NAV.

Our Real Estate Investments Portfolio

Critical Accounting Estimates

Our accompanying condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying footnotes. These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions. The complete listing of our Critical Accounting Estimates was previously disclosed in our ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022,~~17, 2023, and there have been no material changes to our Critical Accounting Estimates as disclosed therein, except as 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 ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022.~~17, 2023.

Acquisitions and Dispositions in ~~2022~~2023

For a discussion of our acquisitions and dispositions of investments in ~~2022,~~2023, see Note 3, Real Estate Investments, Net and ~~Note 4,~~ Business Combinations, to our accompanying condensed consolidated financial statements.

4846

Table of Contents

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 AHI Acquisition and the Merger on October 1, 2021, we employed a workforce necessary to operate as a self-managed company. The impact on our results of operations from operating as a self-managed company is predominantly an increase in general and administrative costs related to employing the necessary workforce 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~~inflation and the ~~AHI Acquisition discussed above, and~~lasting effects of the COVID-19 pandemic discussed below, as well as other national economic conditions affecting real estate generally, and as otherwise disclosed in our risk factors, we are not aware of any material trends or uncertainties 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. For a further discussion of these and other factors that could impact our future results or performance, see “Forward-Looking Statements” above and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q and ~~Part I, Item 1A,~~those Risk Factors previously disclosed in our ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022.~~17, 2023.

COVID-19

Our residents, tenants, operating partners and managers, our industry and the U.S. economy ~~continue to be~~have been adversely affected by the impacts of the COVID-19 pandemic, ~~and related supply chain disruptions and labor shortages. The~~including its economic impact. While the immediate effects of the COVID-19 pandemic have subsided, the timing and extent of the economic recovery ~~from the COVID-19 pandemic~~towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the ~~continued~~ effectiveness and frequency of booster vaccinations, ~~and~~ the duration and implications of ~~continued~~ongoing or future restrictions and safety ~~measures.~~measures, the availability of ongoing government financial support to our tenants, operating partners and managers and the overall pace of economic recovery, among others. As ~~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~~we expect to ~~ascertain~~continue to be adversely affected by the long-term ~~impact~~effects of the COVID-19 pandemic ~~will have~~for some period of time; however, it is not possible to predict the full extent of its future impact on ~~real estate~~us, our residents, tenants, operating partners and managers, the operations of our properties or the markets in which ~~we own and/~~they are located, or ~~operate properties and our portfolio of investments.~~the overall healthcare industry. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and ~~skilled nursing facilities,~~SNFs, and we continue to work diligently to maintain aggressive protocols at such facilities as well as actively collaborate with our tenants, operating partners and managers to respond and take action to mitigate the impact of the COVID-19 pandemic.

The COVID-19 pandemic resulted in a significant decline in resident ~~occupancies~~occupancy at our ~~leased~~ senior housing — leased facilities, ~~and skilled nursing facilities,~~SNFs, SHOP and integrated senior health campuses and an increase in ~~COVID-19 related~~COVID-19-related operating ~~expenses with more costly short-term hires~~expenses. Among other things, due to the shortage of healthcare ~~personnel.~~personnel, the pandemic caused higher labor costs that continue to adversely affect us, including those related to greater reliance on agency staffing and more costly short-term hires. Expenses also increased due to pandemic-related costs (e.g., heightened cleaning and sanitation protocols) and the ongoing inflationary environment. This has, in general, resulted in decreased net operating income, or NOI, and margin at these properties relative to pre-pandemic levels. Therefore, our focus ~~at such properties~~ continues to be on ~~resident~~improving occupancy ~~recovery~~ and managing operating ~~expense management. While resident occupancies at~~expenses. Resident occupancy for our ~~integrated senior health campuses~~properties has been improving, but labor costs continue to remain elevated, and ~~leased senior housing~~we have had difficulty filling open positions and ~~skilled nursing facilities have gradually improved to near pre-pandemic levels, our SHOP have been slower to recover. We believe the operational recovery~~retaining existing staff. The timing and extent of ~~our SHOP and integrated senior health campuses~~any further improvement in occupancy or relief from ~~the impact~~these labor pressures remains unclear.

As a result of the federal government's COVID-19 ~~pandemic will generally continue~~public health emergency declaration in January 2020 and ~~that~~its COVID-19 national emergency declaration in March 2020, certain federal and state pandemic-related relief measures, such ~~recovery over time towards pre-pandemic levels will drive our overall portfolio performance.~~

~~To date, the impacts of the COVID-19 pandemic have been significant, rapidly evolving and may continue into the future. The information in this Quarterly Report on Form 10-Q is based on data currently~~as funding, procedural waivers and/or reimbursement increases, became available to us and some of our tenants and operators. These declarations expired on May 11, 2023 and April 10, 2023, respectively, and certain relief measures have been wound down and others are being phased out. It is unclear what pandemic related relief measures, including funding, waiver and reimbursement programs, that we and certain of our tenants and operators benefited from will ~~likely change as the COVID-19 pandemic progresses. Future actions that may~~continue to be ~~taken by state and local governments to mitigate the impact of COVID-19 variants that may emerge could disrupt our business, activities and operations,~~available or the 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 cannot predict with reasonable certainty when demand for healthcare services at our senior housing andthey will be available. The impact on individual skilled nursing ~~facilities~~facilities’ operators will ~~return~~vary, and therefore it is not possible to ~~pre-COVID-19 pandemic levels.~~predict or quantify the financial impact it will have on resident occupancies.

The lasting effect of the COVID-19 pandemic over the next 12 months will largely depend on future developments, including COVID-19 booster rates; the long term efficacy of COVID-19 vaccinations and boosters; and the potential emergence of new, more transmissible or severe variants, 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.

4947

Table of Contents

Inflation

During the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, inflation has affected our operations. The annual rate of inflation in the United States was ~~7.7%~~3.7% in ~~October 2022,~~September 2023, as measured by the Consumer Price Index. We believe inflation has impacted our operations such that we have experienced, and continue to experience, increases in the cost of labor, services, energy and supplies, and therefore continued inflationary pressures on our integrated senior health campuses and SHOP could continue to impact our profitability in future periods. However, an inflationary environment has also impacted our operations at such properties in that we have the ability to seek increases in rent when relatively short-term resident leases expire (typically one year or less), which will improve our operating performance at such properties, as well as increase rent coverage and the stability of our real estate revenue in our senior housing — leased and SNF segments over time.

For properties that are not operated under a RIDEA structure, there are provisions in the majority of our tenant leases that help us mitigate the impact of inflation. These provisions include negotiated rental increases, which historically range from 2% to 3% per year, reimbursement billings for operating expense pass-through charges and real estate tax and insurance reimbursements. However, due to the long-term nature of existing leases, among other factors, the leases may not reset frequently enough to cover inflation. ~~A period of~~

In addition, inflation ~~could~~ also caused, and may continue to cause, an increase in the cost of our ~~variable rate debt.~~variable-rate debt due to rising interest rates. See Item 3. Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk ~~section below,~~of this Quarterly Report on Form 10Q for a further discussion.

Scheduled Lease Expirations

Excluding our SHOP and integrated senior health campuses, as of September 30, ~~2022,~~2023, our properties were 92.6% leased, and during the remainder of ~~2022, 3.0%~~2023, 3.5% of the leased GLA is scheduled to expire. Our leasing strategy focuses on negotiating renewals for leases scheduled to expire during the next twelve months. In the future, if we are unable to negotiate renewals, we will try to identify new tenants or collaborate with existing tenants who are seeking additional space to occupy. As of September 30, ~~2022,~~2023, our remaining weighted average lease term was ~~7.4~~6.2 years, excluding our SHOP and integrated senior health campuses.

Our combined SHOP and integrated senior health campuses were ~~81.8%~~84.4% leased as of September 30, ~~2022.~~2023. Substantially all of our leases with residents at such properties are for a term of one year or less.

Results of Operations

Comparison of Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022

~~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 leased, non-RIDEA properties to increase in the future due to fixed annual rent escalations and amounts related to our portfolio of RIDEA properties to increase in the future due to an overall increase in market rents and an increase in the pricing of care services provided. 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.

~~Table of Contents~~

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, ~~2022,~~2023, we operated through six reportable business segments: integrated senior health campuses, ~~medical office buildings, skilled nursing facilities,~~MOBs, SHOP, SNFs, senior housing — leased ~~hospitals~~ and ~~SHOP.~~hospitals.

~~Except where otherwise noted,~~

Table of Contents

The most significant drivers behind changes in our consolidated results of operations for the three and nine months ended September 30, 2023 compared to the corresponding periods in 2022 were the adverse effect of inflation, which resulted in increases in the cost of labor, services, energy and supplies; our acquisitions and dispositions of investments subsequent to September 30, 2022; and the transitions of the operations of certain leased skilled nursing and senior housing facilities to a RIDEA structure. Additional drivers behind the changes in our consolidated results of operations ~~for 2022 as compared to 2021~~ are ~~primarily due to the acquisition of GAHR IV’s portfolio of 92 buildings, or approximately 4,799,000 square feet of GLA, as a result of the Merger on October 1, 2021, the disruption~~discussed in more detail below. See Note 3, Real Estate Investments, Net and Business Combinations, to our ~~normal operations as~~accompanying condensed consolidated financial statements for a ~~result~~further discussion of ~~the COVID-19 pandemic~~our acquisitions and ~~grant income received.~~dispositions during 2023. As of September 30, ~~2022~~2023 and ~~2021,~~2022, we owned and/or operated the following types of ~~properties:~~properties (dollars in thousands):


		September 30,											September 30,
		2022					2021						2023					2022
		Number of Buildings/ Campuses	Aggregate Contract Purchase Price		Leased %		Number of Buildings/ Campuses	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	121	$	1,894,235,000	(1)		120	$	1,769,757,000	(1)		Integrated senior health campuses	125	$	1,943,134	(1)		121	$	1,894,235	(1)
Medical office buildings		105	1,378,995,000		89.6	%	62	641,585,000		90.3	%
MOBs												MOBs	90	1,270,474		89.7	%	105	1,378,995		89.6	%
SHOP	SHOP	47	706,871,000		(2)		20	433,891,000		(2)		SHOP	46	729,767		(2)		47	706,871		(2)
Senior housing — leased	Senior housing — leased	20	179,285,000		100	%	9	89,535,000		100	%	Senior housing — leased	20	179,285		100	%	20	179,285		100	%
Skilled nursing facilities		17	249,200,000		100	%	6	119,500,000		100	%
SNFs												SNFs	15	223,500		100	%	17	249,200		100	%
Hospitals	Hospitals	2	139,780,000		100	%	2	139,780,000		100	%	Hospitals	2	139,780		100	%	2	139,780		100	%
Total/weighted average(3)	Total/weighted average(3)	312	$	4,548,366,000	92.6	%	219	$	3,194,048,000	92.7	%	Total/weighted average(3)	298	$	4,485,940	92.6	%	312	$	4,548,366	92.6	%

___________

(1)The leased percentage for the resident units of our integrated senior health campuses was ~~84.0%~~85.5% and ~~77.8%~~84.0% as of September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

(2)The leased percentage for the resident units of our SHOP was ~~75.3%~~80.7% and ~~76.2%~~75.3% as of September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

(3)Leased percentage includes all third-party leased space at our non-RIDEA properties (including master leases), and excludes our SHOP and integrated senior health campuses where leased percentage represents resident occupancy onof the available units/beds therein.

5149

Table of Contents

Revenues and Grant Income

Our primary sources of revenue include ~~rent generated by our leased, non-RIDEA properties, and~~ resident fees and services revenue generated by our RIDEA properties and rent from our ~~RIDEA~~leased, non-RIDEA properties. For the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, resident fees and services revenue primarily consisted of rental fees related to resident leases, extended health care fees and other ancillary services, and real estate revenue primarily consisted of base rent and expense recoveries. The amount of revenues generated by our RIDEA properties depends principally on our ability to maintain ~~the~~resident occupancy rates. The amount of revenues generated by our non-RIDEA properties is dependent on our ability to maintain tenant occupancy rates of currently leased space and to lease available space at the then existing rental rates. We also receive grant income. Revenues and grant income by reportable segment consisted of the following for the periods then ~~ended:~~ended (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Resident Fees and Services Revenue	Resident Fees and Services Revenue									Resident Fees and Services Revenue
Integrated senior health campuses	Integrated senior health campuses	$	328,751,000	$	265,343,000	$	897,345,000	$	754,384,000	Integrated senior health campuses	$	372,291	$	328,751	$	1,096,917	$	897,345
SHOP	SHOP	39,555,000		21,539,000		116,160,000		61,876,000		SHOP	43,915		39,555		138,541		116,160
Total resident fees and services revenue	Total resident fees and services revenue	368,306,000		286,882,000		1,013,505,000		816,260,000		Total resident fees and services revenue	416,206		368,306		1,235,458		1,013,505
Real Estate Revenue	Real Estate Revenue									Real Estate Revenue
Medical office buildings		37,128,000		19,677,000		111,798,000		60,335,000
Skilled nursing facilities		6,633,000		3,665,000		19,625,000		10,993,000
MOBs										MOBs	35,688		37,128		109,811		111,798
SNFs										SNFs	6,175		6,633		10,633		19,625
Senior housing — leased	Senior housing — leased	5,143,000		3,622,000		15,703,000		10,798,000		Senior housing — leased	2,684		5,143		13,352		15,703
Hospitals	Hospitals	2,419,000		2,704,000		7,245,000		8,207,000		Hospitals	2,423		2,419		7,338		7,245
Total real estate revenue	Total real estate revenue	51,323,000		29,668,000		154,371,000		90,333,000		Total real estate revenue	46,970		51,323		141,134		154,371
Grant Income	Grant Income									Grant Income
Integrated senior health campuses	Integrated senior health campuses	5,796,000		936,000		21,861,000		10,063,000		Integrated senior health campuses	1,064		5,796		7,445		21,861
SHOP	SHOP	737,000		—		855,000		201,000		SHOP	—		737		—		855
Total grant income	Total grant income	6,533,000		936,000		22,716,000		10,264,000		Total grant income	1,064		6,533		7,445		22,716
Total revenues and grant income	Total revenues and grant income	$	426,162,000	$	317,486,000	$	1,190,592,000	$	916,857,000	Total revenues and grant income	$	464,240	$	426,162	$	1,384,037	$	1,190,592

Resident Fees and Services Revenue

For the three and nine months ended September 30, 2022, $14,601,000 and $43,144,000 respectively, in resident fees and services revenue for our SHOP segment was due to the increase in the size of our portfolio as a result of the Merger. The remaining increase in resident fees and services revenue was primarily attributable to improved resident occupancy and higher move-in fees, in addition to an increase of $1,610,000 and $4,561,000 for the three and nine months ended September 30, 2022, respectively, due to transitioning the leased senior housing facilities within Delta Valley ALF portfolio to a RIDEA structure and including such facilities within SHOP on December 1, 2021.

For our integrated senior health campuses segment, we experienced an increase in resident fees and services revenue of ~~$27,311,000~~$43,540,000 and $199,572,000, respectively, for ~~both~~the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, ~~in resident fees~~due to: (i) an increase of $14,053,000 and ~~services revenue due~~$97,806,000, respectively, related to our acquisition of the remaining 50.0% ~~controlling~~ interest in a privately held company, RHS Partners, LLC, or ~~RHS. We previously held a 50.0% equity interest in~~ RHS, on August 1, 2022, which owns and/or operates 16 integrated senior health campuses located in ~~Indiana.~~ Indiana; (ii) improved resident occupancy and higher resident fees as a result of an increase in billing rates; and (iii) an increase of $5,897,000 and $33,371,000, respectively, due to the expansion of our customer base, expansion of services offered and an increase in billing rates for such services at an ancillary business unit within Trilogy Investors, LLC, or Trilogy. Such amounts were partially offset by a decrease in total resident fees and services revenue of $3,590,000 and $12,054,000, respectively, due to dispositions within our integrated senior health campuses segment during the third and fourth quarter of 2022.

For ~~the three and nine months ended September 30, 2022,~~our SHOP segment, we ~~also~~ experienced an increase in resident fees and services revenue of ~~$2,995,000~~$4,360,000 and ~~$8,432,000,~~$22,381,000, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, primarily due to: (i) our acquisition of a portfolio of seven senior housing facilities in Texas within our SHOP segment on December 5, 2022, which increased revenue by $6,907,000 and $20,464,000 respectively; and (ii) an increase of $3,656,000 and $8,378,000, respectively, due to ~~our acquisition of an integrated senior health campus~~transitioning the SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in ~~Kentucky on January 3, 2022. See Note 4, Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion.~~March 2023. The remaining increase in resident fees and services revenue for our SHOP segment was primarily attributable to improved resident ~~occupancy.~~occupancy and higher resident fees as a result of an increase in billing rates. Such increases were partially offset by a decrease of $7,169,000 and $11,398,000, respectively, for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, due to real estate dispositions within our SHOP segment during the three months ended December 31, 2022 and the nine months ended September 30, 2023.

Table of Contents

Real Estate Revenue

For the three and nine months ended September 30, ~~2022, $22,214,000 and $66,842,000, respectively, of~~2023, we experienced a decrease in real estate revenue ~~was primarily~~for our SNFs of $458,000 and $8,992,000, respectively, as compared to the three and nine months ended September 30, 2022, due to transitioning the ~~increase~~SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023, which amount included the ~~size~~full amortization of ~~our portfolio as a result~~$8,073,000 of above-market leases. In addition, for the ~~Merger. Such amounts were partially offset by~~three and nine months ended September 30, 2023, we experienced a decrease in ~~rental~~real estate revenue for our senior housing — leased segment of ~~$628,000~~$2,459,000 and ~~$1,576,000 for~~$2,351,000, respectively, as compared to the three and nine months ended September 30, 2022, ~~respectively,~~ primarily due to transitioning the ~~leased~~ senior housing — leased facilities within ~~Delta Valley~~Michigan ALF ~~portfolio~~Portfolio to RIDEA, which amount included the full amortization of $2,756,000 of above-market leases. We also experienced a ~~RIDEA structure~~net decrease in real estate revenue for our MOBs segment for both the three and ~~including such facilities within SHOP on December 1, 2021. In addition, for~~nine months ended September 30, 2023 of $1,440,000 and $1,987,000, respectively, as compared to the three and nine months ended September 30, 2022, primarily due to real estate dispositions of MOBs during the fourth quarter of 2022 and the nine months ended September 30, 2022, we experienced a decrease in rental revenue for our medical office buildings segment of $552,000, primarily due to a one-time lease termination fee recognized in June 2021 for one of our medical office buildings.

~~Table of Contents~~

2023, which was partially offset by fixed rent escalations and lease-up activity.

Grant Income

For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$6,533,000~~$1,064,000 and ~~$936,000,~~$6,533,000, respectively, of grant income at our integrated senior health campuses and SHOP primarily related to government grants received through the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, economic stimulus programs. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we recognized ~~$22,716,000~~$7,445,000 and ~~$10,264,000,~~$22,716,000, respectively, of grant income at our integrated senior health campuses and SHOP primarily related to government grants received through the CARES Act economic stimulus programs. As of April 2023, the federal government’s COVID-19 public health emergency declaration expired and certain relief measures have been wound down and others are being phased out.

Property Operating Expenses and Rental Expenses

Property operating expenses and property operating expenses as a percentage of resident fees and services revenue and grant income, as well as rental expenses and rental expenses as a percentage of real estate revenue, by reportable segment consisted of the following for the periods then ~~ended:~~ended (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021					2023				2022				2023				2022
Property Operating Expenses	Property Operating Expenses																	Property Operating Expenses
Integrated senior health campuses	Integrated senior health campuses	$	299,197,000	89.4	%	$	239,151,000	89.8	%	$	811,281,000	88.3	%	$	700,781,000	91.7	%	Integrated senior health campuses	$	335,563	89.9	%	$	299,197	89.4	%	$	992,620	89.9	%	$	811,281	88.3	%
SHOP	SHOP	38,290,000		95.0	%	17,670,000		82.0	%	109,425,000		93.5	%	51,608,000		83.1	%	SHOP	39,040		88.9	%	38,290		95.0	%	124,678		90.0	%	109,425		93.5	%
Total property operating expenses	Total property operating expenses	$	337,487,000	90.0	%	$	256,821,000	89.2	%	$	920,706,000	88.9	%	$	752,389,000	91.0	%	Total property operating expenses	$	374,603	89.8	%	$	337,487	90.0	%	$	1,117,298	89.9	%	$	920,706	88.9	%

Rental Expenses	Rental Expenses																	Rental Expenses
Medical office buildings		$	14,155,000	38.1	%	$	7,629,000	38.8	%	$	42,259,000	37.8	%	$	22,754,000	37.7	%
Skilled nursing facilities		437,000		6.6	%	364,000		9.9	%	1,644,000		8.4	%	1,108,000		10.1	%
MOBs																		MOBs	$	13,690	38.4	%	$	14,155	38.1	%	$	42,025	38.3	%	$	42,259	37.8	%
SNFs																		SNFs	352		5.7	%	437		6.6	%	1,199		11.3	%	1,644		8.4	%
Senior housing — leased	Senior housing — leased	160,000		3.1	%	71,000		2.0	%	551,000		3.5	%	116,000		1.1	%	Senior housing — leased	446		16.6	%	160		3.1	%	874		6.5	%	551		3.5	%
Hospitals	Hospitals	98,000		4.1	%	124,000		4.6	%	346,000		4.8	%	384,000		4.7	%	Hospitals	86		3.5	%	98		4.1	%	324		4.4	%	346		4.8	%
Total rental expenses	Total rental expenses	$	14,850,000	28.9	%	$	8,188,000	27.6	%	$	44,800,000	29.0	%	$	24,362,000	27.0	%	Total rental expenses	$	14,574	31.0	%	$	14,850	28.9	%	$	44,422	31.5	%	$	44,800	29.0	%

Integrated senior health campuses and SHOP typically have a higher percentage of direct operating expenses to revenue than ~~medical office buildings,~~MOBs, hospitals, ~~and~~ leased senior housing and ~~skilled nursing facilities~~leased SNFs due to the nature of RIDEA-type facilities where we conduct day-to-day operations. For the three and nine months ended September 30, ~~2022,~~2023, as compared to the three and nine months ended September 30, ~~2021, rental expenses increased by $6,330,000 and $19,251,000, respectively, and property operating expenses increased by $16,602,000 and $47,273,000, respectively, for our SHOP due to~~2022, the increase in the size of our portfolio as a result of the Merger. The remaining increase in total property operating expenses for our SHOP segment was due to an increase in labor costs, such as a significant increase in employee wages, agency fees and temporary labor expenses in addition to an increase of $1,302,000 and $3,795,000 for the three and nine months ended September 30, 2022, respectively, due to transitioning the leased senior housing facilities within Delta Valley ALF portfolio to a RIDEA structure and including such facilities within SHOP on December 1, 2021. The increase in total property operating expenses for our integrated senior health campuses segment was predominately due to (i) an increase of $14,481,000 and $95,737,000, respectively, attributable to our acquisition of the 50.0% interest in RHS on August 1, 2022; (ii) increased occupancy at the facilities within such segment; and (iii) an increase of $7,438,000 and $34,636,000, respectively, within Trilogy’s ancillary business unit due to higher labor costs associated with the expansion of services offered and inflation impacting the cost of goods sold. Such amounts were partially offset by a decrease in total property operating expenses of $2,851,000 and $9,311,000, respectively, due to real estate dispositions within our integrated senior health campuses segment during the third and fourth quarters of 2022.

Table of Contents

For the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, total property operating expenses for our SHOP segment primarily increased due to: (i) an increase of $5,756,000 and $16,645,000, respectively, due to the acquisition of a portfolio of seven senior housing facilities within our SHOP segment in Texas on December 5, 2022; (ii) an increase of $3,962,000 and $9,223,000, respectively, due to transitioning the SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023; (iii) higher operating expenses as a result of increased ~~occupancy as well as~~occupancy; and (iv) higher labor costs due to an increase in employee wages. Such amounts were partially offset by a decrease in total property operating expenses for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, of $8,717,000 and $13,445,000, respectively, due to real estate dispositions within our SHOP segment during the three months ended December 31, 2022 and during the nine months ended September 30, 2023.

General and Administrative

For the three months ended September 30, 2023, general and administrative expenses were $11,342,000 compared to $9,626,000 for the three months ended September 30, 2022. The increase in general and administrative expenses of $1,716,000 was primarily the result of an increase of $1,712,000 in bad debt expense.

For the nine months ended September 30, 2023, general and administrative expenses were $36,169,000 compared to $31,673,000 for the nine months ended September 30, 2022. The increase in general and administrative expenses of $4,496,000 was primarily the result of an increase of: (i) $1,910,000 in bad debt expense; (ii) $1,586,000 in stock compensation expense; and (iii) $890,000 in professional fees and legal fees.

Business Acquisition Expenses

For the three and nine months ended September 30, 2023, we recorded business acquisition expenses of $1,024,000 and $2,244,000, respectively, primarily incurred in pursuit of real estate-related investment opportunities. For the three and nine months ended September 30, 2022, we recorded business acquisition expenses of $231,000 and $2,161,000, respectively, primarily incurred in connection with $938,000 in transaction costs related to the acquisition of ~~the 50.0% controlling interest~~a pharmaceutical business in ~~RHS on August 1,~~April 2022 and ~~our acquisition~~$61,000 and $780,000, respectively, of ~~an integrated senior health campus on January 3, 2022.~~costs incurred in the pursuit of real estate investments that did not close. See Note 4,3, Real Estate Investments, Net and Business Combinations — Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion of our acquisition of ~~RHS.~~

~~General and Administrative~~

~~For the three months ended September 30, 2022, general and administrative expenses were $9,626,000 compared to~~ ~~$9,008,000~~ ~~for the three months ended September 30, 2021. The increase~~a pharmaceutical business in general and administrative expenses of $618,000 was primarily the result of an increase of: (i) $5,386,000 in payroll and compensation costs for the personnel hired as a result of the AHI Acquisition; (ii) $1,246,000 in professional and legal fees; (iii) $911,000 in corporate operating expenses; and (iv) $867,000 in stock compensation expenses. Such increases were partially offset by a decrease in our asset management and property management oversight fees of $5,747,000 as a result of the AHI Acquisition.

~~Table of Contents~~

For the nine months ended September 30, 2022, general and administrative expenses were $31,673,000 compared to $23,608,000 for the nine months ended September 30, 2021. The increase in general and administrative expenses of $8,065,000 was primarily the result of an increase of: (i) $16,658,000 in payroll and compensation costs for the personnel hired as a result of the AHI Acquisition; (ii) $4,379,000 in professional fees, legal fees and marketing expenses; (iii) $3,004,000 in corporate operating expenses; and (iv) $1,739,000 in stock compensation expenses. Such increases were partially offset by a decrease in our asset management and property management oversight fees of $17,148,000 as a result of the AHI Acquisition.

~~Business Acquisition Expenses~~

For the three months ended September 30, 2022 and 2021, we recorded business acquisition expenses of $231,000 and $3,633,000, respectively, and for the nine months ended September 30, 2022 and 2021, we recorded business acquisition expenses of $2,161,000 and $7,631,000, respectively. For the three and nine months ended September 30, 2022, the decrease in such expenses primarily related to a decrease of $3,614,000 and $7,296,000, respectively, in third-party legal costs and professional services incurred related to the Merger and the AHI Acquisition, partially offset by $170,000 and $1,105,000, respectively, in transaction costs related to our business combinations and $42,000 and $721,000, respectively, in dead-deal costs incurred in the pursuit of real estate investments that did not close. See Note 4, Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion.April 2022.

Depreciation and Amortization

For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, depreciation and amortization was ~~$40,422,000~~$49,273,000 and ~~$26,334,000,~~$40,422,000, respectively, which primarily consisted of depreciation on our operating properties of ~~$35,327,000~~$36,929,000 and ~~$24,968,000,~~$35,327,000, respectively, and amortization of our identified intangible assets of ~~$4,421,000~~$11,778,000 and ~~$901,000,~~$4,421,000, respectively. For the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, depreciation and amortization was ~~$122,704,000~~$138,644,000 and ~~$78,414,000,~~$122,704,000, respectively, which primarily consisted of depreciation on our operating properties of ~~$104,077,000~~$109,967,000 and ~~$73,821,000,~~$104,077,000, respectively, and amortization of our identified intangible assets of $26,618,000 and $16,554,000, respectively.

For the three and ~~$3,258,000, respectively. For~~nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, the increase in depreciation and amortization of ~~$14,088,000~~$8,851,000 and ~~$44,290,000,~~$15,940,000, respectively, was primarily ~~the result of the~~due to: (i) an increase in ~~depreciable assets in~~depreciation and amortization within our ~~portfolio~~SHOP segment and our integrated senior health campuses segment as a result of acquisitions that occurred subsequent to September 30, 2022, as well as development and capital expenditures since September 30, 2022; (ii) the ~~Merger resulting~~full amortization of an aggregate $6,635,000 of in-place leases related to the transition of SNFs within the Central Wisconsin Senior Care Portfolio to a RIDEA structure in March 2023 and the transition of senior housing — leased facilities within the Michigan ALF Portfolio to a RIDEA structure; and (iii) the full amortization of $1,157,000 of depreciable assets as a result of storm damage affecting our properties in Louisiana, Nebraska, North Carolina and Texas. Such amounts were partially offset by a decrease in depreciation and amortization ~~expense~~as a result of ~~$12,386,000~~real estate dispositions within our SHOP segment and ~~$39,772,000, respectively.~~our MOBs segment subsequent to September 30, 2022.

Table of Contents

Interest Expense

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Interest expense:	Interest expense:									Interest expense:
Lines of credit and term loans and derivative financial instruments		$	14,806,000	$	7,729,000	$	31,382,000	$	23,203,000
Lines of credit and term loan and derivative financial instruments										Lines of credit and term loan and derivative financial instruments	$	24,966	$	14,806	$	72,655	$	31,382
Mortgage loans payable	Mortgage loans payable	10,485,000		9,028,000		29,637,000		26,328,000		Mortgage loans payable	14,215		10,485		41,310		29,637
Amortization of deferred financing costs:	Amortization of deferred financing costs:									Amortization of deferred financing costs:
Lines of credit and term loans		722,000		1,087,000		2,255,000		3,237,000
Lines of credit and term loan										Lines of credit and term loan	686		722		2,491		2,255
Mortgage loans payable	Mortgage loans payable	530,000		424,000		1,463,000		1,143,000		Mortgage loans payable	554		530		1,690		1,463
Amortization of debt discount/premium, net	Amortization of debt discount/premium, net	134,000		201,000		464,000		606,000		Amortization of debt discount/premium, net	887		134		2,662		464
Gain in fair value of derivative financial instruments	Gain in fair value of derivative financial instruments	—		(1,860,000)		(500,000)		(5,456,000)		Gain in fair value of derivative financial instruments	(3,402)		—		(8,200)		(500)
Loss on extinguishments of debt	Loss on extinguishments of debt	628,000		—		5,038,000		2,293,000		Loss on extinguishments of debt	345		628		345		5,038
Interest on finance lease liabilities	Interest on finance lease liabilities	43,000		81,000		183,000		273,000		Interest on finance lease liabilities	82		43		239		183
Interest expense on financing obligations and other liabilities	Interest expense on financing obligations and other liabilities	176,000		335,000		772,000		657,000		Interest expense on financing obligations and other liabilities	270		176		614		772
Total	Total	$	27,524,000	$	17,025,000	$	70,694,000	$	52,284,000	Total	$	38,603	$	27,524	$	113,806	$	70,694

~~For the three months ended September 30, 2022, interest expense was $27,524,000 compared to $17,025,000 for the three months ended September 30, 2021.~~ The increase in total interest expense for the three and nine months ended September 30, 2023, as compared to the three and nine months ended September 30, 2022, was primarily ~~related~~due to an increase in debt balances since September 30, 2022 and a higher weighted average effective interest rate on our variable debt, which was 7.52% and 5.13% as of September 30, 2023 and 2022, respectively. Such increases in total interest expense ~~incurred on our lines of credit and term loans and mortgage loans payable due~~for the nine months ended September 30, 2023, as compared to a larger debt portfolio as a result of the Merger, as well as an increase in variable interest rates and a $1,860,000 decrease in the gain in fair value recognized on our interest rate swap contracts that matured on January 25, 2022. For the nine months ended September 30, 2022, ~~interest expense was $70,694,000 compared to $52,284,000 for the nine months ended September 30, 2021. The~~were primarily offset by: (i) a $7,700,000 increase in total interest expense was primarily related to an increase in interest expense incurred on our lines of credit and term loans and mortgage loans payable due to a larger debt portfolio as a result of the Merger, as well as an increase in variable interest rates and a

~~Table of Contents~~

~~decrease in the~~ gain in fair value ~~recognized on~~of our derivative financial ~~instruments~~instruments; (ii) $2,039,000 of ~~$4,956,000~~net proceeds from our interest rate swaps; and ~~an increase~~(iii) a $4,693,000 decrease in loss on ~~debt extinguishment~~extinguishments of ~~$2,745,000.~~debt. See Note 8,7, Mortgage Loans Payable, Net, and Note 9,8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements for a further discussion onof debt extinguishments.

~~Impairment~~Gain or Loss on Dispositions of Real Estate Investments

For the three months ended September 30, 2023, we recognized an aggregate net gain on dispositions of our real estate investments of $31,981,000 primarily related to the sale of one SHOP within our Central Florida Senior Housing Portfolio and three MOBs. For the nine months ended September 30, 2023, we recognized an aggregate net gain on dispositions of our real estate investments of $29,777,000 primarily related to the sale of six SHOP within our Central Florida Senior Housing Portfolio and 14 MOBs. See Note 3, Real Estate Investments, Net and Business Combinations — Dispositions of Real Estate Investments, to our accompanying condensed consolidated financial statements for further discussion.

For the three and nine months ended September 30, 2022, we recognized an aggregate net gain on dispositions of our real estate investments of $2,113,000 and $2,796,000, respectively, primarily related to the disposition of one integrated senior health campus in Indiana.

Impairment of Real Estate Investments

For both the three and nine months ended September 30, 2023, we recognized an aggregate impairment charge of $12,510,000 for two of our SHOP within the Northern CA Senior Housing Portfolio. For the three and nine months ended September 30, 2022, we recognized an aggregate impairment charge of $21,851,000 and $39,191,000 on our SHOP within the Central Florida Senior Housing Portfolio, respectively. ~~For the nine months ended September 30, 2021, we recognized an impairment charge of $3,335,000 on a medical office building, Mount Dora Medical Center.~~ See Note 3, Real Estate Investments, Net and Business Combinations — Impairment of Real Estate Investments, to our accompanying condensed consolidated financial statements for a further discussion.

Gain on Re-measurement of Previously Held Equity ~~Interest~~Interests

For the nine months ended September 30, 2023, we recognized a $726,000 gain on re-measurement of the fair value of our previously held equity interest in Memory Care Partners, LLC, or MCP. For both the three and nine months ended September 30, 2022, we recognized a $19,567,000 gain on re-measurement of the fair value of our previously held equity interest in RHS. ~~For the nine months ended September 30, 2021, we did not recognize a gain on re-measurement of previously held equity interest.~~ See Note 4,3, Real Estate Investments, Net and Business Combinations — Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion.

Table of Contents

Liquidity and Capital Resources

InOur principal sources of liquidity are cash flows from operations, borrowings under our lines of credit and proceeds from dispositions of real estate investments. For the ~~normal course of business,~~next 12 months, our ~~material cash requirements consist of payment of~~principal liquidity needs are to: (i) fund property operating expenses and general and administrative expenses; (ii) meet our debt service requirements (including principal and interest); (iii) fund development activities and capital ~~improvement expenditures, interest on our indebtedness,~~expenditures; and (iv) make distributions to our stockholders, ~~(including distributions necessary~~as required for us to ~~maintain our qualification~~continue to qualify as a ~~REIT) and general and administrative expenses~~. ~~Our~~REIT. We believe that the sources of ~~funds primarily consist~~liquidity described above, along with the probable refinancing of ~~operating~~the 2019 Trilogy Credit Facility, will be sufficient to satisfy our cash ~~flows~~requirements for the next 12 months and ~~borrowings.~~the longer term thereafter. We do not have any material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

Material Cash Requirements

Capital Improvement Expenditures

A capital plan for each investment 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 and 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 September 30, ~~2022,~~2023, we had ~~$17,434,000~~$17,866,000 of restricted cash in loan impounds and reserve accounts to fund a portion of such capital expenditures. Based on the budget for the properties we owned as of September 30, ~~2022,~~2023, we estimated that unspent discretionary expenditures for capital and tenant improvements as of such date are equal to ~~$53,226,000~~$52,883,000 for the remaining three months of ~~2022,~~2023, although actual expenditures are dependent on many factors which are not presently known.

Contractual Obligations

The following table provides information with respect to: (i) the maturity and scheduled principal repayment of our secured mortgage loans payable and ~~our~~ lines of credit and term ~~loans;~~loan; (ii) interest payments on our mortgage loans payable and lines of credit and term ~~loans;~~loan, excluding the effect of our interest rate swaps; (iii) ground and other lease obligations; and (iv) financing obligations as of September 30, ~~2022:~~2023 (in thousands):
Payments Due by Period
2022 2023-2024 2025-2026 Thereafter Total
Principal payments — fixed-rate debt $ 12,679,000 $ 105,743,000 $ 183,849,000 $ 503,013,000 $ 805,284,000
Interest payments — fixed-rate debt 6,183,000 46,192,000 37,958,000 198,377,000 288,710,000
Principal payments — variable-rate debt 111,000 680,794,000 414,469,000 569,521,000 1,664,895,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2022) 21,838,000 122,717,000 76,107,000 5,847,000 226,509,000
Ground and other lease obligations 9,137,000 72,225,000 70,201,000 244,392,000 395,955,000
Financing obligations 984,000 5,366,000 3,048,000 16,243,000 25,641,000
Total $ 50,932,000 $ 1,033,037,000 $ 785,632,000 $ 1,537,393,000 $ 3,406,994,000

~~Table of Contents~~


	Payments Due by Period
	2023		2024-2025		2026-2027		Thereafter		Total
Principal payments — fixed-rate debt	$	4,804	$	183,615	$	190,619	$	528,962	$	908,000
Interest payments — fixed-rate debt	7,647		54,339		38,683		248,626		349,295
Principal payments — variable-rate debt	57		660,430		925,443		27,328		1,613,258
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2023)	31,009		167,433		46,801		6,746		251,989
Ground and other lease obligations	8,972		70,936		70,690		202,022		352,620
Financing obligations	1,342		9,910		8,646		35,106		55,004
Total	$	53,831	$	1,146,663	$	1,280,882	$	1,048,790	$	3,530,166

Distributions ~~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~~We are party to a 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,~~$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~~party to an agreement, as amended, ~~and restated loan agreement~~ regarding a senior secured revolving credit facility with an aggregate maximum principal amount of ~~$360,000,000,~~$400,000,000, or the 2019 Trilogy Credit ~~Facility. Our total capacity~~Facility, and an outstanding balance of $367,000,000 as of September 30, 2023, which is scheduled to ~~pay operating expenses, capital improvement expenditures, interest, distributions~~mature in less than 12 months on September 5, 2024. See Note 8, Lines of Credit and ~~general~~Term Loan, to our accompanying condensed consolidated financial statements for further discussion. We are currently evaluating our options for refinancing the 2019 Trilogy Credit Facility based on current loan-to-value ratios and ~~administrative expenses~~lending market conditions and believe it is ~~a function of our current cash position, our borrowing capacity on our lines of credit and term loans, as well as any future indebtedness~~probable that we ~~may incur.~~could extend the maturity date of this facility or obtain a replacement facility that would extend the maturity date beyond 12 months from the filing date of this Quarterly Report on Form 10-Q.

Table of Contents

As of September 30, ~~2022,~~2023, our aggregate borrowing capacity under the 2022 Credit Facility and the 2019 Trilogy Credit Facility was ~~$1,410,000,000.~~$1,450,000,000. As of September 30, ~~2022,~~2023, our aggregate borrowings outstanding under our credit facilities was ~~$1,292,935,000~~$1,277,900,000 and we had an aggregate of ~~$117,065,000~~$172,100,000 available on such facilities. ~~We believe that the resources described above will be sufficient to satisfy our cash requirements for the foreseeable future.~~

Cash Flows

The following table sets forth changes in cash ~~flows:~~flows (in thousands):


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2022		2021			2023		2022
Cash, cash equivalents and restricted cash — beginning of period	Cash, cash equivalents and restricted cash — beginning of period	$	125,486,000	$	152,190,000	Cash, cash equivalents and restricted cash — beginning of period	$	111,906	$	125,486
Net cash provided by (used in) operating activities		113,441,000		(1,493,000)
Net cash used in investing activities		(122,539,000)		(137,580,000)
Net cash provided by financing activities		7,969,000		138,271,000
Net cash provided by operating activities						Net cash provided by operating activities	72,766		113,441
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	20,701		(122,539)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(123,177)		7,969
Effect of foreign currency translation on cash, cash equivalents and restricted cash	Effect of foreign currency translation on cash, cash equivalents and restricted cash	(59,000)		(96,000)		Effect of foreign currency translation on cash, cash equivalents and restricted cash	(40)		(59)
Cash, cash equivalents and restricted cash — end of period	Cash, cash equivalents and restricted cash — end of period	$	124,298,000	$	151,292,000	Cash, cash equivalents and restricted cash — end of period	$	82,156	$	124,298

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

Operating Activities

The increase in net cash provided by operating activities of $114,934,000 was primarily due to the increase in the size of our portfolio as a result of the Merger on October 1, 2021, thereby increasing our net operating income duringFor the nine months ended September 30, 2023 and 2022, ~~as compared~~cash flows provided by operating activities were primarily related to the ~~prior year period.~~cash flows provided by our property operations, offset by payments of general and administrative expenses and interest payments on our outstanding indebtedness. In general, cash flows from operating activities are 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~~For the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, the change from net cash used in investing activities ~~of $15,041,000~~to net cash provided by investing activities was primarily due to a ~~$21,123,000~~$142,239,000 increase in proceeds from dispositions of real estate investments and a ~~$9,960,000~~$29,743,000 decrease in ~~developments and capital expenditures.~~cash paid to acquire real estate investments. Such amounts were partially offset by a ~~$13,713,000 payment to acquire the 50.0% controlling interest~~$23,028,000 increase in ~~RHS~~development and capital expenditures and an $7,563,000 increase in ~~August 2022 and the issuance of a $3,000,000 note receivable~~investments in ~~September 2022.~~unconsolidated entities. See Note 4,3, Real Estate Investments, Net and Business Combinations, to our accompanying condensed consolidated financial statements for a further discussion of our ~~acquisition of RHS.~~

~~Table of Contents~~

acquisitions and dispositions.

Financing Activities

~~The decrease in net cash provided by financing activities of $130,302,000 was primarily due~~For the nine months ended September 30, 2023, as compared to ~~a decrease in net borrowings under our mortgage loans payable of $233,399,000 and a $22,430,000 increase in distributions paid to our common stockholders during~~ the nine months ended September 30, 2022, ~~as compared~~the change from net cash provided by financing activities to net cash used in financing activities was primarily due to the prior year period, as well as a $16,233,000 payment to repurchase our common stock for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, we also paid $657,000 in offering costs in connection with the filing of our Registration Statement on Form S-11 for a proposed primary public offering of our shares of common stock in conjunction with a contemplated listing of our common stock on the New York Stock Exchange, as discussed in the “Overview and Background — Public Offerings” section above. No such costs were paid during the nine months ended September 30, 2021. Such amounts were partially offset by an increase inchange from net borrowings under our lines of credit and ~~term~~mortgage loans payable of ~~$153,200,000 during the nine months ended September 30, 2022 as compared~~$94,296,000 to ~~the prior year period. The change in distributions paid to common stockholders was due to the suspension~~net payments on our lines of ~~all stockholder distributions on May 29, 2020 in response to the impact~~credit and mortgage loans payable of the COVID-19 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 GAHR III share repurchase plan from May 31, 2020 through October 4, 2021, when the partial reinstatement of our share repurchase plan was approved by our board.$15,853,000.

Distributions

The following information represents distributions of GAHR IV and GAHR III, as applicable, 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.

~~GAHR IV and Combined Company Distributions~~

~~Prior to March 31, 2020, the GAHR IV~~Our board authorized ~~a daily distribution~~record date distributions 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 shareholders of our Class T common stock and Class I common stock which was equal to an annualized distribution rate of $0.60 per share. These 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.

In response to the COVID-19 pandemic and its effects to our business and operations, at the end of the first quarter of 2020, 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, 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~~monthly record date from January 2022 through June 2022, 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.

~~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, equal to $0.0328767~~$0.133333332 per share of our common stock, which was equal to an annualized distribution rate of $0.40 per share. Further, our board authorized record date distributions to our Class T common stockholders and Class I common 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 was equal to an annualized distribution rate of $0.40$1.60 per share. The distributions were paid in cash or shares of our common stock pursuant to the ~~AHR DRIP.~~

DRIP offering. Effective beginning with the third quarter of 2022, distributions, if any, were or shall be authorized by our board on a quarterly basis, in such amounts as our board determined or shall determine, and each quarterly record date for the purposes of such distributions was or shall be determined and authorized by our board in the last month of each calendar quarter until such time as our board changes our distribution policy. ~~On September 28, 2022, our~~Our board authorized a quarterly distribution to holders of our Class T common stock and Class I common ~~stockholders~~stock of record as of the close of business on September 29, ~~2022, for the quarter commencing on July 1, 2022 and ending on September 30,~~ 2022. ~~The~~Such quarterly distribution was equal to ~~$0.10~~$0.40 per share of our common stock, which iswas equal to an annualized distribution rate of ~~$0.40~~$1.60 per ~~share. The third quarter distribution was~~share and paid ~~in October 2022~~ in cash or shares of our common stock pursuant to the ~~AHR~~ DRIP offering, only from legally available funds.

On March 18, 2021, in connection with the GAHR IV special committee's strategic alternative review process, 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 were participants in the AHR DRIP received cash distributions instead. On October 4, 2021, our board authorized the reinstatement of the DRIP and as a result, beginning with the October 2021 distribution, which was paid in

5755

Table of Contents

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 AHR DRIP, instead of cash distributions. On November 14, 2022, our board suspended the ~~AHR~~ DRIP ~~Offering~~offering beginning with ~~the~~ distributions declared ~~if any,~~ for the quarter ~~ending~~ended December 31, 2022. ~~Please see Note 22, Subsequent Events, to our accompanying condensed consolidated financial statements for~~As a ~~further discussion.~~

~~The amount~~result of the distributions paid to our common stockholders was determined quarterly or monthly, as applicable, by our board and was 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 Maryland law, we may not make distributions that would: (i) cause us to be unable to pay our debts as they become due in the usual course of business or (ii) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences.

~~GAHR III Distributions~~

~~On May 29, 2020 in response to the impact of the COVID-19 pandemic, the board of directors of GAHR III authorized~~ the suspension of ~~all stockholder~~the DRIP offering, unless and until our board reinstates the DRIP offering, stockholders who are current participants in the DRIP will be paid distributions ~~upon the completion~~in cash. Our board authorized a quarterly distribution to holders of ~~the payment of distributions payable to stockholders~~our Class T common stock and Class I common stock of record ~~on or prior to~~as of the close of business on ~~May 31, 2020. The board~~December 29, 2022. Such quarterly distribution was equal to $0.40 per share of ~~directors of GAHR III subsequently reinstated stockholder distributions in June 2021 through September 2021 at~~our common stock, which was equal to an annualized distribution rate of ~~$0.20~~$1.60 per ~~share.~~share and paid in cash, only from legally available funds.

In response to interest rates that have increased drastically since the beginning of 2022, and greater uncertainty surrounding further interest rate movements, our board elected to reduce our quarterly distribution to $0.25 per share in order to preserve our liquidity, better align distributions with available cash flows and position our company for its long-term strategic goals. Therefore, our board authorized a quarterly distribution equal to $0.25 per share to holders of our Class T common stock and Class I common stock commencing with the first quarter of 2023. Such quarterly distributions were equal to an annualized distribution rate of $1.00 per share and paid in cash, only from legally available funds. See our Current Reports on Form 8-K filed with the SEC on March 17, 2023, June 16, 2023 and September 20, 2023 for more information.

The following tables reflect distributions we paid for the nine months ended September 30, ~~2022~~2023 and ~~distributions paid by GAHR III for the nine months ended September 30, 2021,~~2022, along with the amount of distributions reinvested pursuant to the ~~AHR~~ DRIP ~~or GAHR III distribution reinvestment plan, as applicable,~~ and the sources of distributions as compared to cash flows from operations or funds from operations attributable to controlling interest, or FFO, a non-GAAP financial ~~measure:~~measure (dollars in thousands):


		AHR				GAHR III					Nine Months Ended September 30,
		Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021					2023				2022
Distributions paid in cash	Distributions paid in cash	$	35,391,000			$	12,961,000			Distributions paid in cash	$	59,685			$	35,391
Distributions reinvested	Distributions reinvested	26,118,000				—				Distributions reinvested	—				26,118
		$	61,509,000			$	12,961,000				$	59,685			$	61,509
Sources of distributions:	Sources of distributions:									Sources of distributions:
Cash flows from operations	Cash flows from operations	$	61,509,000	100	%	$	—	—	%	Cash flows from operations	$	59,685	100	%	$	61,509	100	%
Proceeds from borrowings	Proceeds from borrowings	—		—		12,961,000		100		Proceeds from borrowings	—		—		—		—

		$	61,509,000	100	%	$	12,961,000	100	%		$	59,685	100	%	$	61,509	100	%


		AHR				GAHR III					Nine Months Ended September 30,
		Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021					2023				2022
Distributions paid in cash	Distributions paid in cash	$	35,391,000			$	12,961,000			Distributions paid in cash	$	59,685			$	35,391
Distributions reinvested	Distributions reinvested	26,118,000				—				Distributions reinvested	—				26,118
		$	61,509,000			$	12,961,000				$	59,685			$	61,509
Sources of distributions:	Sources of distributions:									Sources of distributions:
FFO attributable to controlling interest	FFO attributable to controlling interest	$	61,509,000	100	%	$	12,961,000	100	%	FFO attributable to controlling interest	$	57,075	95.6	%	$	61,509	100	%
Proceeds from borrowings	Proceeds from borrowings	—		—		—		—		Proceeds from borrowings	2,610		4.4		—		—

		$	61,509,000	100	%	$	12,961,000	100	%		$	59,685	100	%	$	61,509	100	%

As of September 30, ~~2022,~~2023, any distributions of amounts in excess of our current and accumulated earnings and profits have resulted in a return of capital to our stockholders, and some portion of a distribution to our stockholders may have been paid from borrowings. For a further discussion of FFO, including a reconciliation of our GAAP net loss to FFO, see “Funds from Operations and ~~Modified~~Normalized Funds from ~~Operations,”~~Operations” below.

Financing

We anticipate that our overall leverage will ~~not exceed~~approximate 50.0% of the combined fair market value of all of our properties, and other real estate-related investments, as determined at the end of each calendar year. For these purposes, the market value of each asset will be equal to the contract purchase price paid for the asset or, if the asset was appraised subsequent to the date of

~~Table of Contents~~

purchase, then the market value will be equal to the value reported in the most recent independent appraisal of the asset. Our policies do not limit the amount we may borrow with respect to any individual investment. As of September 30, ~~2022,~~2023, our aggregate borrowings were ~~48.0%~~53.2% of the combined market value of all of our real estate and real estate-related investments.

Table of Contents

Mortgage Loans Payable, Net

For a discussion of our mortgage loans payable, see Note 8,7, Mortgage Loans Payable, Net, to our accompanying condensed consolidated financial statements.

Lines of Credit and Term ~~Loans~~Loan

For a discussion of our lines of credit and term ~~loans,~~loan, see Note 9,8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements.

REIT Requirements

In order to maintain our qualification as a REIT for U.S. federal income tax purposes, we are required to distribute to our stockholders a minimum of 90.0% of our REIT taxable income. Existing Internal Revenue Service, or IRS, guidance includes a safe harbor pursuant to which publicly offered REITs can satisfy the distribution requirement by distributing a combination of cash and stock to stockholders. In general, to qualify under the safe harbor, each stockholder must elect to receive either cash or stock, and the aggregate cash component of the distribution to stockholders must represent at least 20.0% of the total distribution. In the event that there is a shortfall in net cash available due to factors including, without limitation, the timing of such distributions or the timing of the collection of receivables, we may seek to obtain capital to make distributions by means of secured and unsecured debt financing through one or more unaffiliated third parties. We may also make distributions with 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 ~~12,~~10, 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, ~~2022,~~2023, we had ~~$1,177,244,000~~$1,243,358,000 of fixed-rate and variable-rate mortgage loans payable outstanding secured by our properties. As of September 30, ~~2022,~~2023, we had ~~$1,292,935,000~~$1,277,900,000 outstanding and ~~$117,065,000~~$172,100,000 remained available under our lines of credit. The weighted average effective interest rate on our outstanding debt, factoring in our interest rate swaps, was ~~4.47%~~5.77% per annum as of September 30, ~~2022.~~2023. See Note 8,7, Mortgage Loans Payable, Net, and Note 9,8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements.

We are required by the terms of certain loan documents to meet various financial and non-financial covenants, such as leverage ratios, net worth ratios, debt service coverage ratios and fixed charge coverage ratios. As of September 30, ~~2022,~~2023, we were in compliance with all such covenants and requirements on our mortgage loans payable and our lines of credit and term loans. While the extent and severity of the COVID-19 pandemic on our business has been 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.loan. If any future covenants are violated, we anticipate seeking a waiver or amending the debt covenants with the lenders when and if such event should occur. However, there can be no assurances that management will be able to effectively achieve such plans.

~~Related Party Transactions~~

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

Funds from Operations and ~~Modified~~Normalized Funds from Operations

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

~~Table of Contents~~

We define FFO, a non-GAAP financial measure, consistent with the standards established by the White Paper on funds from operations approved by the Board of Governors of NAREIT, 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, gains or losses upon consolidation of a previously held equity interest, 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.

Table of Contents

Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate-related depreciation and amortization and impairments, provides a further understanding of our operating performance to investors, industry analysts and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income (loss).

~~However,~~We define normalized FFO ~~and modified funds from operations~~ attributable to controlling interest, or ~~MFFO,~~NFFO, as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO ~~and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.~~

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 and which we believe to be another appropriate supplemental performance measure to reflect operating performance. 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 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. Investors are cautioned that MFFO should only be used to assess the sustainability of our operating performance after 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 financial 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 in November 2010. The Practice Guideline defines modified funds from operations as funds from operations~~ further adjusted for the following items included in the determination of GAAP net income (loss): expensed acquisition fees and ~~costs;~~costs, which we refer to as business acquisition expenses; amounts relating to changes in 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~~basis); the non-cash impact of changes to ~~closer to an expected to be received cash basis~~our equity instruments; non-cash or non-recurring income or expense; the non-cash effect of ~~disclosing the rent and lease payments); accretion~~income tax benefits or expenses; capitalized interest; impairment of ~~discounts and~~goodwill; amortization of ~~premiums~~closing costs on debt investments; mark-to-market adjustments included in net income (loss); gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect ~~modified funds from operations~~NFFO on the same basis. ~~Our MFFO calculation complies with the IPA’s Practice Guideline described above.~~

~~Table of Contents~~

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,However, FFO and ~~MFFO are not necessarily indicative of cash flow available to fund cash needs and~~NFFO should not be ~~considered as an alternative~~construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) as an ~~indication~~indicator of our operating performance, ~~as an alternative to~~GAAP cash flows from operations ~~which is~~as an ~~indication~~indicator of our liquidity or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and ~~MFFO~~NFFO measures and the adjustments to GAAP in calculating FFO and NFFO. Presentation of this information is intended to provide useful information to management, investors and industry analysts as they compare the operating performance used by the REIT industry, although it should be noted that not all REITs calculate funds from operations and normalized funds from operations the same way, so comparisons with other REITs may not be meaningful. FFO and NFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete.

None of the SEC, NAREIT, or any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO or ~~MFFO.~~NFFO. In the future, the SEC, NAREIT, or another regulatory body may decide to standardize the allowable adjustments across the REIT industry and we would have to adjust our calculation and characterization of ~~FFO.~~

~~For the three and nine months ended September 30, 2022 and 2021, we recognized government grants as grant income~~FFO or as a reduction of property operating expenses, as applicable, and within loss from unconsolidated entities. Such amounts were granted through federal and state government programs, such as through the CARES Act, and which were established for eligible healthcare providers to preserve liquidity in response to the COVID-19 pandemic. See the “Results of Operations” section above for a further discussion. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial condition and results of operations. Without such relief funds, the COVID-19 pandemic would have had a material adverse impact to our FFO and MFFO. For the three months ended September 30, 2022 and 2021, FFO would have been approximately $21,574,000 and $15,996,000, respectively, excluding government grants recognized. For the nine months ended September 30, 2022 and 2021, FFO would have been approximately $74,456,000 and $37,622,000, respectively, excluding government grants recognized. For the three months ended September 30, 2022 and 2021, MFFO would have been approximately $25,326,000 and $20,619,000, respectively, excluding government grants recognized. For the nine months ended September 30, 2022 and 2021, MFFO would have been approximately $86,800,000 and $43,300,000, respectively, excluding government grants recognized.NFFO.

6158

Table of Contents

The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure, to FFO and ~~MFFO~~NFFO for the periods presented ~~below:~~below (in thousands except for share and per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net loss $ (7,644,000) $ (4,036,000) $ (24,083,000) $ (28,270,000)
Depreciation and amortization related to real estate — consolidated properties 40,390,000 26,334,000 122,640,000 78,414,000
Depreciation and amortization related to real estate — unconsolidated entities 197,000 768,000 1,043,000 2,336,000
Impairment of real estate investments — consolidated properties 21,851,000 — 39,191,000 3,335,000
(Gain) loss on dispositions of real estate investments — consolidated properties (2,113,000) (276,000) (2,796,000) 101,000
Gain on re-measurement of previously held equity interest(1) (19,567,000) — (19,567,000) —
Net (income) loss attributable to noncontrolling interests (5,861,000) (1,201,000) (9,688,000) 3,508,000
Depreciation, amortization, impairments, gain/loss on dispositions and gain on re-measurement — noncontrolling interests (757,000) (4,960,000) (14,910,000) (14,616,000)
FFO attributable to controlling interest $ 26,496,000 $ 16,629,000 $ 91,830,000 $ 44,808,000
Business acquisition expenses(2) $ 231,000 $ 3,633,000 $ 2,161,000 $ 7,631,000
Amortization of above- and below-market leases(3) 700,000 22,000 1,904,000 270,000
Amortization of closing costs(4) 60,000 52,000 174,000 148,000
Change in deferred rent(5) (1,029,000) 1,493,000 (3,333,000) 1,011,000
Loss on debt extinguishments(6) 628,000 — 5,038,000 2,293,000
Gain in fair value of derivative financial instruments(7) — (1,860,000) (500,000) (5,456,000)
Foreign currency loss(8) 3,695,000 1,394,000 8,689,000 741,000
Adjustments for unconsolidated entities(9) 33,000 133,000 223,000 452,000
Adjustments for noncontrolling interests(9) (566,000) (244,000) (2,012,000) (1,412,000)
MFFO attributable to controlling interest $ 30,248,000 $ 21,252,000 $ 104,174,000 $ 50,486,000
Weighted average Class T and Class I common shares outstanding — basic and diluted 263,279,232 179,641,677 262,940,706 179,632,818
Net loss per Class T and Class I common share — basic and diluted $ (0.03) $ (0.02) $ (0.09) $ (0.16)
FFO attributable to controlling interest per Class T and Class I common share — basic and diluted $ 0.10 $ 0.09 $ 0.35 $ 0.25
MFFO attributable to controlling interest per Class T and Class I common share — basic and diluted $ 0.11 $ 0.12 $ 0.40 $ 0.28

~~___________~~

~~(1)~~We recognized a gain upon the acquisition of the 50.0% controlling interest in RHS. Such acquisition resulted in the consolidation of RHS, which was previously accounted for as an equity method investment. We believe that adjusting for such non-recurring gains provides useful supplemental information because such gains may not be reflective of on-going business transactions and operations and is consistent with management’s analysis of our operating performance.

~~(2)~~In evaluating investments in real estate, we differentiate the costs to acquire the investment from the operations derived from the investment. 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.

~~(3)~~Under GAAP, above- and below-market leases are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, including inflation, interest rates,

~~Table of Contents~~

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.

~~(4)~~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.

~~(5)~~Under GAAP, as a lessor, rental revenue is recognized on a straight-line basis over the terms of the related lease (including rent holidays). As a lessee, we record amortization of right-of-use assets and accretion of lease liabilities for our operating leases. This may result in income or expense recognition that is significantly different than the underlying contract terms. By adjusting such amounts, MFFO may provide useful supplemental information on the realized economic impact of lease terms, providing insight on the expected contractual cash flows of such lease terms, and aligns results with management’s analysis of operating performance.

~~(6)~~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.

~~(7)~~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.

~~(8)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.~~

~~(9)~~Includes all adjustments to eliminate the unconsolidated entities’ share or noncontrolling interests’ share, as applicable, of the adjustments described in notes (2) – (8) above to convert our FFO to MFFO.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(6,446)	$	(7,644)	$	(45,928)	$	(24,083)

Depreciation and amortization related to real estate — consolidated properties	49,235		40,390		138,530		122,640
Depreciation and amortization related to real estate — unconsolidated entities	96		197		254		1,043
Impairment of real estate investments — consolidated properties	12,510		21,851		12,510		39,191

Gain on dispositions of real estate investments, net — consolidated properties	(31,981)		(2,113)		(29,777)		(2,796)
Net loss (income) attributable to noncontrolling interests	457		(5,861)		1,884		(9,688)
Gain on re-measurement of previously held equity interests	—		(19,567)		(726)		(19,567)
Depreciation, amortization, impairments, net gain on dispositions and gain on re-measurements — noncontrolling interests	(6,061)		(757)		(19,672)		(14,910)
FFO attributable to controlling interest	$	17,810	$	26,496	$	57,075	$	91,830

Business acquisition expenses	$	1,024	$	231	$	2,244	$	2,161
Amortization of above- and below-market leases	3,103		700		12,233		1,904
Amortization of closing costs	71		60		204		174
Change in deferred rent	1,478		(1,029)		1,238		(3,333)

Non-cash impact of changes to equity instruments	1,579		880		4,244		2,659
Capitalized interest	(47)		(44)		(127)		(122)

Loss on debt extinguishments	345		628		345		5,038
Gain in fair value of derivative financial instruments	(3,402)		—		(8,200)		(500)
Foreign currency loss (gain)	1,704		3,695		(372)		8,689
Adjustments for unconsolidated entities	(106)		(6)		(359)		162
Adjustments for noncontrolling interests	(386)		(575)		(976)		(2,078)
NFFO attributable to controlling interest	$	23,173	$	31,036	$	67,549	$	106,584
Weighted average Class T and Class I common shares outstanding — basic and diluted	66,048,991		65,819,808		66,036,253		65,735,176
Net loss per Class T and Class I common share attributable to controlling interest — basic and diluted	$	(0.09)	$	(0.21)	$	(0.67)	$	(0.51)
FFO per Class T and Class I common share attributable to controlling interest — basic and diluted	$	0.27	$	0.40	$	0.86	$	1.40
NFFO per Class T and Class I common share attributable to controlling interest — basic and diluted	$	0.35	$	0.47	$	1.02	$	1.62

Net Operating Income

~~Net operating income, or~~ NOI is a non-GAAP financial measure that is defined as net income (loss), computed in accordance with GAAP, generated from properties before general and administrative expenses, business acquisition expenses, depreciation and amortization, interest expense, gain or loss on dispositions, ~~impairment of real estate investments,~~ income or loss from unconsolidated entities, gain on re-measurement of previously held equity interests, 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 operating performance or 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.~~liquidity. NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or. NOI should be reviewed in ~~its applicability in evaluating~~conjunction with other measurements as an indication of our ~~operating~~ performance. Investors are also cautioned that NOI should only be used to assess our operational performance in periods in which we have not incurred or accrued any business acquisition expenses.

Table of Contents

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 the three and nine months ended September 30, 2022 and 2021, we recognized government grants as grant income or as a reduction of property operating expenses, as applicable. The government grants helped mitigate some of the negative impact that the COVID-19 pandemic had on our financial condition and results of operations. Without such relief funds, the COVID-19 pandemic would have had a material adverse impact to our NOI. For the three months ended September 30, 2022 and 2021, NOI would have been approximately $67,292,000 and $51,541,000, respectively, excluding government grants

~~Table of Contents~~

~~recognized. For the nine months ended September 30, 2022 and 2021, NOI would have been approximately $202,370,000 and $129,842,000, respectively, excluding government grants recognized.~~

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:~~below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net loss $ (7,644,000) $ (4,036,000) $ (24,083,000) $ (28,270,000)
General and administrative 9,626,000 9,008,000 31,673,000 23,608,000
Business acquisition expenses 231,000 3,633,000 2,161,000 7,631,000
Depreciation and amortization 40,422,000 26,334,000 122,704,000 78,414,000
Interest expense 27,524,000 17,025,000 70,694,000 52,284,000
(Gain) loss on dispositions of real estate investments (2,113,000) (276,000) (2,796,000) 101,000
Impairment of real estate investments 21,851,000 — 39,191,000 3,335,000
Loss (income) from unconsolidated entities 344,000 (384,000) (1,680,000) 2,288,000
Gain on re-measurement of previously held equity interest (19,567,000) — (19,567,000) —
Foreign currency loss 3,695,000 1,394,000 8,689,000 741,000
Other income (670,000) (348,000) (2,399,000) (811,000)
Income tax expense 126,000 127,000 499,000 785,000
Net operating income $ 73,825,000 $ 52,477,000 $ 225,086,000 $ 140,106,000

~~Subsequent Events~~

~~For a discussion of subsequent events, see Note 22, Subsequent Events, to our accompanying condensed consolidated financial statements.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(6,446)	$	(7,644)	$	(45,928)	$	(24,083)
General and administrative	11,342		9,626		36,169		31,673
Business acquisition expenses	1,024		231		2,244		2,161
Depreciation and amortization	49,273		40,422		138,644		122,704
Interest expense	38,603		27,524		113,806		70,694
Gain on dispositions of real estate investments, net	(31,981)		(2,113)		(29,777)		(2,796)
Impairment of real estate investments	12,510		21,851		12,510		39,191
Loss (income) from unconsolidated entities	505		344		924		(1,680)
Gain on re-measurement of previously held equity interests	—		(19,567)		(726)		(19,567)
Foreign currency loss (gain)	1,704		3,695		(372)		8,689
Other income	(1,755)		(670)		(5,952)		(2,399)
Income tax expense	284		126		775		499
Net operating income	$	75,063	$	73,825	$	222,317	$	225,086

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 ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022.~~17, 2023.

Interest Rate Risk

We are exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire and develop properties and other 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 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, and for which we have not and may not elect hedge accounting treatment. We did not elect to apply hedge accounting treatment to these derivatives; therefore, changes in the fair value of interest rate derivative financial instruments were recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive loss. As of September 30, ~~2022, we did not have any derivative financial instruments.~~2023, our interest rate swaps are recorded in other assets, net in our accompanying condensed consolidated balance sheet at their fair value of $8,200,000. We do not enter into derivative transactions for speculative purposes.

The Financial Conduct Authority, or FCA, ceased publishing one-week and two-month LIBOR after December 31, 2021 and intends to cease publishing all remaining LIBOR after June 30, 2023. On January 19, 2022, we, through For information on our ~~operating partnership, entered into the 2022 Credit Facility that bears~~ interest ~~at varying rates based upon, at our option, (1) the Daily SOFR, plus the applicable~~ rate ~~for Daily SOFR Rate Loans; or (2) the Term SOFR plus the applicable rate for Term SOFR Rate Loans, as such terms are defined in the 2022 Credit Facility. Please~~swaps, see Note 9, ~~Lines of Credit~~Derivative Financial Instruments, and ~~Term Loans — 2022 Credit Facility,~~Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial ~~statements for a further discussion.~~statements.

6460

Table of Contents

We have variable rate debt outstanding and maturing on various dates from 2023 to 2031 that are indexed to LIBOR. As such, we are monitoring and evaluating the related risks of the discontinuation of LIBOR, which include possible changes to the interest on loans or amounts received and paid on derivative instruments 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 when LIBOR is discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty. If a contract is not transitioned to an alternative rate when LIBOR is discontinued, the impact on our contracts is likely to vary. When 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.

As of September 30, ~~2022,~~2023, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate ~~changes.~~changes, excluding the effect of our interest rate swaps (dollars in thousands):


		Expected Maturity Date																								Expected Maturity Date
		2022			2023			2024			2025			2026			Thereafter			Total			Fair Value			2023			2024			2025			2026			2027			Thereafter			Total			Fair Value
Assets	Assets																								Assets
Debt security held-to-maturity	Debt security held-to-maturity	$	—		$	—		$	—		$	93,433,000		$	—		$	—		$	93,433,000		$	92,831,000	Debt security held-to-maturity	$	—		$	—		$	93,433		$	—		$	—		$	—		$	93,433		$	93,047
Weighted average interest rate on maturing fixed-rate debt security	Weighted average interest rate on maturing fixed-rate debt security	—		%	—		%	—		%	4.24		%	—		%	—		%	4.24		%	—		Weighted average interest rate on maturing fixed-rate debt security	—		%	—		%	4.24		%	—		%	—		%	—		%	4.24		%	—
Liabilities	Liabilities																								Liabilities
Fixed-rate debt — principal payments	Fixed-rate debt — principal payments	$	12,679,000		$	34,321,000		$	71,422,000		$	28,892,000		$	154,957,000		$	503,013,000		$	805,284,000		$	644,045,000	Fixed-rate debt — principal payments	$	4,804		$	47,582		$	136,033		$	155,670		$	34,949		$	528,962		$	908,000		$	718,803
Weighted average interest rate on maturing fixed-rate debt	Weighted average interest rate on maturing fixed-rate debt	4.03		%	3.78		%	3.52		%	3.34		%	2.98		%	3.00		%	3.10		%	—		Weighted average interest rate on maturing fixed-rate debt	3.24		%	3.53		%	4.29		%	2.99		%	3.34		%	3.27		%	3.39		%	—
Variable-rate debt — principal payments	Variable-rate debt — principal payments	$	111,000		$	522,729,000		$	158,065,000		$	277,000		$	414,192,000		$	569,521,000		$	1,664,895,000		$	1,672,727,000	Variable-rate debt — principal payments	$	57		$	630,277		$	30,153		$	375,265		$	550,178		$	27,328		$	1,613,258		$	1,617,675
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2022)		6.52		%	5.68		%	5.60		%	5.07		%	4.79		%	4.75		%	5.13		%	—
Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2023)																									Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2023)	8.18		%	8.14		%	7.81		%	7.15		%	7.05		%	7.58		%	7.52		%	—

Debt Security Investment, Net

As of September 30, ~~2022,~~2023, the net carrying value of our debt security investment was ~~$82,067,000.~~$85,922,000. As we expect to hold our debt security investment to maturity and the amounts due under such debt security investment would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our debt security investment, would have a significant impact on our operations. See Note ~~16,~~13, Fair Value Measurements, to our accompanying condensed consolidated financial statements, for a discussion of the fair value of our investment in a held-to-maturity debt security. The effective interest rate on our debt security investment was 4.24% per annum as of September 30, ~~2022.~~2023.

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

Mortgage loans payable were ~~$1,177,244,000~~$1,243,358,000 ($1,221,238,000, net of discount/premium and deferred financing costs) as of September 30, ~~2022.~~2023. As of September 30, ~~2022,~~2023, we had 6471 fixed-rate mortgage loans payable and 13 variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to ~~6.52%~~8.44% per annum and a weighted average effective interest rate of ~~3.85%~~4.64%. In addition, as of September 30, ~~2022,~~2023, we had ~~$1,292,935,000~~$1,277,900,000 ($1,277,076,000, net of deferred financing fees) outstanding under our lines of credit and term ~~loans,~~loan, at a weighted average interest rate of ~~5.04%~~7.39% per annum.

As of September 30, ~~2022,~~2023, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, ~~(if any),~~ was ~~4.47%~~5.77% per annum. An increase in the variable interest rate on our variable-rate mortgage loans payable and lines of credit and term ~~loans~~loan constitutes a market risk. As of September 30, ~~2022,~~2023, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on all of our other variable-rate mortgage loans payable and lines of credit and unhedged term ~~loans~~loan by ~~$8,440,000,~~$5,390,000, or ~~10.7%~~3.7% of total annualized interest expense on our mortgage loans payable and lines of credit and term ~~loans.~~loan. See Note 8,7, Mortgage Loans Payable, Net and Note 9,8, Lines of Credit and Term ~~Loans,~~Loan, to our accompanying condensed consolidated financial statements.

~~Table of Contents~~

Other Market Risk

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

Table of Contents

Item 4. Controls and Procedures.

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

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of September 30, ~~2022~~2023 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, ~~2022,~~2023, were effective at the reasonable assurance level.

(b) Changes in internal control over financial reporting. There were no changes in internal control over financial reporting that occurred during the fiscal quarter ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

6662

Table of Contents

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

There were no material changes from the risk factors previously disclosed in our ~~2021~~2022 Annual Report on Form 10-K, as filed with the SEC on March ~~25, 2022~~17, 2023, except as noted below.

The COVID-19 pandemic and economic impact of the pandemic have adversely impacted, and continue to adversely impact, our business and financial results, and the ultimate long-term impact of the pandemic will depend on future developments, which are highly uncertain and cannot be predicted with accuracy.

Our residents, tenants, operating partners and managers, our industry and the U.S. economy continue to be adversely affected by the COVID-19 pandemic and related supply chain disruptions, inflation and labor shortages. While the immediate effects of the COVID-19 pandemic have subsided, the timing and extent of the recovery towards pre-pandemic norms is dependent upon many factors, including the emergence and severity of future COVID-19 variants, the effectiveness and frequency of booster vaccinations, the duration and implications of ongoing or future restrictions and safety measures, the availability of ongoing government financial support to our tenants, operating partners and managers and the overall pace of economic recovery, among others. As an owner and operator of healthcare facilities, we expect to continue to be adversely affected by the long-term effects of the COVID-19 pandemic for some period of time; however, it is not possible to predict the full extent of its future impact on us, our residents, tenants, operating partners and managers, the operations of our properties or the markets in which they are located, or the overall healthcare industry. COVID-19 is particularly dangerous among the senior population and results in heightened risk to our senior housing and SNFs, and we continue to work diligently to maintain aggressive protocols at such facilities as well as actively collaborate with our tenants, operating partners and managers to respond and take action to mitigate the impact of the COVID-19 pandemic.

The COVID-19 pandemic resulted in a significant decline in resident occupancy at our senior housing — leased facilities, SNFs, SHOP and integrated senior health campuses and an increase in COVID-19 related operating expenses. Among other things, due to the shortage of healthcare personnel, the pandemic caused higher labor costs that continue to adversely affect us, including those related to greater reliance on agency staffing and more costly short-term hires. Expenses also increased due to pandemic-related costs (e.g., heightened cleaning and sanitation protocols) and the ongoing inflationary environment. This has, in general, resulted in decreased NOI and margin at these properties relative to pre-pandemic levels. Therefore, our focus continues to be on improving occupancy and managing operating expenses. Resident occupancy for our other properties has been improving, but labor costs continue to remain elevated, and we have had difficulty filling open positions and retaining existing staff. The timing and extent of any further improvement in occupancy or relief from these labor pressures remains unclear. No assurance can be given that werecent improvements in our occupancy, margin or NOI will ~~complete~~be maintained or will continue at the ~~contemplated underwritten primary offering~~same pace or at all, or that our occupancy, margin or NOI will ever return to pre-pandemic levels.

As a result of the federal government’s COVID-19 public health emergency declaration in January 2020 and its COVID-19 national emergency declaration in March 2020, certain federal and state pandemic-related relief measures, such as funding, procedural waivers and/or reimbursement increases, became available to us and some of our ~~common stock or~~tenants and operators. These declarations expired on May 11, 2023 and April 10, 2023, respectively, and certain relief measures have been wound-down and others are being phased out. It is unclear what pandemic-related relief measures, including funding, waiver and reimbursement programs, that we and certain of our tenants and operators benefited from will continue to be available or the extent they will be ~~successful in listing our common stock~~available. The impact on the New York Stock Exchange. Similarly, there can be no assurance that the public offering price per share of common stock in any offering that we may complete or that the subsequent trading price per share of our common stock on the New York Stock Exchange, if we are successful in listing our common stock thereon, will exceed our current NAV per share.

In September 2022, we filed a registration statement with the SEC relating to a proposed primary public offering of shares of our common stock in conjunction with the contemplated listing of our common stock on the New York Stock Exchange, or NYSE. Completing a public offering will require the SEC to declare the registration statement effective, and listing on the NYSE will require approval by the NYSE. Moreover, in addition to required regulatory actions, a decision to proceed with an offering and listing depends on our evaluation of market conditions and other factors, many of which are beyond our control. Accordingly, there can be no assurance as to when, or even if, we will be able to complete the public offering or successfully list our common stock on the NYSE.

We do not know the terms, including the public offering price per share, on which the contemplated underwritten primary public offering of common stock may be completed. The initial public offering price of the common stock sold in any such offering will be discussed between us and the representatives of the underwriters of such offering. Among the factors that we expect to consider in determining the initial public offering price, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses. Thereafter, the market price of shares of our common stock on the NYSE will depend on numerous factors and may be volatile, and an active trading market may not develop or be maintained. There can be no assurance that the public offering price per share of common stock will equal or exceed our NAV per share, which our Board determined on March 24, 2022 to be $9.29 as of December 31, 2021, and the subsequent trading price may be below the public offering price per share.

Prior to suspension of the AHR DRIP in November 2022, the purchase price per share of common stock sold under the AHR DRIP was the most recently published estimated NAV per share. No assurance can be given that the public offering price per share of common stock sold in any underwritten primary offering or that the trading price per share of our common stock on the NYSE will equal or exceed the price at which shares of common stock were sold under the AHR DRIP. The public offering price per share of common stock sold in any underwritten primary offering or the subsequent trading price per share of our common stock on the NYSE could be below our NAV per share and the price per share that investors purchased shares in the AHR DRIP.

~~Shares of Class T common stock and Class I common stock held by current stockholders will not initially be listed on the NYSE.~~

It is contemplated that we will list our common stock sold in the potential underwritten public offering on the NYSE in conjunction with any such offering. Currently, our stockholders own either Class T common stock or Class I common stock, and we do not intend to list our Class T common stock or Class I common stock on the NYSE. However, on the six-month anniversary of any listing of our common stock on the NYSE, outstanding shares of Class T common stock and Class I common stock will automatically be converted into shares of our NYSE-listed common stock. Accordingly, current stockholders will not be able to sell their Class T common stock or Class I common stock on the NYSE until such conversion occurs, and such shares will be less liquid than our listed common stock until such time as the automatic conversion occurs.

~~Our investments in, and acquisitions of, medical office buildings, senior housing,~~individual skilled nursing ~~facilities, hospitals~~facilities’ operators will vary, and ~~other healthcare-related facilities may be unsuccessful~~therefore it is not possible to predict or ~~fail to meet our expectations.~~

Some of our acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and acquired properties might require significant management attention that would otherwise be devoted to our ongoing business. Such expenditures may negatively affect our results of operations. Investments in and acquisitions of medical office buildings, senior housing, skilled nursing facilities,quantify the financial impact it will have on resident occupancies.

6763

Table of Contents

~~hospitals~~Certain provisions of Maryland law may make it more difficult for us to be acquired and ~~other healthcare-related facilities entail risks associated with real estate investments generally, including risks that~~may limit or delay our stockholders’ ability to dispose of their shares of our common stock.

Certain provisions of the ~~investment will not achieve expected returns, that~~Maryland General Corporation Law, or MGCL, such as the cost estimates for necessary property improvements will prove inaccurate or that the tenant or operator will fail to meet performance expectations. Furthermore, there can be no assurance that our anticipated acquisitions and investments, the completion of which is subject to various conditions, will be consummated in accordance with anticipated timing, on anticipated terms, or at all. In addition, we may not be able to identify off-market investment opportunities or investment opportunities that are strategically marketed to a limited number of investors at the rate that we anticipate or at all. We may be unable to obtain or assume financing for acquisitions on favorable terms or at all. Healthcare properties are often highly customizablebusiness combination statute and the ~~development~~control share acquisition statute, are designed to prevent, or ~~redevelopment~~have the effect of ~~such properties may require costly tenant-specific improvements. We may experience delays~~preventing, someone from acquiring control of us. The MGCL prohibits “business combinations” between a Maryland corporation and ~~disruptions to property redevelopment as a result~~an interested stockholder or an affiliate of supply chain issues and construction material and labor shortages. We also may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have a material adverse effect on us. Acquired properties may be located in new markets, either withinan interested stockholder. An “interested stockholder” is defined generally as:

•any person who beneficially owns, directly or outside the United States, where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office, and unfamiliarity with local governmental and permitting procedures. As a result, we cannot provide assurances that we will achieve the economic benefit we expect from acquisitions, investment, development and redevelopment opportunities, which may lead to impairment of such assets.

~~Inaccuracies in our underwriting assumptions and/or delays in the selection, acquisition, expansion or development of real properties may materially and adversely affect us.~~

Inaccuracies in our underwriting assumptions and/or delays we encounter in the selection, acquisition, expansion and development of real properties could materially and adversely affect us. In deciding whether to acquire, expand or develop a particular property, we make assumptions regarding the expected future performance of that property. In particular, we estimate the return on our investment based on expected construction costs, lease up velocity, occupancy, rental rates, operating expenses, capital costs and future competition. If our financial projections with respect to a new property are inaccurate, the property may fail to perform as we expected in analyzing our investment. Our development/expansion and construction projects are vulnerable to the impact of material shortages and inflation. For example, shortages and fluctuations in the price of lumber or in other important raw materials could result in delays in the start or completion of, or increase the cost of, developing oneindirectly, 10.0% or more of ~~our projects. Pricing for labor and raw materials can be affected by various national, regional, local, economic and political factors, including changes to immigration laws that impact~~ the ~~availability of labor or tariffs on imported construction materials.~~

In connection with our development, expansion and related construction activities, we may be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, or satisfactory tax rates, incentives or abatements. Operators of new facilities we construct may need to obtain Medicare and Medicaid certification and enter into Medicare and Medicaid provider agreements and/or third-party payor contracts. In the event that the operator is unable to obtain the necessary licensure, certification, provider agreements or contracts after the completion of construction, there is a risk that we will not be able to earn any revenues on the facility until either the initial operator obtains a license or certification to operate the new facility and the necessary provider agreements or contracts or we find and contract with a new operator that is able to obtain a license to operate the facility for its intended use and the necessary provider agreements or contracts.

One of our growth strategies is to develop new and expand existing clinical healthcare real estate; we may do this directly or indirectly through joint ventures, including through Trilogy Investors, LLC, or Trilogy. In particular, Trilogy is currently engaged in six new developments, with a total estimated cost of approximately $137 million, and 14 expansions, with a total estimated cost of approximately $11 million. Expanding and, in particular, developing properties exposes us to increased risks beyond those associated with investing in stabilized, cash flowing real estate. For example, actual costs could significantly exceed estimates (particularly during periods of rapid inflation), construction and stabilization (i.e., substantial lease-up) could take longer than expected, and occupancy and/or rental rates could prove to be lower than expected or property operating expenses could be higher. Any of these events could materially reduce any returns we achieve, or result in losses, on expansion or development projects. For the developments we have completed to date, the time to stabilization has varied, in some cases significantly, and certain developments have not yet stabilized. There can be no assurance that our current or any future development or expansion projects will be completed in accordance with our budgeted expectations, that they will achieve our underwritten returns or result in yields on cost similar to those achieved on past investments, that they will be stabilized in accordance with our expectations or at all or that, if stabilization is achieved, such stabilization will be maintained. In addition, development and expansion projects undertaken indirectly through Trilogy are primarily overseen by Trilogy Management Services, LLC, or the Trilogy Manager, and we do not have the same level of day-to-day involvement or control over such projects that we do in a project we undertake directly. Accordingly, with respect to projects undertaken through Trilogy, we rely on the development expertisevoting power of the ~~Trilogy Manager.~~corporation’s outstanding voting stock; or

~~Table~~•an affiliate or associate of ~~Contents~~

~~Where properties are acquired~~the corporation who, at any time within the two-year period prior to the ~~start~~date in question, was an interested stockholder.

These prohibitions last for five years after the most recent date on which the interested stockholder became an interested stockholder. Thereafter, any business combination with the interested stockholder or an affiliate of ~~construction or during~~ the ~~early stages~~interested stockholder must be recommended by the corporation’s board and approved by the affirmative vote of ~~construction or when an existing property is expanded, it will typically take several months~~at least 80.0% of the votes entitled to ~~complete construction~~be cast by holders of outstanding shares of voting stock of the corporation and ~~lease available space. Development and~~two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other ~~construction projects,~~than shares held by the interested stockholder. These requirements could have the effect of inhibiting a change in control even if a change in control were in the best interests of our stockholders.

The control share acquisition statute of the MGCL provides that, subject us to ~~uncertainties associated~~certain exceptions, holders of “control shares” of a Maryland corporation (defined as voting shares of stock that, if aggregated with re-zoning for development, environmental concerns of governmental entities and/or community groups and our builder’s ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completion of construction could give tenants the right to terminate preconstruction leases for space at a newly developed project. We may incur additional risks if we make periodic progress payments or other advances to builders prior to completion of construction. These andall other such ~~factors~~shares of stock owned by the acquiror or in respect of which the acquiror can ~~result in increased costs~~exercise or direct voting power (except solely by virtue of a ~~project or loss~~revocable proxy), would entitle the acquiror to exercise voting power in electing directors within specified ranges of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and our return on our investment could suffer or resultvoting power) acquired in a ~~loss.~~

~~Bridge loans involve a greater risk~~“control share acquisition” (defined as the acquisition of ~~loss than traditional investment-grade mortgage loans with fully insured borrowers.~~

Weissued and outstanding control shares) have in the past, and may in the future, acquire bridge loans secured by first lien mortgages on a property to borrowers who are typically seeking short-term capital to be used in an acquisition, construction or rehabilitation of a property, or other short-term liquidity needs. The typical borrower under a bridge loan has usually identified an undervalued asset that has been under-managed and/or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we bear the risk that we may not recover some or all of our initial expenditure.

In addition, borrowers usually use the proceeds of a conventional mortgage to repay a bridge loan. A bridge loan therefore is subject to the risk of a borrower’s inability to obtain permanent financing to repay the bridge loan. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses, and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and non-payment of interest and feesno voting rights except to the extent approved by our stockholders by the affirmative vote of ~~any deficiency between~~at least two-thirds of all the ~~value~~votes entitled to be cast on the matter. Shares of stock owned by the acquiror, by our officers or by our employees who are also our directors are excluded from shares entitled to vote on the matter.

Pursuant to the MGCL, our bylaws contain a provision exempting from the control share acquisition provisions of the ~~mortgage collateral~~MGCL any and all acquisitions by any person of shares of our stock, which eliminates voting rights for certain levels of shares that could exercise control over us, and our Board has adopted a resolution providing that any business combination between us and any other person is exempted from the ~~principal amount and unpaid interest~~business combination statute, provided that such business combination is first approved by our Board. However, if the bylaws provision exempting us from the control share acquisition statute or our Board resolution opting out of the ~~bridge loan. To the extent we suffer such losses with respect to our bridge loans, we may be materially and adversely affected.~~

~~We have substantial indebtedness and may incur additional indebtedness~~business combination statute were repealed in ~~the future, which could materially and adversely affect us.~~

~~We have substantial indebtedness and may incur additional indebtedness~~whole or in ~~the future, which could materially and adversely affect us. Though we anticipate that our overall leverage will not exceed 50.0%~~part at any time, these provisions of the combined fair market value of all of our properties and other real estate-related investments, as determined at the end of each calendar year, our organizational documents do not place a limitation on the amount of leverage that we may incur, and weMGCL could ~~incur leverage substantially in excess of this amount. We expect~~delay or prevent offers to fund a portion of our cash needs, including funding investment activity, with additional indebtedness. Our ability to access additional debt capital and the cost of other terms thereof will be significantly influenced by our creditworthiness and any rating potentially assigned by a rating agency, as well as by general economic and market conditions. Significant secured and unsecured indebtedness adversely affects our creditworthiness and could preventacquire us from achieving an investment grade credit rating, if pursued, or cause a rating agency to lower a rating or to place a rating on a “watchlist” for possible downgrade. Deterioration in our creditworthiness or in any ratings that we may achieve, or the perception that any such deterioration may occur, would adversely affect our ability to access additional debt capital and increase the ~~cost~~difficulty of consummating any ~~debt capital that is available to us and may require us to accept restrictive covenants. A reduction in our access to debt capital, an increase~~such offers, even if such a transaction would be in the ~~cost thereof or our acceptance of restrictive covenants could limit our ability to achieve our business objectives and pursue our growth strategies.~~

We may also incur mortgage debt and other property-level debt on properties that we already own in order to obtain funds to acquire additional properties or make other capital investments. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for U.S. federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90.0%best interests of our ~~annual REIT taxable income to our~~ stockholders. ~~However, we cannot guarantee that we will be able to obtain any such borrowings on favorable terms or at all.~~

If we mortgage a property and there is a shortfall between the cash flows from that property and the cash flows needed to service mortgage debt on that property, our financial results would be negatively affected and the amount of cash available for distributions to stockholders would be reduced. In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. In

~~Table of Contents~~

addition, lenders may have recourse to assets other than those specifically securing the repayment of indebtedness. For tax purposes, a foreclosure on any of our properties will be treated as a disposition of the property, which could cause us to recognize taxable income on foreclosure, without receiving corresponding cash proceeds. We may give full or partial guarantees to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity.

~~A significant amount of debt subjects us to many risks that, if realized, would materially and adversely affect us, including the risk that:~~

• our cash flow from operating activities could become insufficient to make required payments of principal and interest on our debt, which would likely result in (1) acceleration of the debt (and any other debt containing a cross-default or cross-acceleration provision), increasing the likelihood of further distress if refinancing is not available on favorable terms or at all, (2) our inability to borrow undrawn amounts under other existing financing arrangements, even if we have timely made all required payments under such arrangements, further compromising our liquidity and/or (3) the loss of some or all of our assets that are pledged as collateral in connection with our financing arrangements;

•our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that such debt will increase our investment returns in an amount sufficient to offset the associated risks relating to leverage;

• we may be required to dedicate a substantial portion of our cash flow from operating activities to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions and/or other purposes; and

• to the extent the maturity of certain debt occurs prior to the maturity of a related asset pledged or transferred as collateral for such debt, we may not be able to refinance that debt on favorable terms or at all, which may reduce available liquidity and/or cause significant losses to us.

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

~~Recent Sales of Unregistered Securities~~

On August 8, 2022, we granted 12,614 shares of our restricted Class T common stock, or the RSAs, and 4,205 performance-based restricted stock units, or PSUs, to one of our executive officers pursuant to our 2015 Incentive Plan. Such RSAs and PSUs were issued in transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act. The RSAs vest in three equal annual installments beginning on January 1, 2023 and ending on January 1, 2025 (subject to continuous employment through each vesting date) and the PSUs will cliff vest in the first quarter of 2025 (subject to continuous employment through that vesting date), with the amount of vesting depending on meeting certain key performance criteria as further described in the 2015 Incentive Plan.

On August 30, 2022, we granted 7,244 shares of our restricted Class T common stock to one of our independent directors pursuant to our 2015 Incentive Plan in connection with his appointment to our board. Such shares of restricted stock were issued in transactions exempt from registration pursuant to Section 4(a)(2) of the Securities Act and vest on June 15, 2023.

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

Our share repurchase plan allowed for repurchases of shares of our common stock by us when certain criteria were met. Share repurchases were made at the sole discretion of our board. Funds for the repurchase of shares of our common stock originated exclusively from the cumulative proceeds we received from the sale of shares of our common stock pursuant to our DRIP Offerings.

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.

On November 14, 2022, our board suspended our share repurchase plan with respect to all repurchase requests, including repurchases resulting from the death or qualifying disability of stockholders, beginning with share repurchases for the quarter

~~Table of Contents~~

~~ending December 31, 2022. See Note 22, Subsequent Events, to our accompanying condensed consolidated financial statements.~~

~~During the three months ended September 30, 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
July 1, 2022 to July 31, 2022 608,138 $ 9.29 608,138 (1)
August 1, 2022 to August 31, 2022 — $ — — (1)
September 1, 2022 to September 30, 2022 — $ — — (1)
Total 608,138 $ 9.29 608,138

~~___________~~

~~(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.None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~In connection with~~During the ~~filing of a Registration Statement on Form S-11 for a proposed public offering~~period covered by this report, none of our ~~shares~~directors or executive officers has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in item 408 of ~~common stock in conjunction with a contemplated listing~~Regulation S-K under the Securities Exchange Act of ~~our common stock on the New York Stock Exchange,~~1934 as ~~discussed in Note 1, Organization and Description of Business — Public Offerings, to our accompanying condensed consolidated financial statements, our board approved the following:~~

~~Reverse Stock Split~~

On November 10, 2022, our board approved the following charter amendments to effect on November 15, 2022: (i) a one-for-four reverse stock split of each issued and outstanding share of Class T common stock, par value $0.01 per share, and Class I common stock, par value $0.01 per share, which resulted in a par value of $0.04 per share for each class of shares of our common stock; and (ii) a decrease to the par value per share of each share of our common stock outstanding as a result of the reverse stock split from $0.04 to $0.01.

~~Suspension of DRIP~~

~~Suspension of Share Repurchase Plan~~

Additionally on November 14, 2022, our board approved the suspension of our SRP beginning with share repurchase requests for the quarter ending December 31, 2022. All share repurchase requests outstanding as of the quarter ending December 31, 2022, including requests resulting from the death or qualifying disability of stockholders, shall not be processed, shall be considered canceled in full and shall not be considered outstanding repurchase requests.amended).

7164

Table of Contents

Item 6. Exhibits.

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the period ended September 30, ~~2022~~2023 (and are numbered in accordance with Item 601 of Regulation S-K).


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			Amended and Restated 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~~			~~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~~1 8 ~~, 20~~19 February 17, 2023 and incorporated herein by reference)

10.1			~~Transition Services~~Extension Letter to the First Amended and Restated Senior Secured Credit Agreement, dated as of September 5, 2023, by and among ~~American~~Trilogy RER, LLC, certain subsidiaries of Trilogy RER, LLC, Trilogy Investors, LLC, Trilogy Healthcare ~~REIT,~~Holdings, Inc., ~~American Healthcare Opps Holdings,~~Trilogy OpCo, LLC, Trilogy Pro Services, LLC, and ~~Mathieu B. Streiff, dated July 14, 2022~~KeyBank National Association (included as Exhibit ~~10.1~~10.23 to Pre-Effective Amendment No. 2 to our ~~Current Report~~Registration Statement on Form ~~8-K~~S-11 (File No. ~~000-55775)~~333-267464) filed ~~July 18, 2022~~ November 7, 2023 and incorporated herein by reference)

10.2			~~Offer Letter, dated July 14, 2022, between~~Membership Interest Purchase Agreement by and among GAHC3 Trilogy JV, LLC, American Healthcare REIT, Inc., Trilogy Holdings NT-HCI, LLC and ~~Gabriel M. Willhite~~NorthStar Healthcare Income Operating Partnership, LP, dated as of November 3, 2023 (included as Exhibit ~~10.2 to~~10.1 of our Current Report on Form 8-K (File No. 000-55775) filed ~~July 18, 2022~~ November 7, 2023 and incorporated herein by reference)

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

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

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

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

101.INS*			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.

7265

Table of Contents

SIGNATURES

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

American Healthcare REIT, Inc.

(Registrant)

November ~~14, 2022~~13, 2023

By:

/s/ DANNY PROSKY

Date

Danny Prosky

Chief Executive Officer, President and Director

(Principal Executive Officer)

November ~~14, 2022~~13, 2023

By:

/s/ BRIAN S. PEAY

Date

Brian S. Peay

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

7366


	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		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
BALANCE — June 30, 2021	179,658,367	$	1,798,000	$	1,730,002,000	$	(886,983,000)	$	(1,897,000)	$	842,920,000	$	163,551,000	$	1,006,471,000




Amortization of nonvested restricted common stock	—	—		13,000		—		—		13,000		—		13,000





Distributions to noncontrolling interests	—	—		—		—		—		—		(9,005,000)		(9,005,000)


Adjustment to value of redeemable noncontrolling interests	—	—		62,000		—		—		62,000		27,000		89,000
Distributions declared ($0.05 per share)	—	—		—		(9,774,000)		—		(9,774,000)		—		(9,774,000)
Net (loss) income	—	—		—		(5,237,000)		—		(5,237,000)		1,084,000		(4,153,000)		(1)
Other comprehensive loss	—	—		—		—		(207,000)		(207,000)		—		(207,000)
BALANCE — September 30, 2021	179,658,367	$	1,798,000	$	1,730,077,000	$	(901,994,000)	$	(2,104,000)	$	827,777,000	$	155,657,000	$	983,434,000


	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		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 restricted common stock	—	—		66,000		—		—		66,000		—		66,000
Stock based compensation	—	—		—		—		—		—		(14,000)		(14,000)




Distributions to noncontrolling interests	—	—		—		—		—		—		(9,360,000)		(9,360,000)


Adjustment to value of redeemable noncontrolling interests	—	—		(577,000)		—		—		(577,000)		(233,000)		(810,000)
Distributions declared ($0.07 per share)	—	—		—		(12,961,000)		—		(12,961,000)		—		(12,961,000)
Net loss	—	—		—		(24,762,000)		—		(24,762,000)		(3,111,000)		(27,873,000)		(1)
Other comprehensive loss	—	—		—		—		(96,000)		(96,000)		—		(96,000)
BALANCE — September 30, 2021	179,658,367	$	1,798,000	$	1,730,077,000	$	(901,994,000)	$	(2,104,000)	$	827,777,000	$	155,657,000	$	983,434,000


	September 30, 2022		December 31, 2021
Intangible assets subject to amortization:
In-place leases, net of accumulated amortization of $34,036,000 and $28,120,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 7.4 years and 8.2 years as of September 30, 2022 and December 31, 2021, respectively)	$	74,761,000	$	81,538,000
Above-market leases, net of accumulated amortization of $5,419,000 and $2,082,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 9.2 years and 9.7 years as of September 30, 2022 and December 31, 2021, respectively)	31,736,000		35,106,000
Customer relationships, net of accumulated amortization of $747,000 and $635,000 as of September 30, 2022 and December 31, 2021, respectively (with a weighted average remaining life of 13.9 years and 14.7 years as of September 30, 2022 and December 31, 2021, respectively)	2,093,000		2,205,000
Internally developed technology and software, net of accumulated amortization of $399,000 as of December 31, 2021 (with a weighted average remaining life of 0.7 years as of December 31, 2021)	—		70,000
Intangible assets not subject to amortization:
Certificates of need	98,592,000		99,165,000
Trade names	30,787,000		30,787,000
	$	237,969,000	$	248,871,000


	September 30, 2022		December 31, 2021
Total fixed-rate debt	$	805,284,000	$	845,504,000
Total variable-rate debt	371,960,000		270,712,000
Total fixed- and variable-rate debt	1,177,244,000		1,116,216,000
Less: deferred financing costs, net	(8,001,000)		(8,680,000)
Add: premium	267,000		397,000
Less: discount	(10,351,000)		(12,339,000)
Mortgage loans payable, net	$	1,159,159,000	$	1,095,594,000


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Asset management fees(1)	$	5,424,000	$	16,187,000
Property management fees(2)	674,000		2,009,000
Development fees(3)	214,000		854,000
Operating expenses(4)	44,000		160,000
Construction management fees(5)	38,000		118,000
Lease fees(6)	25,000		410,000
Acquisition fees(7)	19,000		1,363,000
	$	6,438,000	$	21,101,000


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



Liabilities:
Warrants	$	—	$	—	$	678,000	$	678,000
Total liabilities at fair value	$	—	$	—	$	678,000	$	678,000


	Payments Due by Period
	2022		2023-2024		2025-2026		Thereafter		Total
Principal payments — fixed-rate debt	$	12,679,000	$	105,743,000	$	183,849,000	$	503,013,000	$	805,284,000
Interest payments — fixed-rate debt	6,183,000		46,192,000		37,958,000		198,377,000		288,710,000
Principal payments — variable-rate debt	111,000		680,794,000		414,469,000		569,521,000		1,664,895,000
Interest payments — variable-rate debt (based on rates in effect as of September 30, 2022)	21,838,000		122,717,000		76,107,000		5,847,000		226,509,000
Ground and other lease obligations	9,137,000		72,225,000		70,201,000		244,392,000		395,955,000
Financing obligations	984,000		5,366,000		3,048,000		16,243,000		25,641,000
Total	$	50,932,000	$	1,033,037,000	$	785,632,000	$	1,537,393,000	$	3,406,994,000


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plan or Program	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2022 to July 31, 2022	608,138	$	9.29	608,138	(1)
August 1, 2022 to August 31, 2022	—	$	—	—	(1)
September 1, 2022 to September 30, 2022	—	$	—	—	(1)
Total	608,138	$	9.29	608,138