GRIFFIN AMERICAN HEALTHCARE REIT III : Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

Written by on November 16, 2020

The usage of the phrases "we," "us" or "our" refers to Griffin-American Healthcare
REIT III, Inc. and its subsidiaries, together with Griffin-American Healthcare REIT
III Holdings, LP, besides the place in any other case famous.
The next dialogue ought to be learn at the side of our accompanying
condensed consolidated monetary statements and notes thereto showing
elsewhere on this Quarterly Report on Type 10-Q and in our 2019 Annual Report on
Type 10-Okay, as filed with the United States Securities and Trade Fee,
or SEC, on March 26, 2020. Such condensed consolidated monetary statements and
data have been ready to mirror our monetary place as of September
30, 2020 and December 31, 2019, along with our outcomes of operations for the
three and 9 months ended September 30, 2020 and 2019 and money flows for the
9 months ended September 30, 2020 and 2019.
Ahead-Wanting Statements
Historic outcomes and traits shouldn't be taken as indicative of future
operations. Our statements contained on this report that aren't historic
factual statements are "forward-looking statements." Precise outcomes might differ
materially from these included within the forward-looking statements.
Ahead-looking statements, that are primarily based on sure assumptions and describe
future plans, methods and expectations, are usually identifiable by use of
the phrases "anticipate," "venture," "might," "will," "ought to," "may," "would,"
"intend," "plan," "anticipate," "estimate," "imagine," "proceed," "predict,"
"potential," "search" and every other comparable and by-product phrases or the
negatives thereof. Our skill to foretell outcomes or the precise impact of future
plans and methods is inherently unsure. Elements which may have a
materials hostile impact on our operations on a consolidated foundation embrace, however
will not be restricted to: adjustments in financial circumstances usually and the actual property
market particularly; the results of the coronavirus, or COVID-19, pandemic,
together with its results on the healthcare trade, senior housing and expert
nursing amenities and the financial system basically; legislative and regulatory
adjustments, together with adjustments to legal guidelines governing the taxation of actual property
funding trusts, or REITs; the supply of capital; adjustments in curiosity
and overseas forex alternate charges; competitors in the actual property trade;
adjustments in accounting rules usually accepted in the USA, or
GAAP, insurance policies or pointers relevant to REITs; the success of our funding
technique; the supply of financing; and our ongoing relationship with
American Healthcare Buyers, LLC, or American Healthcare Buyers, and
Griffin Capital Firm, LLC, or Griffin Capital, or collectively, our
co-sponsors, and their associates. These dangers and uncertainties ought to be
thought-about in evaluating forward-looking statements and undue reliance ought to
not be positioned on such statements. Ahead-looking statements on this Quarterly
Report on Type 10-Q converse solely as of the date on which such statements have been
made, and undue reliance shouldn't be positioned on such statements. We undertake
no obligation to replace any such statements which will turn into unfaithful due to
subsequent occasions. Further data regarding us and our enterprise,
together with extra components that would materially have an effect on our monetary outcomes,
is included herein and in our different filings with the SEC.
Overview and Background
Griffin-American Healthcare REIT III, Inc., a Maryland company, was
integrated on January 11, 2013, and due to this fact, we contemplate that our date of
inception. We have been initially capitalized on January 15, 2013. We spend money on a
diversified portfolio of actual property properties, focusing totally on medical
workplace buildings, hospitals, expert nursing amenities, senior housing and
different healthcare-related amenities. We additionally function healthcare-related
amenities using the construction permitted by the REIT Funding
Diversification and Empowerment Act of 2007, which is usually known as a
"RIDEA" construction (the provisions of the Inside Income Code of 1986, as
amended, or the Code, authorizing the RIDEA construction have been enacted as a part of
the Housing and Financial Restoration Act of 2008). We additionally originate and purchase
secured loans and may originate and purchase different actual estate-related
investments on an rare and opportunistic foundation. We usually search
investments that produce present revenue. We certified to be taxed as a REIT
below the Code for federal revenue tax functions starting with our taxable 12 months
ended December 31, 2014, and we intend to proceed to qualify to be taxed as a
REIT.
On February 26, 2014, we commenced a greatest efforts preliminary public providing, or
our preliminary providing, through which we supplied to the general public as much as $1,900,000,000 in
shares of our frequent inventory. As of April 22, 2015, the deregistration date of our
preliminary providing, we had obtained and accepted subscriptions in our preliminary
providing for 184,930,598 shares of our frequent inventory, or $1,842,618,000,
excluding shares of our frequent inventory issued pursuant to our preliminary distribution
reinvestment plan, or the Preliminary DRIP. As of April 22, 2015, a complete of
$18,511,000 in distributions have been reinvested that resulted in 1,948,563 shares
of our frequent inventory being issued pursuant to the Preliminary DRIP.
On March 25, 2015, we filed a Registration Assertion on Type S-Three below the
Securities Act of 1933, as amended, or the Securities Act, to register a most
of $250,000,000 of extra shares of our frequent inventory to be issued pursuant
to the Preliminary DRIP, or the 2015 DRIP Providing. We commenced providing shares
pursuant to the 2015 DRIP Providing following the deregistration of our preliminary
providing. Efficient October 5, 2016, we amended and restated the Preliminary DRIP,
or the Amended and Restated DRIP, to amend the worth at which shares of our
frequent inventory are issued pursuant to the 2015 DRIP Providing. We
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continued to supply shares of our frequent inventory pursuant to the 2015 DRIP Providing
till the termination and deregistration of such providing on March 29, 2019. As
of March 29, 2019, a complete of $245,396,000 in distributions have been reinvested that
resulted in 26,386,545 shares of our frequent inventory being issued pursuant to the
2015 DRIP Providing.
On January 30, 2019, we filed a Registration Assertion on Type S-Three below the
Securities Act to register a most of $200,000,000 of extra shares of our
frequent inventory to be issued pursuant to the Amended and Restated DRIP, or the 2019
DRIP Providing. We commenced providing shares pursuant to the 2019 DRIP Providing
on April 1, 2019, following the deregistration of the 2015 DRIP Providing. On Might
29, 2020, in consideration of the affect the COVID-19 pandemic has had on the
United States, globally and our enterprise operations, our board of administrators, or
our board, licensed the suspension of the Amended and Restated DRIP till such
time, if any, as our board determines to authorize new distributions and to
reinstate such plan. Such suspension was efficient upon the completion of all
shares issued with respect to distributions payable to stockholders of document on
or previous to the shut of enterprise on Might 31, 2020. As of September 30, 2020, a
complete of $63,105,000 in distributions have been reinvested that resulted in 6,724,348
shares of frequent inventory being issued pursuant to the 2019 DRIP Providing. We
collectively seek advice from the Preliminary DRIP portion of our preliminary providing, the 2015
DRIP Providing and the 2019 DRIP Providing as our DRIP Choices. See the
"Liquidity and Capital Assets" part beneath for an extra dialogue.
The COVID-19 pandemic is dramatically impacting the USA and has
resulted in an aggressive worldwide effort to comprise the unfold of the virus.
These efforts have considerably and adversely disrupted financial markets and
impacted industrial exercise worldwide, together with markets through which we personal and/or
function properties, and the extended financial affect stays unsure. In
addition, the repeatedly evolving nature of the COVID-19 pandemic makes it
troublesome to establish the long-term affect it'll have on actual property markets
and our portfolio of investments. Appreciable uncertainty nonetheless surrounds the
COVID-19 pandemic and its results on the inhabitants, in addition to the
effectiveness of any responses taken on a nationwide and native stage by authorities
and public well being authorities and companies to comprise and fight the outbreak
and unfold of the virus. Specifically, government-imposed enterprise closures and
re-opening restrictions have dramatically impacted the operations of our actual
property investments and our tenants throughout the nation, comparable to creating declines
in resident occupancy. Additional, our senior housing - RIDEA amenities and
built-in senior well being campuses have additionally skilled dramatic will increase and
might proceed to expertise will increase in prices to look after residents,
notably labor prices to take care of staffing ranges to look after the aged
inhabitants throughout this disaster, prices of COVID-19 testing of staff and
residents and prices to acquire the amount of private protecting tools, or
PPE, and different provides required.
We now have taken actions to strengthen our stability sheet and protect liquidity in
response to the COVID-19 pandemic dangers. Since March 2020, we've postponed
non-essential capital expenditures. As well as, in March 2020, we decreased
stockholder distributions and partially suspended our share repurchase plan with
respect to all repurchase requests aside from repurchases ensuing from the
loss of life or qualifying incapacity of stockholders. In response to the continued
uncertainty and hostile results of the COVID-19 pandemic on our operations, in
Might 2020, we suspended all distribution funds, the Amended and Restated DRIP
and our share repurchase plan for all stockholders to additional preserve and
protect liquidity. Moreover, in an effort to extend our liquidity, our
advisor agreed to defer 50.0% of the asset administration charges that it could
in any other case be entitled to obtain for companies carried out by our advisor or its
associates from June 1, 2020 to November 30, 2020. See Notice 14, Associated Social gathering
Transactions, to our accompanying condensed consolidated monetary statements
for an extra dialogue. We imagine that the long-term stability of our
portfolio will return as soon as the virus has been managed. In states the place
lockdown orders have been lifted, the downward traits in our portfolio seem to
have considerably moderated, however we've not but witnessed a major rebound. We
are repeatedly monitoring the affect of the COVID-19 pandemic on our enterprise,
residents, tenants, working companions, managers, portfolio of investments and
on the USA and world economies. The extended period and affect of
the COVID-19 pandemic has materially disrupted, and will proceed to materially
disrupt, our enterprise operations and affect our monetary efficiency. See the
"Elements Which Might Affect Outcomes of Operations," "Outcomes of Operations" and
"Liquidity and Capital Assets" sections beneath for an extra dialogue.
On October 3, 2019, our board, on the advice of the audit committee of
our board, comprised solely of unbiased administrators, unanimously permitted and
established an up to date estimated per share web asset worth, or NAV, of our
frequent inventory of $9.40. We beforehand offered an up to date estimated per share NAV
yearly to help broker-dealers in reference to their obligations below
Monetary Trade Regulatory Authority, or FINRA, Rule 2231 with respect to
buyer account statements. The up to date estimated per share NAV was primarily based on
the estimated worth of our property much less the estimated worth of our liabilities,
divided by the variety of shares excellent on a completely diluted foundation, calculated
as of June 30, 2019. The valuation was carried out in accordance with the
methodology offered in Follow Guideline 2013-01, Valuations of Publicly
Registered Non-Listed REITs, or the Follow Guideline, issued by the Institute
for Portfolio Options, or the IPA, in April 2013, along with steering
from the SEC. See our Present Report on Type 8-Okay filed with the SEC on
October 4, 2019 for extra data on the methodologies and assumptions used
to find out, and the constraints and dangers of, our up to date estimated per share
NAV. Right now, the audit committee of our board continues to deem it prudent
to delay the dedication of our annual estimated per share NAV till someday
sooner or later once we are in a position to extra clearly discern the short- and long-term
ramifications on valuation assumptions and methodologies and ensuing
healthcare actual property asset values
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as a result of impacts of the COVID-19 pandemic. As such, we didn't publish an
up to date estimated per share NAV of our frequent inventory in October 2020. See Notice
13, Fairness - Distribution Reinvestment Plan, to our accompanying condensed
consolidated monetary statements.
We conduct considerably all of our operations via Griffin-American
Healthcare REIT III Holdings, LP, or our working partnership. We're
externally suggested by Griffin-American Healthcare REIT III Advisor, LLC, or our
advisor, pursuant to an advisory settlement, or the Advisory Settlement, between
us and our advisor. The Advisory Settlement was efficient as of February 26, 2014
and had a one-year preliminary time period, topic to successive one-year renewals upon
the mutual consent of the events. The Advisory Settlement was final renewed
pursuant to the mutual consent of the events on February 11, 2020 and expires
on February 26, 2021. Our advisor makes use of its greatest efforts, topic to the
oversight, overview and approval of our board, to, amongst different issues, analysis,
determine, overview and make investments in and tendencies of properties and
securities on our behalf in keeping with our funding insurance policies and targets.
Our advisor performs its duties and obligations below the Advisory
Settlement as our fiduciary. Our advisor is 75.0% owned and managed by wholly
owned subsidiaries of American Healthcare Buyers, and 25.0% owned by a completely
owned subsidiary of Griffin Capital. American Healthcare Buyers is 47.1%
owned by AHI Group Holdings, LLC, or AHI Group Holdings, 45.1% not directly owned
by Colony Capital, Inc. (NYSE: CLNY), or Colony Capital, and seven.8% owned by James
F. Flaherty III, a former companion of Colony Capital. We aren't affiliated with
Griffin Capital, Griffin Capital Securities, LLC, the vendor supervisor for our
preliminary providing, Colony Capital, or Mr. Flaherty; nonetheless, we're affiliated
with our advisor, American Healthcare Buyers and AHI Group Holdings.
We at present function via six reportable enterprise segments: medical workplace
buildings, hospitals, expert nursing amenities, senior housing, senior housing
- RIDEA and built-in senior well being campuses. As of September 30, 2020, we
owned and/or operated 97 properties, comprising 101 buildings, and 118
built-in senior well being campuses together with accomplished improvement initiatives, or
roughly 13,880,000 sq. toes of gross leasable space, or GLA, for an
mixture contract buy value of $3,031,654,000. As well as, as of
September 30, 2020, we additionally owned an actual estate-related funding bought for
$60,429,000.
Important Accounting Insurance policies
The entire itemizing of our Important Accounting Insurance policies was beforehand
disclosed in our 2019 Annual Report on Type 10-Okay, as filed with the SEC on
March 26, 2020, and there have been no materials adjustments to our Important
Accounting Insurance policies as disclosed therein, besides as famous beneath or included
inside Notice 2, Abstract of Important Accounting Insurance policies, to our accompanying
condensed consolidated monetary statements.
Interim Unaudited Monetary Knowledge
Our accompanying condensed consolidated monetary statements have been ready
by us in accordance with GAAP at the side of the foundations and rules of
the SEC. Sure data and footnote disclosures required for annual
monetary statements have been condensed or excluded pursuant to SEC guidelines and
rules. Accordingly, our accompanying condensed consolidated monetary
statements don't embrace all the data and footnotes required by GAAP
for full monetary statements. Our accompanying condensed consolidated
monetary statements mirror all changes, that are, in our view, of a
regular recurring nature and obligatory for a good presentation of our monetary
place, outcomes of operations and money flows for the interim interval. Interim
outcomes of operations will not be essentially indicative of the outcomes to be
anticipated for the total 12 months; such full 12 months outcomes could also be much less favorable. Our
accompanying condensed consolidated monetary statements ought to be learn in
conjunction with our audited consolidated monetary statements and the notes
thereto included in our 2019 Annual Report on Type 10-Okay, as filed with the SEC
on March 26, 2020.
Just lately Issued Accounting Pronouncements
For a dialogue of not too long ago issued accounting pronouncements, see Notice 2,
Abstract of Important Accounting Insurance policies - Just lately Issued Accounting
Pronouncements, to our accompanying condensed consolidated monetary statements.
Acquisitions and Tendencies in 2020
For a dialogue of our acquisitions and tendencies of investments in 2020,
see Notice 2, Abstract of Important Accounting Insurance policies - Impairment of
Lengthy-Lived Belongings, Notice 2, Abstract of Important Accounting Insurance policies -
Properties Held for Sale and Notice 3, Actual Property Investments, Internet, to our
accompanying condensed consolidated monetary statements.
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Elements Which Might Affect Outcomes of Operations
As a result of ongoing COVID-19 pandemic in the USA and globally, our
residents, tenants, working companions and managers have been materially
impacted. The scenario continues to current a significant problem for us as an
proprietor and operator of healthcare amenities, because the affect of the virus
continues to end in a large pressure all through the healthcare system.
COVID-19 is especially harmful among the many senior inhabitants and ends in
heightened danger to our senior housing and expert nursing amenities, and we
proceed to work diligently to implement aggressive protocols at such amenities
in keeping with the Facilities for Illness Management and Prevention and Facilities for
Medicare and Medicaid Providers pointers to restrict the publicity and unfold of
COVID-19.
Every sort of actual property asset we personal has been impacted by COVID-19 to various
levels. The COVID-19 pandemic has negatively impacted the companies of our
medical workplace tenants and their skill to pay hire on a well timed foundation. Within the
early months of the pandemic when lots of the states had applied "keep at
residence" orders, in extra of 50.0% of our tenants in medical workplace buildings had
been labeled by state governments as "non-essential" and have been ordered to
both shut down fully, or considerably restrict hours of operations, which
prevented or considerably restricted our tenants from seeing sufferers of their
workplaces and thereby creating unprecedented income strain on such tenants.
Considerably all of our doctor practices and different medical service suppliers
of non-essential and elective companies in our medical workplace buildings are actually
open. Nonetheless, the variety of sufferers returning to such workplaces varies throughout
follow sorts and geographic markets as folks proceed to delay workplace visits
indefinitely as a result of fears or uncertainties related to COVID-19 regardless of
the supply of companies. Moreover, whereas restrictions have been at
least partially lifted in lots of states, there stays a danger of reclosures in
states the place an infection charges proceed to rise, which can put extra strain
on our operations.
For our managed senior housing - RIDEA amenities and built-in senior well being
campuses, primarily based on preliminary data obtainable to administration as of October
31, 2020, we've skilled an approximate 13.3% decline in our resident
occupancies since February 2020 largely as a consequence of a decline in move-ins of
potential residents due to shelter-in-place, re-opening and different
quarantine restrictions imposed by authorities rules and pointers. In
addition, we proceed to expertise challenges in attracting potential
residents to such amenities and campuses as a result of they're selecting to delay
transferring into communities till the menace posed by the virus has declined.
Additional, the elimination of elective hospital procedures, which drive post-acute
expert nursing admissions, has impacted our resident occupancy ranges of our
built-in senior well being campuses. Our amenities have adopted totally different
phased-in approaches to facility operations relying in the marketplace through which
they function, which vary from stringent restrictions of important guests and
frequent testing of employees and residents to permitting screened guests and
restricted actions. On the similar time that our managed senior housing - RIDEA
amenities and built-in senior well being campuses are going through a discount in
income related to decrease resident occupancies, they skilled as much as a
30.0% improve in prices to look after residents, notably elevated labor
prices to take care of staffing ranges to look after the aged inhabitants throughout this
disaster, prices of testing staff and residents for COVID-19 and prices to
procure the amount of PPE and different provides required to take care of well being and
security measures and protocols. Such prices have begun to reasonable considerably throughout
the third quarter of 2020. Our leased, non-RIDEA senior housing and expert
nursing facility tenants have additionally skilled and will proceed to expertise
comparable pressures associated to occupancy declines and expense will increase, which can
affect their skill to pay hire and have an hostile impact on our operations.
Subsequently, our speedy focus continues to be on resident occupancy restoration
and working expense administration.
The impacts of the COVID-19 pandemic have been vital, quickly evolving and
might proceed into the long run. Managers of our RIDEA properties proceed to
consider their choices for monetary help, comparable to using applications
inside the Coronavirus Support, Reduction, and Financial Safety Act, or the CARES Act,
handed by the federal authorities on March 27, 2020, in addition to different state and
native authorities aid applications. The CARES Act contains a number of alternatives
for speedy money aid within the type of grants, tax advantages and Medicare
reimbursement applications. A few of our tenants inside our non-RIDEA properties have
sought monetary help from the CARES Act via applications such because the
Payroll Safety Program and deferral of payroll tax funds. Nonetheless, these
authorities help applications will not be anticipated to completely offset the damaging
monetary affect of the COVID-19 pandemic, and there will be no assurance that
these applications will proceed or the extent to which they are going to be expanded.
Subsequently, the final word affect of such aid from the CARES Act and different
enacted and future laws and regulation, together with the extent to which
aid funds from such applications will present significant assist for misplaced income
and growing prices, is unsure.
The knowledge on this Quarterly Report on Type 10-Q relies on knowledge at present
obtainable to us and can seemingly change because the COVID-19 pandemic progresses. As
such, we proceed to intently monitor COVID-19 developments and are repeatedly
assessing the implications to our enterprise, residents, tenants, working
companions, managers and our portfolio of investments. We anticipate that the
government-imposed or self-imposed lockdowns and restrictions have created
pent-up demand for medical doctors' visits, move-ins into senior housing amenities and
elective procedures, which can finally drive expert nursing occupancies
increased; nonetheless, we can't predict with affordable certainty when such demand
will return to pre-COVID-19 ranges. The COVID-19 pandemic has had, and will
proceed to have, an hostile impact on our enterprise, and
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due to this fact, we're unable to foretell the total extent or nature of the long run
affect to our monetary situation and outcomes of operations at the moment. We
anticipate the traits mentioned above with respect to the affect of the COVID-19
pandemic to proceed. Thus, the lasting affect of the COVID-19 pandemic on our
future outcomes may very well be vital and can largely depend upon future
developments, together with the period of the disaster and the success of efforts to
comprise it, that are extremely unsure and can't be predicted with confidence
at the moment. See the "Outcomes of Operations" and "Liquidity and Capital
Assets" sections beneath, in addition to Half II, Merchandise 1A, Danger Elements, of this
Quarterly Report on Type 10-Q for an extra dialogue.
Scheduled Lease Expirations
Excluding our senior housing - RIDEA amenities and our built-in senior well being
campuses, as of September 30, 2020, our properties have been 91.5% leased and through
the rest of 2020, 2.4% of the leased GLA is scheduled to run out. Our
leasing technique focuses on negotiating renewals for leases scheduled to run out
through the subsequent twelve months. Sooner or later, if we're unable to barter
renewals, we'll attempt to determine new tenants or collaborate with present
tenants who're in search of extra area to occupy. As of September 30, 2020,
our remaining weighted common lease time period was 7.Three years, excluding our senior
housing - RIDEA amenities and our built-in senior well being campuses.
Our mixed senior housing - RIDEA amenities and built-in senior well being
campuses have been 76.1% and 78.4% leased, respectively, for the three and 9
months ended September 30, 2020. Considerably all of our leases with residents
at such properties are for a time period of 1 12 months or much less.
Outcomes of Operations
Comparability of Three and 9 Months Ended September 30, 2020 and 2019
Our main sources of income embrace hire and resident charges and companies from
our properties. Our main bills embrace property working bills and
rental bills. Basically, and below a standard working atmosphere, we anticipate
quantities associated to our portfolio of working properties to extend within the
future primarily based on ongoing property expansions and developments.
We segregate our operations into reporting segments with a purpose to assess the
efficiency of our enterprise in the identical method that administration evaluations our
efficiency and makes working selections. As of September 30, 2020, we operated
via six reportable enterprise segments: medical workplace buildings, hospitals,
expert nursing amenities, senior housing, senior housing - RIDEA and
built-in senior well being campuses.
The COVID-19 pandemic has had a major affect on the operations of our actual
property portfolio. Though we've skilled a delay in receiving hire
funds from our tenants, as of September 30, 2020, we've collected 100% of
contractual hire from our leased, non-RIDEA senior housing and expert nursing
facility tenants. As well as, considerably all the contractual hire via
September 2020 from our medical workplace constructing tenants has been obtained.
Nonetheless, given the numerous uncertainty of the affect of the COVID-19
pandemic, we're unable to foretell the affect it'll have on such tenants'
continued skill to pay hire. We obtained lease concession requests from some
of our medical workplace constructing tenants primarily through the second quarter of
2020 that resulted in an insignificant variety of concessions granted, comparable to in
the type of hire abatements, at the side of a lease time period extension for up
to seven years, or hire fee deferrals requiring compensation inside one 12 months.
Such lease concessions granted shouldn't have a fabric affect to our condensed
consolidated monetary statements. No contractual hire for our medical workplace
constructing tenants was forgiven.
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Besides the place in any other case famous, the adjustments in our consolidated outcomes of
operations for 2020 as in comparison with 2019 are primarily as a result of disruption to
our regular operations because of the COVID-19 pandemic and grant revenue
obtained, in addition to the event and growth of our portfolio of
built-in senior well being campuses. As well as, there are adjustments in our outcomes
of operations by reporting section as a result of transitioning of the operations of
seven senior housing amenities inside North Carolina ALF Portfolio to a RIDEA
construction on December 1, 2019. As of September 30, 2020 and 2019, we owned
and/or operated the next forms of properties:
                                                                                             September 30,
                                                                2020                                                              2019
                                        Variety of              Mixture                                  Variety of              Mixture
                                       Buildings/               Contract               Leased            Buildings/               Contract               Leased
                                        Campuses             Buy Value              %                Campuses             Buy Value              %
Built-in senior well being campuses          118             $ 1,582,563,000                 (1)                     113       $ 1,528,470,000                 (1)
Medical workplace buildings                    63                 657,885,000               88.6  %                    64           664,135,000               89.1  %
Senior housing - RIDEA                      20                 433,891,000                 (2)                      13           320,035,000                 (2)
Senior housing                               9                  89,535,000                100  %              16                 203,391,000                100  %
Expert nursing amenities                   7                 128,000,000                100  %                     7           128,000,000                100  %
Hospitals                                    2                 139,780,000                100  %               2                 139,780,000                100  %
Whole/weighted common(3)                  219             $ 3,031,654,000               91.5  %             215             $ 2,983,811,000               92.4  %


___________
(1)For the three months ended September 30, 2020 and 2019, the leased proportion
for the resident items of our built-in senior well being campuses was 76.8% and
86.9%, respectively. For the 9 months ended September 30, 2020 and 2019, the
leased proportion for the resident items of our built-in senior well being
campuses was 79.0% and 86.1%, respectively.
(2)For the three months ended September 30, 2020 and 2019, the leased proportion
for the resident items of our senior housing - RIDEA amenities was 72.6% and
82.3%, respectively. For the 9 months ended September 30, 2020 and 2019, the
leased proportion for the resident items of our senior housing - RIDEA
amenities was 75.5% and 82.8%, respectively.
(3)Leased proportion excludes our senior housing - RIDEA amenities and
built-in senior well being campuses.
Revenues and Grant Revenue
The quantity of revenues generated by our properties relies upon principally on our
skill to take care of the occupancy charges of at present leased area and to lease
obtainable area on the then present rental charges. Revenues and grant revenue by
reportable section consisted of the next for the intervals then ended:
                                                      Three Months Ended September 30,                       9 Months Ended September 30,
                                                        2020                        2019                       2020                       2019
Resident Charges and Providers
Built-in senior well being campuses             $     242,714,000$ 257,048,000$     743,340,000$ 764,803,000
Senior housing - RIDEA                               21,217,000                  16,752,000                 65,134,000                 49,751,000
Whole resident charges and companies                    263,931,000                 273,800,000                808,474,000                814,554,000
Actual Property Income
Medical workplace buildings                             19,675,000                  19,890,000                 58,853,000                 60,548,000
Expert nursing amenities                            3,676,000                   2,672,000                 12,415,000                  9,998,000
Senior housing                                        4,245,000                   2,601,000                 11,038,000                 14,184,000
Hospitals                                             2,737,000                   2,799,000                  8,258,000                  8,467,000
Whole actual property income                            30,333,000                  27,962,000                 90,564,000                 93,197,000
Grant Revenue
Built-in senior well being campuses                       740,000                           -                 30,730,000                          -
Whole grant revenue                                      740,000                           -                 30,730,000                          -
Whole revenues and grant revenue               $     295,004,000$ 301,762,000$     929,768,000$ 907,751,000


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For the three and 9 months ended September 30, 2020 and 2019, resident charges
and companies primarily consisted of rental charges associated to resident leases,
prolonged well being care charges and different ancillary companies. For the three and 9
months ended September 30, 2020 and 2019, actual property income primarily
consisted of base hire and expense recoveries. For the three and 9 months
ended September 30, 2020, we acknowledged $740,000 and $30,730,000, respectively,
of grant revenue at our built-in senior well being campuses associated to authorities
grants obtained via CARES Act financial aid applications. An extra
$20,735,000 of such authorities grants have been obtained, which we've deferred and
anticipate to acknowledge as grant revenue via mid-year 2021. See Notice 2,
Abstract of Important Accounting Insurance policies - Authorities Grants, to our
accompanying condensed consolidated monetary statements for an extra
dialogue.
Property Working Bills and Rental Bills
Property working bills and property working bills as a proportion of
resident charges and companies income and grant revenue, in addition to rental bills
and rental bills as a proportion of actual property revenues, by reportable
section consisted of the next for the intervals then ended:
                                                   Three Months Ended September 30,                                                   9 Months Ended September 30,
                                              2020                                      2019                                    2020                                     2019
Property Working Bills
Built-in senior well being
campuses                     $    225,199,000               92.5  %       $ 230,349,000            89.6  %       $    683,332,000            88.3  %       $ 681,996,000            89.2  %
Senior housing - RIDEA             15,790,000               74.4  %          11,509,000            68.7  %             47,588,000            73.1  %          34,704,000            69.8  %
Whole property working
bills                     $    240,989,000               91.1  %       $ 241,858,000            88.3  %       $    730,920,000            87.1  %       $ 716,700,000            88.0  %

Rental Bills
Medical workplace buildings     $      7,304,000               37.1  %       $   8,140,000            40.9  %       $     22,536,000            38.3  %       $  23,553,000            38.9  %
Expert nursing amenities            369,000               10.0  %             346,000            12.9  %              1,195,000             9.6  %           1,076,000            10.8  %
Hospitals                             113,000                4.1  %             149,000             5.3  %                329,000             4.0  %             434,000             5.1  %
Senior housing                          9,000                0.2  %             553,000            21.3  %                 52,000             0.5  %             776,000             5.5  %
Whole rental bills        $      7,795,000               25.7  %       $   9,188,000            32.9  %       $     24,112,000            26.6  %       $  25,839,000            27.7  %


For the three months ended September 30, 2020 and 2019, property working
bills primarily consisted of administration and advantages expense of
$209,944,000 and $212,791,000, respectively. For the 9 months ended September
30, 2020 and 2019, property working bills primarily consisted of
administration and advantages expense of $635,972,000 and $627,617,000,
respectively. General, property working bills have considerably elevated
as a consequence of labor prices, the only largest expense line merchandise for expert nursing and
senior housing amenities, in addition to the prices of COVID-19 testing of staff
and residents and the prices of PPE and different provides required because of
the COVID-19 pandemic. Built-in senior well being campuses and senior housing -
RIDEA amenities sometimes have the next proportion of direct working bills
to income than medical workplace buildings, hospitals, and leased, non-RIDEA
senior housing and expert nursing amenities as a result of nature of RIDEA
amenities the place we conduct day-to-day operations. We anticipate that the
proportion of working bills to income might fluctuate primarily based on the forms of
property we personal and/or function sooner or later.
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Normal and Administrative
Normal and administrative consisted of the next for the intervals then
ended:
                                                    Three Months Ended September 30,                 9 Months Ended September 30,
                                                        2020                    2019                    2020                    2019
Asset administration and property administration
oversight charges - associates                     $       5,518,000

$ 5,021,000$ 16,391,000$ 15,018,000
Skilled and authorized charges

                               501,000            1,226,000                  1,901,000             2,391,000
Switch agent companies                                   298,000              348,000                    928,000             1,005,000
Inventory compensation expense                                195,000              195,000                    585,000               585,000
Financial institution costs                                              153,000               72,000                    431,000               174,000
Administrators' and officers' legal responsibility insurance coverage               82,000               78,000                    247,000               236,000
Board of administrators charges                                    76,000               68,000                    230,000               208,000
Postage and supply                                       69,000               14,000                    231,000               155,000
Restricted inventory compensation                              28,000               72,000                    128,000               172,000
Franchise taxes                                            22,000               56,000                    168,000               254,000
Unhealthy debt expense                                                -              473,000                          -               745,000
Different                                                      27,000               52,000                     84,000               161,000

Whole                                           $       6,969,000$ 7,675,000$      21,324,000$ 21,104,000


Depreciation and Amortization
For the three months ended September 30, 2020 and 2019, depreciation and
amortization was $24,591,000 and $36,778,000, respectively, which primarily
consisted of depreciation on our working properties of $22,699,000 and
$25,062,000, respectively, and amortization on our recognized intangible property
of $1,456,000 and $11,435,000, respectively.
For the 9 months ended September 30, 2020 and 2019, depreciation and
amortization was $74,250,000 and $87,149,000, respectively, which primarily
consisted of depreciation on our working properties of $67,959,000 and
$68,796,000, respectively, and amortization of our recognized intangible property
of $5,120,000 and $17,530,000, respectively.
The lower in depreciation and amortization expense for the three and 9
months ended September 30, 2020, in comparison with the corresponding prior 12 months
intervals, is primarily as a result of September 2019 write-off of tenant enhancements
and in-place leases in reference to the termination of a administration companies
settlement with an operator in 2019.
Curiosity Expense
Curiosity expense, together with achieve or loss in honest worth of by-product monetary
devices, consisted of the next for the intervals then ended:
                                                          Three Months Ended September 30,                 9 Months Ended September 30,
                                                             2020                    2019                     2020                    2019
Curiosity expense:
Strains of credit score and time period loans and by-product
monetary devices                                $       7,448,000

$ 8,757,000$ 23,709,000$ 27,975,000
Mortgage loans payable

                                       8,044,000             8,383,000                 24,502,000            24,254,000
Amortization of deferred financing prices:
Strains of credit score and time period loans                                 955,000               882,000                  2,488,000             2,882,000
Mortgage loans payable                                         277,000               483,000                    913,000             1,122,000
Amortization of debt low cost/premium, web                     206,000               164,000                    621,000               502,000
(Achieve) loss in honest worth of by-product monetary
devices                                                 (1,763,000)            1,169,000                  5,671,000             5,846,000
Loss on extinguishment of debt                                       -             2,179,000                          -             2,179,000
Curiosity on finance lease liabilities                           82,000               146,000                    413,000               277,000
Curiosity expense on financing obligations and different
liabilities                                                    217,000                52,000                    769,000               474,000
Whole                                                $      15,466,000$ 22,215,000$      59,086,000$ 65,511,000


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The lower in complete curiosity expense for the three and 9 months ended
September 30, 2020, as in comparison with the three and 9 months ended September 30,
2019, was primarily associated to the lower in curiosity expense because of
the termination of an settlement for our earlier credit score facility, the
extinguishment of a mortgage mortgage payable throughout 2019 and reduce in curiosity
charges on our variable charge debt, partially offset by the honest worth changes
on our by-product monetary devices, which was as a consequence of a lower in London
Inter-bank Supplied Price, or LIBOR, charges relative to our rate of interest swap
contracts.
Impairment of Actual Property Investments
For the 9 months ended September 30, 2020, we acknowledged an impairment cost
of $3,711,000 on one expert nursing facility inside Fox Grape SNF Portfolio,
$1,905,000 on one medical workplace constructing inside Mount Olympia MOB Portfolio and
$2,719,000 on two built-in senior well being campuses inside Trilogy Buyers,
LLC, or Trilogy, for an mixture impairment cost of $8,335,000. We
subsequently disposed of such impaired medical workplace constructing in July 2020 and
acknowledged a web achieve on sale of $15,000. See Notice 2, Abstract of Important
Accounting Insurance policies - Impairment of Lengthy-Lived Belongings and Notice 2, Abstract of
Important Accounting Insurance policies - Properties Held for Sale, to our accompanying
condensed consolidated monetary statements for an extra dialogue. No
impairment costs on actual property investments have been acknowledged for each the three
and 9 months ended September 30, 2019.
Liquidity and Capital Assets
Our sources of funds primarily include working money flows and borrowings.
Within the regular course of enterprise, our principal calls for for funds are for
fee of working bills, capital enchancment expenditures, improvement of
actual property investments, curiosity on our indebtedness, distributions to our
stockholders and repurchases of our frequent inventory. We estimate that we are going to
require roughly $13,493,000 to pay curiosity on our excellent
indebtedness for the rest of 2020, primarily based on rates of interest in impact as of
September 30, 2020, and that we are going to require $3,381,000 to pay principal on our
excellent indebtedness for the rest of 2020. We additionally require sources to
make sure funds to our advisor and its associates. See Notice 14, Associated
Social gathering Transactions, to our accompanying condensed consolidated monetary
statements for an extra dialogue of our funds to our advisor and its
associates. Typically, money wants for such objects will likely be met from operations and
borrowings. Our complete capability to pay working bills, capital enchancment
expenditures, curiosity, distributions and repurchases, in addition to purchase and/or
develop actual property investments, is a perform of our present money place, our
borrowing capability on our strains of credit score, in addition to any future indebtedness
that we might incur.
As a result of affect the COVID-19 pandemic has had on the USA and
globally, and the continued uncertainty of the severity and period of the
COVID-19 pandemic and its results, our board has taken steps since March 2020 to
shield our capital and maximize our liquidity in an effort to strengthen our
long-term monetary prospects. Consequently, on March 31, 2020, our board
permitted a day by day distribution charge for April and Might 2020 equal to $0.000821918
per share of our frequent inventory, which was equal to an annualized distribution
charge of $0.30 per share, a lower from the annualized charge of $0.60 per share
beforehand paid by us. On March 31, 2020, our board additionally partially suspended our
share repurchase plan with respect to all repurchase requests aside from
repurchases ensuing from the loss of life or qualifying incapacity of stockholders.
Repurchase requests ensuing from the loss of life or qualifying incapacity of
stockholders weren't suspended, however remained topic to all phrases and
circumstances of our share repurchase plan, together with our board's discretion to
decide whether or not we had ample funds obtainable to repurchase any shares.
Moreover, in response to the continued uncertainty of the COVID-19 pandemic
and its affect to our portfolio of investments, to additional maximize our
liquidity, on Might 29, 2020, our board permitted the suspension of all stockholder
distributions and the Amended and Restated DRIP till such time, if any, as our
board determines to authorize new distributions and to reinstate such plan. Such
suspensions have been efficient upon the completion of all shares issued with respect
to distributions payable to stockholders of document on or previous to the shut of
enterprise on Might 31, 2020. See the "Distributions" part beneath for an extra
dialogue. Moreover, on Might 29, 2020, our board permitted the suspension of
our share repurchase plan with respect to all share repurchase requests obtained
after Might 31, 2020, together with repurchases ensuing from loss of life or qualifying
incapacity of stockholders. Our board will proceed to evaluate our distribution
coverage in mild of our operations and future capital wants and shall decide
if and when it's in the perfect curiosity of our firm and our stockholders to
reinstate distributions, the Amended and Restated DRIP or our share repurchase
plan. Along with the actions taken by our board described above, our advisor
agreed to defer 50.0% of the asset administration charges that it could in any other case be
entitled to obtain for companies carried out by our advisor or its associates from
June 1, 2020 to November 30, 2020. See Notice 14, Associated Social gathering Transactions, to
our accompanying condensed consolidated monetary statements for an extra
dialogue of such deferred asset administration charges.
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As of September 30, 2020, our money readily available was $133,332,000 and we had
$134,366,000 obtainable on our strains of credit score. Such money readily available included
$12,547,000 of presidency grants and $50,910,000 in Medicare advance funds
obtained by Trilogy, of which we at present personal 67.6%, via financial stimulus
applications of the CARES Act. See Notice 2, Abstract of Important Accounting
Insurance policies - Authorities Grants and Notice 11, Commitments and Contingencies - Impression
of the COVID-19 Pandemic, to our accompanying condensed consolidated monetary
statements for an extra dialogue of such aid funds. We imagine that such
proceeds of money and obtainable strains of credit score will likely be ample to fulfill our
money necessities for the foreseeable future, and we don't anticipate a must
increase funds from different sources inside the subsequent 12 months.
A capital plan for every funding is established upon acquisition that
contemplates the estimated capital wants of that funding, together with prices of
refurbishment, tenant enhancements or different main capital expenditures. The
capital plan additionally units forth the anticipated sources of the mandatory capital,
which can embrace working money generated by the funding, capital reserves,
a line of credit score or different mortgage established with respect to the funding, different
borrowings, or extra fairness investments from us or three way partnership companions.
As of September 30, 2020, we had $12,698,000 of restricted money in mortgage impounds
and reserve accounts to fund a portion of such capital expenditures. The capital
plan for every funding is adjusted via ongoing, common evaluations of our
portfolio or as obligatory to answer unanticipated extra capital wants.
Based mostly on the funds for the properties we personal as of September 30, 2020, we
estimate that our discretionary expenditures for developments and capital and
tenant enhancements may require as much as $15,743,000 for the remaining three
months of 2020. Nonetheless, in mild of the COVID-19 pandemic and to additional
protect money, since March 2020, we suspended all non-essential, discretionary
expenditures for capital enhancements, in addition to developments and/or
expansions, that have been anticipated throughout 2020 all through our actual property
funding portfolio. Specifically, we suspended capital expenditures which might be
in a roundabout way related to the upkeep or growth of tenant occupancy
and the enhancement of web working revenue, or NOI. The period of our
suspension of developments and capital expenditures are unsure and an replace
to the precise quantities forecasted to be expended for the rest of the 12 months
can't be estimated at the moment.

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