The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements ofHealthcare Trust, Inc. and the notes thereto. As used herein, the terms the "Company," "we," "our" and "us" refer toHealthcare Trust, Inc. , aMaryland corporation, including, as required by context,Healthcare Trust Operating Partnership, LP (our "OP"), aDelaware limited partnership, and its subsidiaries. The Company is externally managed byHealthcare Trust Advisors, LLC (our "Advisor"), aDelaware limited liability company. Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to those terms in "Part I - Financial Information" included in the notes to the consolidated financial statements and contained herein. Forward-Looking Statements Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations ofHealthcare Trust, Inc. ("we," "our" or "us") and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Overview We are an externally managed REIT that focuses on acquiring and managing a diversified portfolio of healthcare-related real estate focused on MOBs, NNN properties, and SHOPs. As ofMarch 31, 2021 , we owned 190 properties located in 31 states and comprised of 9.3 million rentable square feet. Substantially all of our business is conducted through the OP, aDelaware limited partnership, and its wholly owned subsidiaries. Our Advisor manages our day-to-day business with the assistance ofHealthcare Trust Properties, LLC (our "Property Manager"). Our Advisor and Property Manager are under common control withAR Global Investments, LLC ("AR Global") and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.Healthcare Trust Special Limited Partnership, LLC (the "Special Limited Partner"), which is also under common control with AR Global, also has an interest in us through ownership of interests in our OP. As ofMarch 31, 2021 , we owned 55 seniors housing properties under the REIT Investment Diversification and Empowerment Act ("RIDEA") structure in our SHOP segment. Under RIDEA, a REIT may lease qualified healthcare properties on an arm's length basis to a taxable REIT subsidiary ("TRS") if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor. We have declared and paid quarterly dividends entirely in shares of our common stock. Stock dividends paid inOctober 2020 andJanuary 2021 were equal to 0.01349 shares of common stock on each share of our outstanding common stock The stock dividend paid inApril 2021 was equal to 0.014655 shares of our common stock on each share of our outstanding common stock. Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. The aggregate impact of all three Stock Dividends was an increase of 1,392,822 shares. Dividends payable entirely in shares of common stock are treated in fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods. The aggregate impact of all three stock dividends was an increase of 1,392,822 shares. No additional shares, except for the stock dividends, were issued during the three months endedMarch 31, 2021 . References made to weighted-average shares and per-share amounts in the accompanying consolidated statements of operations and comprehensive income have been retroactively adjusted to reflect the increase of 0.04222 shares for every share outstanding due to the stock dividends. Additionally, other references to weighted-average shares outstanding and per-share amounts have been retroactively adjusted for the stock dividends and are noted as such throughout the accompanying financial statements and footnotes. OnApril 1, 2021 , we published a new Estimated Per-Share NAV equal to$14.50 as ofDecember 31, 2020 . Our previous Estimated Per-Share NAV was equal to$15.75 as ofDecember 31, 2019 . The Estimated Per-Share NAV reflects theOctober 2020 stock dividend we paid and took into consideration theJanuary 2021 stock dividend we paid but has not been adjusted to reflect theApril 2021 stock dividend we paid and will not be adjusted for stock dividends we pay in the future until the board of directors (the "Board") determines a new Estimated Per-Share NAV. Paying dividends in additional shares of common stock 45 -------------------------------------------------------------------------------- will, all things equal, cause the value of each share to decline because the number of shares outstanding will increase when Stock Dividends are paid; however, because each stockholder will receive the same number of new shares, the total value of our common stockholders' investment, all things equal, will not change assuming no sales or other transfers. Unless we list our common stock on a national security exchange, we intend to publish Estimated Per-Share NAV at least once annually. Management Update on the Impacts of the COVID-19 Pandemic The COVID-19 global pandemic has created several risks and uncertainties that have had and may continue to have an impact on our business, including our financial condition, future results of operations and our liquidity. Negative impacts of the COVID-19 pandemic have caused some of our tenants to be unable to make rent payments to us timely, or at all. There may be a decline in the demand for tenants to lease real estate, as well as a negative impact on rental rates. The extent to which the ongoing global COVID-19 pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the COVID-19 or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material. As ofMarch 31, 2021 , our MOB segment had an occupancy of 91.7% with a weighted-average remaining lease term of 4.8 years, (based on annualized straight-line rent as ofMarch 31, 2021 ), our triple-net leased healthcare facilities segment had an occupancy of 94.5% with a weighted average remaining lease term of 6.2 years (based on annualized straight-line rent as ofMarch 31, 2021 ) and our SHOP segment had an occupancy of 72.7%. During the three months endedMarch 31, 2021 , we experienced a decline in occupancy and an increase in costs at our SHOP portfolio, however, we received grants under the CARES Act of$5.1 million during the first quarter of 2021 which helped offset the COVID-19 related operating costs. The negative impact of the pandemic on our results of operations and cash flows has impacted and could continue to impact our ability to comply with covenants in our senior secured credit facility (the"Credit Facility"), which is comprised of our revolving credit facility (the "Revolving Credit Facility") and a term loan (the "Term Loan"), and the amount available for future borrowings thereunder. For a further discussion of the risks and uncertainties associated with the impact of the COVID-19 pandemic on us, please see Item 1A . "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Rent Collections We experienced delays in rent collection in the second, third and fourth quarters of 2020 and the first quarter of 2021. We have taken several steps to mitigate the impact of the pandemic on our business. We have been in direct contact with our tenants and operators since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations. We have achieved mutually agreeable solutions with our tenants and in some cases, during the year endedDecember 31, 2020 , we executed lease amendments providing for deferral of rent. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic. We have collected nearly 100% of the original cash rent due for the first quarter of 2021 in our MOB segment and 100% in our triple-net leased healthcare facilities segment. Cash rental payments for our 55 SHOPs is primarily paid for by the residents through private payer insurance or directly, and to a lesser extent, by government reimbursement programs such as Medicaid and Medicare. These cash rental payments are subject to timing differences, therefore we have not provided the amount of first quarter 2021 cash rent collected for our SHOP segment. "Original cash rent" refers to contractual rents on a cash basis due from tenants as stipulated in their original executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate "original cash rent collections" by comparing the total amount of rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements. Eliminating the impact of deferred rent paid, we collected nearly 100% of original cash rent due for the first quarter of 2021. A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period. During the year endedDecember 31, 2020 , we granted rent deferrals for an aggregate of$0.4 million or less than 1% of original cash rent due for the year. No additional rent was deferred during the three months endedMarch 31, 2021 . Rent collections inApril 2021 were materially consistent with the first quarter of 2021, and we expect this trend to continue. We have also granted rent concessions which serve to reduce revenue in our SHOP segment. The impact of the COVID-19 pandemic on our tenants and operators thus our ability to collect rents in future periods cannot be determined at present. 46 --------------------------------------------------------------------------------Seniors Housing Properties In earlyMarch 2020 , we implemented preventative actions at all our seniors housing properties in our SHOP segment, including restrictions on visitation except in very limited and controlled circumstances, social distancing measures, and the screening of all persons entering these facilities. Some of the additional steps we have taken to address the COVID-19 pandemic include, enhanced training for staff members, the implementation of Telehealth to help residents be safe while keeping appointments with important, but non-emergency, health providers, virtual tours for potential new residents, and agreements between some of our facilities and local lab partners to provide COVID-19 testing services. Starting inMarch 2020 , the COVID-19 pandemic and measures to prevent its spread began to affect us in a number of ways. Occupancy in our SHOP portfolio has trended lower since the second half ofMarch 2020 as government policies and implementation of infection control best practices and prospective residents' concerns about communal-setting COVID-19 spread limited resident move-ins. We have also continued to experience lower inquiry volumes and reduced in-person tours during the pandemic. These and other impacts of the COVID-19 pandemic have affected and could continue to affect our ability to fill vacancies. We have also continued to experience lower inquiry volumes and reduced in-person tours during the pandemic. SHOP occupancy has continued to decline from 84.1% as ofMarch 31, 2020 , to 79.5% as ofJune 30, 2020 , to 77.9% as ofSeptember 30,2020 , to 75.1% as ofDecember 31, 2020 and to 72.7% as ofMarch 31, 2021 . The declines in revenue we experienced during the first quarter of 2021 were primarily attributable to this decline in occupancy. In addition, starting in mid-March of 2020, operating costs began to rise materially, including for services, labor and personal protective equipment and other supplies, as our operators took appropriate actions to protect residents and caregivers. At our SHOP facilities, we bear these cost increases. These trends accelerated during the second, third and fourth quarters of 2020 and into the beginning of the first quarter of 2021 as the surge of new COVID-19 cases that started in late 2020 crested, and have continued through the end of the first quarter of 2021 and into the second quarter of 2021 and may continue to impact us in the and have a material adverse effect on our revenues and income in the other quarters thereafter. We believe that, as infections decline and more vaccinations are administered during 2021, our occupancy will stop declining, and may start to increase, but there can be no assurance as to when or if we will be able to approach pre-pandemic levels of occupancy. The pandemic raises the risk of an elevated level of resident exposure to illness and restrictions on move-ins at our SHOPs, which has and could also continue to adversely impact occupancy and revenues as well as increase costs. We believe that the actions we have taken help reduce the incidences of COVID-19 at our properties, but there can be no assurance in this regard. There have been some incidences of COVID-19 among the residents and staff at certain of our seniors housing properties. Further incidences, or the perception that outbreaks may occur, could materially and adversely affect our revenues and income, as well as cause reputational harm to us and our tenants, managers and operators. The extent to which the ongoing global COVID-19 pandemic, including the outbreaks that have occurred and may occur in markets where we own properties, impacts our operations and those of our tenants and third-party operators, will continue to depend on future developments, including the scope, severity and duration of the pandemic, and the actions taken to contain the COVID-19 or treat its impact, among others, which are highly uncertain and cannot be predicted with confidence, but could be material. OnMarch 27, 2020 , Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law and it provides funding to Medicare providers in order to provide financial relief during the COVID-19 pandemic. Funds provided under the program were to be used for the preparation, prevention, and medical response to COVID-19, and were designated to reimburse providers for healthcare related expenses and lost revenues attributable to COVID-19. During the first quarter of 2021, we received an additional$5.1 million in CARES Act funding. We consider the funds to be a grant contribution from the government and the full amount was recognized as a reduction of property operating expenses in our consolidated statement of operations during the first quarter of 2021. There can be no assurance that the program will be extended or any further amounts received under currently effective or potential future government programs. Significant Accounting Estimates and Critical Accounting Policies For a discussion about our significant accounting estimates and critical accounting policies, see the "Significant Accounting Estimates and Critical Accounting Policies" section of our 2020 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies. Recently Issued Accounting Pronouncements Please see Note 2 - Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion. CARES Act Grants As discussed in Note 2 - Summary of Significant Accounting Policies - CARES Act Grants, we adopted a new policy with respect to accounting for such grants received. 47
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Table of Contents
Properties
The following table presents certain additional information about the properties
we owned as of
Weighted Average Remaining Number Rentable Lease Term in Gross Asset Portfolio of Properties Square Feet Percentage Leased(1) Years (2) Value (3) (In thousands) Medical Office Buildings 118 3,941,057 91.7% 4.8$ 1,094,451 Triple-Net Leased Healthcare Facilities: Hospitals 6 514,962 90.7% 6.0
133,580
Post-Acute / Skilled Nursing 8 354,016 100.0% 6.6 86,574 Total Triple-Net Leased Healthcare Facilities 14 868,978 94.5% 6.2 220,154 Seniors Housing - Operating (4) Properties (6) 55 4,265,466 72.7% N/A 1,229,434 Jupiter Property - Recently (5) Developed 1 235,445 10.0% 9.7 58,005 Land 2 N/A N/A N/A 3,665 Total Portfolio 190 9,310,946$ 2,605,709 _______________ (1)Inclusive of leases signed but not yet commenced as ofMarch 31, 2021 . (2)Weighted-average remaining lease term in years is calculated based on square feet as ofMarch 31, 2021 . (3)Gross asset value represents total real estate investments, at cost ($2.6 billion total as ofMarch 31, 2021 ) net of gross market lease intangible liabilities ($22.2 million total as ofMarch 31, 2021 ). Impairment charges are already reflected within gross asset value. (4)Weighted by unit count as ofMarch 31, 2021 . (5)Our development property inJupiter, Florida was substantially completed in the fourth quarter of 2019. Although a portion of the property has been leased as ofMarch 31, 2021 , the property is separately shown and excluded from combined occupancy numbers. Occupancy in the triple-net leased healthcare facilities segment would have been 76.5% had the development property been included. This property is currently under a PSA to be sold. Although the disposition is expected to be completed in the second quarter of 2021, and there can be no assurance that the disposition will be completed on its contemplated terms, or at all. (6)One SHOP inWellington , Florida is under a PSA to be sold. Although the disposition is expected to be completed in the second quarter of 2021, there can be no assurance that the disposition will be completed on its contemplated terms, or at all. During the three months endedMarch 31, 2021 , four MI SHOPs located inMichigan were transferred to their buyer pursuant to their sale inNovember 2020 . N/A Not applicable. 48 -------------------------------------------------------------------------------- Results of Operations We operate in three reportable business segments for management and internal financial reporting purposes: MOBs, triple-net leased healthcare facilities, and SHOPs. In our MOB operating segment, we own, manage and lease single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. In our triple-net leased healthcare facilities operating segment, we own, manage and lease seniors housing properties, hospitals, post-acute care and skilled nursing facilities throughoutthe United States under long-term triple-net leases, and tenants are generally directly responsible for all operating costs of the respective properties.Our Property Manager or third party managers manage our MOBs and our triple-net leased healthcare facilities. In our SHOP segment, we invest in seniors housing properties using the RIDEA structure. As ofMarch 31, 2021 , we had six eligible independent contractors operating 55 SHOPs (not including two land parcels). All of our properties across all three business segments are located throughoutthe United States .Same Store Properties Information based on Same Store, Acquisitions and Dispositions (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As ofMarch 31, 2021 , we owned 190 properties. There were 180 properties (our "Same Store" properties) owned for the entire year endedDecember 31, 2020 and the three months endedMarch 31, 2021 . Our Same Store properties include two vacant land parcels and one development property that was substantially completed in the fourth quarter of 2019. SinceJanuary 1, 2020 , we acquired ten properties (our "Acquisitions") and disposed of 13 properties (our "Dispositions"). As described in more detail under "Results of Operations - Comparison of the Three Months EndedMarch 31, 2021 -Transition Properties " below, our Same Store properties include fourTransition Properties that were transitioned fromSenior Housing - Triple Net Leased to our SHOP segment effectiveJuly 1, 2020 . These fourTransition Properties were owned for the entire same store period and merely moved between segments. We retroactively adjusted our Same Store for those segments to include theTransition Properties as part of our Same Store in our SHOP segment and excluded them from the Same Store in our triple-net leased healthcare facilities segment (each segment as so retroactively adjusted, the "Segment Same Store"). See Note 3 - Real Estate Investments, Net for further information about theTransition Properties and the transition. The following table presents a roll-forward of our properties owned fromJanuary 1, 2019 toMarch 31, 2021 : Number of Properties Number of properties, January 1, 2020 193 Acquisition activity during the year ended December 31, 2020 9 Disposition activity during the year ended December 31, 2020 (9) Number of properties, December 31, 2020 193
Acquisition activity during the three months ended
1
Disposition activity during the three months ended
(4) Number of properties,March 31, 2021 190 Number ofSame Store Properties (1) 180
___________
(1) Includes the acquisition of a land parcel adjacent to an existing property which is not considered an Acquisition.
49 -------------------------------------------------------------------------------- In addition to the comparative period-over-period discussions below, please see the "Overview - Management Update on the Impacts of the COVID-19 Pandemic" section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management's responses. Comparison of the Three Months EndedMarch 31, 2021 and 2020 Net loss attributable to common stockholders was$12.2 million and$24.7 million for the three months endedMarch 31, 2021 and 2020, respectively. The following table shows our results of operations for the three months endedMarch 31, 2021 and 2020 and the period to period change by line item of the consolidated statements of operations: Increase Three Months Ended March 31, (Decrease) (Dollars in thousands) 2021 2020 $ Revenue from tenants$ 83,436 $ 100,235 $ (16,799) Operating expenses: Property operating and maintenance 49,355 61,723 (12,368) Impairment charges 878 18,038 (17,160) Operating fees to related parties 5,883 6,049 (166) Acquisition and transaction related 132 327 (195) General and administrative 6,052 6,730 (678) Depreciation and amortization 20,102 20,195 (93) Total expenses 82,402 113,062 (30,660)
Operating income (loss) before gain on sale of real estate investments
1,034 (12,827) 13,861 Gain on sale of real estate investments (172) 2,306 (2,478) Operating loss 862 (10,521) 11,383 Other income (expense): Interest expense (12,322) (13,257) 935 Interest and other income 52 5 47 Loss on non-designated derivatives 14 16 (2) Total other expenses (12,256) (13,236) 980 Loss before income taxes (11,394) (23,757) 12,363 Income tax expense (48) (332) 284 Net loss (11,442) (24,089) 12,647 Net (income) loss attributable to non-controlling interests (46) 87 (133) Allocation for preferred stock (742) (742) - Net loss attributable to common stockholders$ (12,230) $ (24,744) $ 12,514 _________ NM - Not MeaningfulTransition Properties Some of our properties move between our operating segments, for example if they are converted from being triple-net leased to third parties in our triple-net leased healthcare facilities segment to being leased to one of our TRSs and operated and managed on our behalf by a third-party operator in our SHOP segment. When transfers between segments occur, we reclassify the operating results of the transferred properties to their current segment for both the current and all historical periods in order to present a consistent group of property results. See Note 3 - Real Estate Investments, Net - "Impairments" and "Held for Use Assets" and Note 15 - Segment Reporting to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Over the last three years, we have had properties transfer between operating segments. Upon such transfers we retroactively restate the historical operating results for the segment for all periods presented in that filing and, thereafter, we will restate other later prior periods when they are subsequently reported in later filings for comparative purposes. As a result, we provide transition disclosure adjustments only for properties that have transitioned since the prior numbers were previously 50 -------------------------------------------------------------------------------- reported. We transitioned the four triple-net leased properties inTexas (the "LaSalle Properties ") effectiveJuly 1, 2020 (the "Transition Properties "). As described in more detail below, our Same Store includes the fourTransition Properties , which transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the third quarter of 2020. During the three months endedMarch 31, 2021 , as shown in more detail in the table below, theTransition Properties contributed approximately$(0.2) million of net operating income ("NOI"). The results of operations of theTransition Properties are included inSegment Same Store with respect to the SHOP segment. The bad debt expense relating to theTransition Properties is included as a reduction to revenue from tenants on the consolidated statement of operations. For purposes of the discussion and analysis of the segment results of operations during the three months endedMarch 31, 2021 as compared to the three months endedMarch 31, 2020 , the results of operations for theTransition Properties are included as part of our SHOP segment and excluded from our triple-net leased healthcare facilities segment. The following table presents by segment Same Store properties' NOI before and after adjusting for theTransition Properties as described above, to arrive at "Segment Same Store " results. Our MOB segment was not affected by theTransition Properties . Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Increase (Decrease)
Same Store Transition Segment Same Same Store Transition Segment Same
Same Store Transition Segment Same (Dollar amounts in thousands) Properties Properties Store
Properties Properties Store Properties Properties Store NNN Segment Revenue from tenants$ 5,299 $ (1,350) $
3,949
590$ (726) $ (136) Less: Property operating and maintenance 2,541 (1,527) 1,014 1,460 (925) 535 1,081 (602) 479 NOI$ 2,758 $ 177 $ 2,935 $ 3,249 $ 301$ 3,550 $ (491) $ (124) $ (615) SHOP Segment Revenue from tenants$ 47,958 $ 1,350 $ 49,308 $ 58,611 $ 624$ 59,235 $ (10,653) $ 726$ (9,927) Less: Property operating and maintenance 36,196 1,527 37,723 43,435 925 44,360 (7,239) 602 (6,637) NOI$ 11,762 $ (177) $ 11,585 $ 15,176 $ (301) $ 14,875 $ (3,414) $ 124$ (3,290) Net Operating Income NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance expenses. NOI excludes all other financial statement amounts included in net income (loss) attributable to common stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures included elsewhere in this Quarterly Report for additional disclosure and a reconciliation to our net income (loss) attributable to common stockholders. Segment Results - Medical Office Buildings The following table presents the components of NOI and the period to period change within our MOB segment for the three months endedMarch 31, 2021 and 2020: Same Store (1) Acquisitions (2) Dispositions (3) Segment Total (4) Increase Increase Increase Increase Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) (Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $ Revenue from tenants$ 25,199 $ 25,808 $ (609) $ 941 $ 329 $ 612 $ 250 $ 233 $ 17$ 26,390 $ 26,370 $ 20 Less: Property operating and maintenance 7,609 7,517 92 221 61 160 - 32 (32) 7,830 7,610 220 NOI$ 17,590 $ 18,291 $ (701) $ 720 $ 268 $ 452 $ 250 $ 201 $ 49$ 18,560 $ 18,760 $ (200) _______________
(1)Our MOB segment included 112 Same Store properties. (2)Our MOB segment included six Acquisition properties. (3)Our MOB segment included one Disposition property. (4)Our MOB segment included 118 properties. NM - Not Meaningful
51 -------------------------------------------------------------------------------- Revenues from tenants is primarily related to contractual rent received from tenants in our MOBs. It also includes operating expense reimbursements which generally increase in proportion with the increase in property operating and maintenance expenses in our MOB segment. Pursuant to many of our lease agreements in our MOBs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent. Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees. During the three months endedMarch 31, 2021 , the MOB segment contributed a$0.2 million decrease in NOI as compared to the three months endedMarch 31, 2020 . Of our ten Acquisitions during the period fromJanuary 1, 2020 throughMarch 31, 2021 , six were MOBs which contributed a$0.5 million increase in NOI and our Disposition properties contributed a$49,000 increase in NOI due to non-recurring property operating expenses, while NOI from our Same Store properties decreased by$0.7 million during the three months endedMarch 31, 2021 as compared toMarch 31, 2020 . Segment Results - Triple-Net Leased Healthcare Facilities The following table presents the components of NOI and the period to period change within our triple-net leased healthcare facilities segment for the three months endedMarch 31, 2021 and 2020: Same Store (1) Acquisitions (2) Dispositions (3) Segment Total (4) Increase Increase Increase Increase Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) (Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $ Revenue from tenants$ 3,949 $ 4,085 $ (136) $ - $ - $ - $ - $ - $ -$ 3,949 $ 4,085 $ (136) Less: Property operating and maintenance 1,014 535 479 - - - - - - 1,014 535 479 NOI$ 2,935 $ 3,550 $ (615) $ - $ - $ - $ - $ - $ -$ 2,935 $ 3,550 $ (615) _________ (1) Our triple-net leased healthcare facilities segment included 15 Same Store properties. (2)Our triple-net leased healthcare facilities segment included zero Acquisition properties. (3)Our triple-net leased healthcare facilities segment included zero Disposition properties. (4)Our triple-net leased healthcare facilities segment included 15 properties. Revenue from tenants for our triple-net leased healthcare facilities generally consist of fixed rental amounts (which may be subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms. These revenues are contractual rent received from tenants that does not vary based on the underlying operating performance of the properties. In addition, revenue from tenants also includes operating expense reimbursements in our triple-net leased healthcare facilities segment, which generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment. However, pursuant to many of our lease agreements in this segment, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Property operating and maintenance expense should typically include minimal activity in our triple-net leased healthcare facilities segment except for real estate taxes and insurance. Real estate taxes are typically paid directly by the tenants; however, they may be paid by us and reimbursed by the tenants. During the three months endedMarch 31, 2021 , revenue from tenants in our triple-net leased healthcare facilities segment increased$0.1 million compared to the three months endedMarch 31, 2020 , driven by ourSame Store Properties . Property operating and maintenance expenses of$1.0 million and$0.5 million during the three months endedMarch 31, 2021 and 2020, respectively, primarily relates to property taxes and operating expenses. Segment Results -Seniors Housing - Operating Properties The following table presents the components of NOI and the period to period change within our SHOP segment for the three months endedMarch 31, 2021 and 2020: Same Store (1) Acquisitions (2) Dispositions (3)
Segment Total (4) Increase Increase Three Months Ended March Increase Increase Three Months EndedMarch 31 , (Decrease) Three Months EndedMarch 31 , (Decrease) 31, (Decrease) Three Months EndedMarch 31 , (Decrease) (Dollars in thousands) 2021 2020 $ 2021 2020 $ 2021 2020 $ 2021 2020 $ Revenue from tenants$ 49,308 $ 59,235 $ (9,927) $ 3,464 $ 1,618 $ 1,846 $ 325 $ 8,927 $ (8,602) $ 53,097 $ 69,780 $ (16,683) Less: Property operating and maintenance 37,723 44,360 (6,637) 2,696 1,217 1,479 92 8,001 (7,909) 40,511 53,578 (13,067) NOI$ 11,585 $ 14,875 $ (3,290) $ 768 $ 401 $ 367 $ 233 $ 926 $ (693) $ 12,586 $ 16,202 $ (3,616) ________ 52
-------------------------------------------------------------------------------- (1)Our SHOP segment included 53 Same Store properties, including two land parcels. (2)Our SHOP segment included four Acquisition properties. (3)Our SHOP segment included 12 Disposition properties. (4)Our SHOP segment included 57 properties, including two land parcels. Revenue from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators, and costs associated with maintaining the physical site. During the three months endedMarch 31, 2021 , revenues from tenants decreased by$16.7 million in our SHOP segment as compared to the three months endedMarch 31, 2020 which was primarily driven by a decrease in revenue of$9.9 million due to our Same Store properties, which includes ourTransition Properties , as well as a decrease in revenue of$8.6 million due to our Disposition properties. These revenue decreases were partially offset by an increase of$1.8 million due to our Acquisition properties. These revenue decreases were also offset by$0.5 million in COVID-19 surcharges during the quarter related to billing residents for Personal Protective Equipment ("PPE"). Revenues declined in our Same Store SHOPs primarily due to a decrease in occupancy as a result of the impact of COVID-19 as discussed above. SHOP occupancy has declined from 84.1% as ofMarch 31, 2020 to 72.7% as ofMarch 31, 2021 . Regulatory and government-imposed restrictions and infectious disease protocols have hindered, and continue to hinder, our ability to accommodate and conduct in-person tours, process and attract new move-ins at our SHOPs and these and other impacts of the COVID-19 pandemic have affected, and could continue to affect, our ability to fill vacancies. In addition, we also generated a portion of our SHOP revenue from skilled nursing facilities (which include ancillary revenue from non-residents) at three of our Same Store SHOPs. This revenue declined$0.8 million from$2.6 million during the three months endedMarch 31, 2020 to$1.8 million during the quarter endedMarch 31, 2021 as a result of us limiting the services we offer at our skilled nursing facilities, during the COVID-19 pandemic, to protect our residents and on-site staff. We also offered COVID-related rent concessions of$0.1 million for the quarter endedMarch 31, 2021 . During the three months endedMarch 31, 2021 , property operating and maintenance expenses decreased$13.1 million in our SHOP segment as compared to the three months endedMarch 31, 2020 , primarily due to a decrease of$6.6 million due to our Same Store properties, which include our Transition properties, and a decrease of$7.9 million from our Disposition properties, partially offset by an increase of$1.5 million in our Acquisition properties. The total decrease in Same Store operating costs mainly related to funds received through the CARES Act of$5.1 million which offset costs incurred from the ongoing COVID-19 pandemic which totaled$0.7 million for the quarter endedMarch 31, 2021 . The full amount of the CARES Act funds was recognized as a reduction to our Same Store property operating expenses in the table above for the quarter endedMarch 31, 2021 . The remaining decrease in property operating expenses at our Same Store properties are explained by lower operating expenses incurred due to lower levels of occupancy. As a result we experienced a decrease in Same Store operating costs of$6.6 million year over year. There can be no assurance that the program will be extended or any further amounts received. See the "Overview - Management Update on the Impacts of the COVID-19 Pandemic" section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management's actions taken in response.The LaSalle Properties OnJuly 1, 2020 , we transitioned four triple-net leased properties inTexas (collectively, the "LaSalle Properties ") from the triple-net leased healthcare facilities segment to the SHOP segment, and theLaSalle Properties are now leased to our TRS and operated and managed on our behalf by a third-party operator. During 2019,The LaSalle Group Inc. , a guarantor of certain of the lease obligations of prior tenants (collectively, the "LaSalle Tenant"), filed for voluntarily relief under chapter 11 of the United States Bankruptcy Code. We have filed proofs of claims related to amounts previously awarded to it from the bankruptcy proceeding, however, we have no amounts due from the LaSalle Tenant in its consolidated balance sheets as ofMarch 31, 2021 andDecember 2020 as we do not believe recovery is likely against the LaSalle Tenant. Other Results of Operations Impairment Charges We incurred$0.9 million of impairment charges for the three months endedMarch 31, 2021 due to an amended purchase and sale agreement ("PSA") which reduced the sales price of the skilled nursing facility inWellington , Florida to$30.7 million . We incurred$18.0 million of impairment charges for the three months endedMarch 31, 2020 related to an amendment to a purchase and sale agreement ("PSA") related to the sale of SHOP assets located inMichigan (the "Michigan SHOPs") to reduce 53 -------------------------------------------------------------------------------- the number of properties to be sold from 14 to 11 and to reduce the sale price from$71.8 million to$11.8 million . See Note 3 - Real Estate Investments to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the three months endedMarch 31, 2021 and 2020. Operating Fees to Related Parties Operating fees to related parties were$5.9 million for the three months endedMarch 31, 2021 and$6.0 million forMarch 31, 2020 respectively. Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. We pay a base management fee equal to$1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity raised subsequent toFebruary 17, 2017 . Asset management fees were$5.0 million in the three months endedMarch 31, 2021 and 2020, as we had raised any equity in the fourth quarter of 2019. InMay 2021 , we raised net proceeds of$56.7 million in equity pursuant to an underwritten offering of our Series A Preferred Stock (see N ote 17
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Subsequent Events). Property management fees were$1.0 million for the three months endedMarch 31, 2021 and$1.1 million for the three months endedMarch 31, 2020 . Property management fees increase or decrease in direct correlation with gross revenues of the properties managed. See Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements. Acquisition and Transaction Related Expenses Acquisition and transaction related expenses were$0.1 million for the three months endedMarch 31, 2021 , compared to approximately$0.3 million for the three months endedMarch 31, 2020 . The expenses in both periods relate to indirect costs related to acquisitions. General and Administrative Expenses General and administrative expenses decreased to$6.1 million for the three months endedMarch 31, 2021 compared to$6.7 million for the three months endedMarch 31, 2020 , which includes$2.6 million and$2.6 million for the three months endedMarch 31, 2021 andMarch 31, 2020 , respectively, incurred in expense reimbursements and distributions on partnership units of the OP designated as "ClassB Units " ("ClassB Units ") to related parties. ClassB Units will not receive distributions, and no expense will be incurred, for so long as we pay distributions to our common stockholders in stock instead of cash. Depreciation and Amortization Expenses Depreciation and amortization expense decreased$0.1 million to$20.1 million for the three months endedMarch 31, 2021 from$20.2 million for the three months endedMarch 31, 2020 . Gain on Sale of Real Estate Investments During the three months endedMarch 31, 2021 , we transferred the remaining four Michigan SHOPs to the buyer at a second closing in the first quarter of 2021 and as a result, we recorded a loss on sale of$0.2 million during the three months endedMarch 31, 2021 . During the three months endedMarch 31, 2020 we sold one MOB property which resulted in a gain on sale of$2.3 million . This property sold for a contract purchase price of$8.6 million . Interest Expense Interest expense decreased by$0.9 million to$12.3 million for the three months endedMarch 31, 2021 from$13.3 million for the three months endedMarch 31, 2020 . The decrease in interest expense resulted from lower interest rates. As ofMarch 31, 2021 our outstanding debt obligations were$1.2 billion at a weighted average interest rate of 3.55% per year. As ofMarch 31, 2020 , we had total borrowings of$1.3 billion , at a weighted average interest rate of 3.79% per year. Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings among other factors. Interest and Other Income Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period. Interest and other income was approximately$52,000 and a$5,000 income for the three months endedMarch 31, 2021 and 2020, respectively. Gain (Loss) on Non-Designated Derivatives The gain (loss) on non-designated derivative instruments for the three months endedMarch 31, 2021 and 2020 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates. 54 -------------------------------------------------------------------------------- Income Tax Expense We recorded an income tax expense of$48,000 and$0.3 million for the three months endedMarch 31, 2021 and 2020, respectively, primarily related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS. These deferred tax assets are partially offset by other income tax benefits incurred during the same period. Income taxes generally relate to our SHOPs, which are leased by our TRS. Because of our TRS's recent operating history of losses and the on-going impacts of the COVID-19 pandemic on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets; thus we have retained a 100% valuation allowance as ofMarch 31, 2021 of$4.3 million . If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive income (loss). Net Loss Attributable to Non-Controlling Interests Net loss attributable to non-controlling interests was approximately$0.0 million and$0.1 million for the three months endedMarch 31, 2021 and 2020, respectively. These amounts represent the portion of our net loss that is related to the OP Units and non-controlling interest holders in our subsidiaries that own certain properties. Cash Flows from Operating Activities During the three months endedMarch 31, 2021 , net cash provided by operating activities was$14.0 million . The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of$11.5 million (net loss of$11.4 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), an decrease in prepaid expenses and other assets of$2.7 million and in increase in deferred rent an other liabilities of$1.2 million . These cash inflows were partially offset a decrease in accounts payable and accrued expenses of$1.2 million related to timing of payments for real estate taxes, property operating expenses and professional and legal fees and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of$0.2 million . During the three months endedMarch 31, 2020 , net cash provided by operating activities was$19.0 million . The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of$14.3 million (net loss of$24.1 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, equity-based compensation, gain on non-designated derivatives and impairment charges), an increase in accounts payable and accrued expenses of$4.3 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees and a decrease in prepaid expenses and other assets of$1.3 million . These cash inflows were partially offset by a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of$1.2 million . Cash Flows from Investing Activities Net cash used in investing activities during the three months endedMarch 31, 2021 was$10.9 million . The cash used in investing activities included$6.7 million for the acquisition of one property and$4.0 million in capital expenditures. Net cash used in investing activities during the three months endedMarch 31, 2020 was$93.8 million . The cash used in investing activities included$91.0 million for the acquisition of eight properties and$11.1 million in capital expenditures. These cash outflows were partially offset by proceeds from sale of real estate of$8.3 million . Cash Flows from Financing Activities Net cash used in financing activities of$1.3 million during the three months endedMarch 31, 2021 related to cash outflows of payments of deferred financing costs of$0.0 million and dividends paid to preferred stockholders of$0.7 million , payments for derivative instruments of$0.1 million and principal payments on mortgages of$0.3 million . Net cash used in financing activities of$69.8 million during the three months endedMarch 31, 2020 related to proceeds of$95.0 million from our Revolving Credit Facility. These cash inflows were partially offset by distributions to stockholders of$13.2 million , common stock repurchases of$10.5 million , payments of deferred financing costs of$0.9 million and dividends paid to preferred stockholders of$0.2 million . 55 -------------------------------------------------------------------------------- Liquidity and Capital Resources The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which has had, and could continue to have, an adverse effect on the amount of cash we receive from our operations. In addition to the discussion below, please see the "Overview - Management Update on the Impacts of the COVID-19 Pandemic" section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management's actions taken in response. As ofMarch 31, 2021 , we had$74.1 million of cash and cash equivalents. Our ability to use this cash on hand is restricted. Under our amended Credit Facility, we are required to maintain a combination of cash, cash equivalents and availability for future borrowings under our revolving credit facility under our Credit Facility (our "Revolving Credit Facility") totaling at least$50.0 million . As ofMarch 31, 2021 ,$42.8 million was available for future borrowings under our Revolving Credit Facility. Certain other restrictions and conditions described below will no longer apply starting in the "Commencement Quarter " which is a quarter in which we make an election and, as of the day prior to the commencement of the applicable quarter we have a combination of cash, cash equivalents and availability for future borrowings under the Revolving Credit Facility totaling at least$100.0 million , giving effect to the aggregate amount of distributions projected to be paid by us during the applicable quarter, and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 62.5%. As ofMarch 31, 2021 , our ratio of consolidated total indebtedness to consolidated total asset value for these purposes was 63.0%.The Commencement Quarter may be no earlier than the fiscal quarter endingJune 30, 2021 . We did not, however, satisfy the conditions to make the quarter endingJune 30, 2021 theCommencement Quarter . There can be no assurance as to if, or when, we will be able to satisfy these conditions. We, may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of our common stock) on our common stock until theCommencement Quarter . Moreover, beginning in theCommencement Quarter , we may only pay cash distributions provided that the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after theCommencement Quarter . Our amended Credit Facility also restricts our sources of liquidity. Until the first day of theCommencement Quarter , we must use all of the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. The availability for future borrowings under the Credit Facility is calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and availability has been, and may continue to be, adversely affected by the decreases in cash rent collected from our tenants and income from our operators that have resulted from the effects of the COVID-19 pandemic and may persist for some time. See "Item 1A. Risk Factors to our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Our Credit Facility restricts our ability to use cash that would otherwise be available to us, and there can be no assurance our available liquidity will be sufficient to meet our capital needs." We expect to fund our future short-term operating liquidity requirements, including dividends to holders of Series A Preferred Stock, through a combination of current cash on hand, net cash provided by our property operations and proceeds from the Revolving Credit Facility, which may include amounts reborrowed following the repayments we were required to make with the net proceeds from our dispositions and Series A Preferred Stock offering completed inMay 2021 . Our principal demands for cash are for acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), and dividends to holders of our Series A Preferred Stock. We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity and access to additional liquidity to meet our financial obligations for at least the next 12 months. Our future liquidity requirements, and available liquidity, however, depend on many factors, such as the on-going impact of COVID-19 on our tenants and operators and our ability to complete our pending dispositions on their contemplated terms, or at all. Preferred Stock Equity Line withB. Riley Principal Capital, LLC OnSeptember 15, 2020 , we entered into a preferred stock purchase agreement and registration rights agreement withB. Riley Principal Capital, LLC ("B. Riley"), pursuant to which we have the right from time to time to sell up to an aggregate of$15 million of shares of our Series A Preferred Stock toB. Riley untilDecember 31, 2023 , on the terms and subject to the conditions set forth in the purchase agreement. This arrangement is also referred to as the "Preferred Stock Equity Line." We control the timing and amount of any sales toB. Riley under the Preferred Stock Equity Line, andB. Riley is obligated to make purchases of up to 3,500 shares of Series A Preferred Stock each time (as may be increased by mutual agreement by the parties) in accordance with the purchase agreement, upon certain terms and conditions being met. We did not sell any shares under the Preferred Stock Equity Line during the quarter endedMarch 31, 2021 or year endedDecember 31, 2020 . 56 -------------------------------------------------------------------------------- Series A Preferred Stock Add-On Offering OnMay 11, 2021 , we completed an underwritten public offering of 2,352,144 shares (which includes 152,144 shares issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares) of its Series A Preferred Stock for net proceeds of$56.7 million after deducting the underwriters' discount and a structuring fee aggregating to$2.1 million . Pursuant to the terms under the Credit Facility amendment all proceeds were used to prepay amounts outstanding under the Credit Facility. Financings As ofMarch 31, 2021 , our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.3%. Net debt totaled$1.2 billion , which represents gross debt ($1.2 billion ) less cash and cash equivalents ($74.1 million ). Gross asset value totaled$2.6 billion , which represents total real estate investments, at cost ($2.6 billion ) net of gross market lease intangible liabilities$22.2 million . Impairment charges are already reflected within gross asset value. As ofMarch 31, 2021 , we had total gross borrowings of$1.2 billion , at a weighted average interest rate of 3.5%. As ofDecember 31, 2020 , we had total gross borrowings of$1.2 billion at a weighted average interest rate of 3.6%. As ofMarch 31, 2021 , the carrying value of our real estate investments, at cost was$2.6 billion , with$0.9 billion of this asset value pledged as collateral for mortgage notes payable,$0.6 billion of this asset value pledged to secure advances under the Fannie Mae Master Credit Facilities and$0.9 billion of this asset value comprising the borrowing base of the Credit Facility. These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable unless the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the Credit Facility, which would impact availability thereunder. We expect to utilize proceeds from our Credit Facility to fund future property acquisitions, as well as, subject to the terms of our Credit Facility, other sources of funds that may be available to us. These actions may require us to add some or all of our unencumbered properties to the borrowing base under our Credit Facility. Unencumbered real estate investments, at cost as ofMarch 31, 2021 was$200.0 million . There can be no assurance as to the amount of liquidity we would be able to generate from adding any of the unencumbered assets we own to the borrowing base of our Credit Facility. Mortgage Notes Payable As ofMarch 31, 2021 , we had$550.1 million in mortgage notes payable outstanding. Future scheduled principal payments on our mortgage notes payable for the remainder of 2021 are$1.0 million . Credit Facility Our Credit Facility consists of two components, the Revolving Credit Facility and our Term Loan. The Revolving Credit Facility is interest-only and matures onMarch 13, 2023 , subject to a one-year extension at our option. Our Term Loan is interest-only and matures onMarch 13, 2024 . Loans under our Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs. Any amounts repaid under our Term Loan may not be re-borrowed. InMarch 2020 , we borrowed an additional$95.0 million under the Revolving Credit Facility a portion of which was used for general corporate purposes. Subsequently, we have not borrowed additional amount under the Revolving Credit Facility. The total commitments under the Credit Facility are$630.0 million including$480.0 million under the Revolving Credit Facility. The Credit Facility includes an uncommitted "accordion feature" that may be used to increase the commitments under either component of the Credit Facility by up to an additional$370.0 million to a total of$1.0 billion . As ofMarch 31, 2021 ,$323.7 million was outstanding under the Credit Facility and the unused borrowing availability under the Credit Facility was$42.8 million . The amount available for future borrowings under the Credit Facility is based on either the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, or a minimum debt service coverage ratio with respect to the borrowing base. Both of these amounts are calculated using the adjusted net operating income of the real estate assets comprising the borrowing base, and, therefore, availability under our Credit Facility has been adversely affected by the decreases in cash rent collected from our tenants and income from our operators due to the effects of the COVID-19 pandemic, and may continue to be adversely affected. As ofMarch 31, 2021 ,$150.0 million was outstanding under our Term Loan, and$173.7 million was outstanding under the Revolving Credit Facility. The equity interests and related rights in our wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder. The Credit Facility also contains a subfacility for letters of credit of up to$25.0 million . The applicable margin used to determine the interest rate under both the Term Loan and Revolving Credit Facility components of the Credit Facility varies based on our leverage. As ofMarch 31, 2021 , the Revolving Credit Facility and the Term Loan had an effective interest rate per annum equal to 3.21% and 4.95%, respectively. The Credit Facility prohibits us from exceeding a maximum ratio of consolidated total indebtedness to consolidated total asset value, and requires us to maintain a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges on a quarterly basis and a minimum consolidated tangible net 57 -------------------------------------------------------------------------------- worth. As ofMarch 31, 2021 , we were in compliance with the financial covenants under the Credit Facility. Based upon our current expectations, we believe our operating results during the next 12 months will allow us to comply with these covenants. Fannie Mae Master Credit Facilities As ofMarch 31, 2021 ,$355.2 million was outstanding under the Fannie Mae Master Credit Facilities. We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool or by borrowing-up against the increased value of the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. Future advances based on the increased value of the collateral pool may only occur untilNovember 2021 and not more than once annually for each of the Fannie Mae Master Credit Facilities. Borrowings under the Fannie Mae Master Credit facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current LIBOR for one monthU.S. dollar-denominated deposits and 2.62%, with a floor of 2.62%. The Fannie Mae Master Credit Facilities mature onNovember 1, 2026 . Capital Expenditures During the first three months of 2021, our capital expenditures were$4.0 million , of which$0.5 million related our MOB segment and$3.5 million related to our SHOP segment. All other capital expenditures were typical in nature for the other properties in our portfolio. We anticipate this rate of capital expenditures for the MOB and SHOP segments throughout 2020, however, given the recent economic uncertainty created by the COVID-19 global pandemic will continue to impact our decisions on the amount and timing of future capital expenditures. Acquisitions - Three Months EndedMarch 31, 2021 During the three months endedMarch 31, 2021 , we completed the acquisitions of one multi-tenant MOB for a contract purchase price of$6.6 million . This acquisition was funded with proceeds from cash on hand. Acquisitions - Subsequent toMarch 31, 2021 We did not complete any acquisitions subsequent toMarch 31, 2021 . We have signed two definitive purchase and sale agreements PSAs to acquire a total of two MOBs for an aggregate contract purchase price of approximately$10.1 million and we have signed one non-binding letter of intent ("LOI") for a portfolio of MOBs for an aggregate contract purchase price of approximately$19.7 million . We anticipate using cash on hand to fund the consideration required to complete these acquisitions. The PSAs are subject to conditions and the LOI is non-binding. There can be no assurance we will complete any of these acquisitions, or any future acquisitions or other investments, on a timely basis or on acceptable terms and conditions, if at all. Disposition - Three Months EndedMarch 31, 2021 During the three months endedMarch 31, 2021 , four Michigan SHOPs were transferred to their buyer pursuant to their sale in November, 2020, which resulted in a loss on sale of$0.2 million . There were no assets classified as held for sale as ofMarch 31, 2021 . With respect to the sale of the Michigan SHOPs, inNovember 2020 , we received payment of the full$11.8 million sales price for all 11 of the Michigan SHOPs, less$0.8 million held in escrow, and transferred seven of the properties to the buyer. The remaining four properties were transferred to the buyer at a second closing inJanuary 2021 when the$0.8 million held in escrow was released to the buyer. Of the properties transferred at the initial closing, four were part of the borrowing base under the Credit Facility, one was part of the collateral pool under the Fannie Mae Master Credit Facility with Capital One and two were unencumbered. Of the properties transferred at the second closing, three were part of the borrowing base under the Credit Facility until the initial closing and one was unencumbered. At the initial closing,$4.2 million of the net proceeds was used to repay amounts outstanding under the Fannie Mae Master Credit Facility with Capital One,$4.4 million of the net proceeds were used to repay amounts outstanding under the Revolving Credit Facility, with the remainder used for closing costs. Following the sale of the SHOP inLutz, Florida , all$17.6 million of the net proceeds were used to repay amounts outstanding under the Credit Facility. Dispositions - Subsequent toMarch 31, 2021 We had previously entered into a definitive PSA to sell the property inJupiter Florida for$65.0 million and a skilled nursing facility inWellington , Florida for$33.0 million . OnApril 30, 2021 , we amended the PSA which reduced the sales price of the skilled nursing facility inWellington , Florida to$30.7 million . The property inJupiter, Florida and the property inWellington , Florida are expected to be sold in the second quarter of 2021, however, there can be no assurance that these dispositions will be completed on their contemplated terms, or at all. The sales of these assets are subject to conditions, and, due to the persistence of the COVID-19 pandemic and other factors beyond our control, there can be no assurance that we will be able to meet these conditions and that these dispositions will be completed on their contemplated terms, or at all. With respect to the skilled nursing facility inWellington , Florida, closing may not occur unless, among other conditions, certain occupancy and revenue levels have been maintained at the property for a period of time. The property inJupiter, Florida is not currently encumbered by any mortgage debt or part of the borrowing base under our Credit Facility. The skilled nursing facility inWellington Florida is part of the borrowing base under our Credit Facility. Pursuant to the terms of our amended Credit Facility, 58 -------------------------------------------------------------------------------- the net cash proceeds from any completed dispositions must be used to prepay amounts outstanding under the Revolving Credit Facility and will therefore not be available to us for any other purpose. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. Share Repurchase Program Our Board has adopted the SRP, which enables our common stockholders to sell their shares of common stock to us under limited circumstances. At the time a common stockholder requests a repurchase, we may, subject to certain conditions, repurchase the shares presented for repurchase for cash. There are limits on the number of shares we may repurchase under this program during any calendar year. We are only authorized to repurchase shares using the proceeds secured from our DRIP in any given period, although the Board has the power, in its sole discretion, to determine the number of shares repurchased during any period as well as the amount of funds to be used for that purpose. Under the currently effective amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Additionally, pursuant to the SRP, the repurchase price per share equals 100% of the Estimated Per-Share NAV in effect on the last day of the fiscal semester, or the six-month period endingJune 30 orDecember 31 . The amended Credit Facility restricts the Company from repurchasing shares until no earlier than the quarter endingJune 30, 2021 . In light of this provision, the Board suspended repurchases under the SRP effectiveAugust 14, 2020 . The Board has also rejected all repurchase requests made during the period fromJanuary 1, 2020 until the effectiveness of the suspension of the SRP. No further repurchase requests under the SRP may be made unless and until the SRP is reactivated. Beginning in theCommencement Quarter , we will be permitted to repurchase up to$50.0 million of shares of our common stock (including amounts previously repurchased during the term of the Revolving Credit Facility) if, after giving effect to the repurchases, we maintain cash and cash equivalents of at least$30.0 million and our ratio of consolidated total indebtedness to consolidated total asset value (expressed as a percentage) is less than 55.0%. No assurances can be made as to when or if our SRP will be reactivated. Non-GAAP Financial Measures This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations ("FFO"), Modified Funds from Operations ("MFFO") and NOI. While NOI is a property-level measure, MFFO is based on our total performance as a company and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined here, includes straight-line rent which is excluded from MFFO. A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below: Funds from Operations and Modified Funds from Operations The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative. Because of these factors, theNational Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT's operating performance. FFO is not equivalent to our net income or loss as determined under GAAP. We calculate FFO, a non-GAAP measure, consistent with the standards established over time by theBoard of Governors of NAREIT, as restated in a White Paper approved by theBoard of Governors of NAREIT effective inDecember 2018 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from the sale of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT's definition. 59 -------------------------------------------------------------------------------- We believe that the use of FFO provides a more complete understanding of our operating performance to investors and to management, and 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. Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT's definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings. Because of these factors, theInstitute of Portfolio Alternatives ("IPA"), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it 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. MFFO is not equivalent to our net income or loss as determined under GAAP. We calculate MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline") issued by the IPA inNovember 2010 . The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses and capitalized interest. We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, 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 once our portfolio is stabilized. Our Modified FFO (as defined in our Credit Facility) is similar but not identical to MFFO as discussed in this Quarterly Report on Form 10-Q. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs. Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to pay dividends and other distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO. Neither theSEC , NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, updates to the White Paper or the Practice Guideline may be published or theSEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly. 60 -------------------------------------------------------------------------------- Accounting Treatment of Rent Deferrals All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the "Overview - Management Update on the Impacts of the COVID-19 Pandemic" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information). As a result of relief granted by the FASB andSEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been, and we do not expect it to be, significantly impacted by these types of deferrals. In addition, since we currently believe that these deferral amounts are collectable, we have excluded from the increase in straight-line rent for MFFO purposes the amounts recognized under GAAP relating to these types of rent deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 - Significant Accounting Polices to our consolidated financial statements included in this Quarterly Report on Form 10-Q. The table below reflects the items deducted from or added to net loss attributable to stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests. Three Months Ended March 31, (In thousands) 2021 2020
Net loss attributable to common stockholders (in accordance with GAAP)
$ (12,230) $ (24,744) Depreciation and amortization (1) 19,688 19,862 Impairment charges 878 18,038 Gain on sale of real estate investment 172 (2,306) Adjustments for non-controlling interests (2) (96) (166) FFO (as defined by NAREIT) attributable to stockholders 8,412 10,684 Acquisition and transaction related 132 327
(Accretion) amortization of market lease and other intangibles, net
(34) 18 Straight-line rent adjustments (224) (1,175) Straight-line rent (rent deferral agreements) (2) (234) - Amortization of mortgage premiums and discounts, net 14 15 (Gain) loss on non-designated derivatives (14) (16) Deferred tax asset allowance (4) (340) - Adjustments for non-controlling interests (3) 4 4 MFFO attributable to stockholders $
7,716
_______
(1) Net of non-real estate depreciation and amortization. (2) Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for purposes of MFFO as they are expected to be collected. (3) Represents the portion of the adjustments allocable to non-controlling interest. (4) Represents the reversal of a previously recorded non-cash add-back. Net Operating Income NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating and maintenance. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). 61 -------------------------------------------------------------------------------- NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay distributions. The following table reflects the items deducted from or added to net loss attributable to stockholders in our calculation of NOI for the three months endedMarch 31, 2021 : Non-Property (In thousands) Same Store Acquisitions Dispositions Specific Total Net income (loss) attributable to common stockholders (in accordance with GAAP)$ 11,743 $
402 $ 311
878 - - - 878 Operating fees to related parties - - - 5,883 5,883 Acquisition and transaction related 3 - - 129 132 General and administrative 32 - - 6,020 6,052 Depreciation and amortization 19,016 1,086 - - 20,102 Interest expense 452 - - 11,870 12,322 Interest and other income (14) - - (38) (52) Loss on sale of real estate investments - - 172 - 172 Gain on non-designated derivative instruments - - - (14) (14) Income tax (benefit) expense - - 48 48 Allocation for preferred stock - - - 742 742 Net income attributable to non-controlling interests - - - 46 46 NOI$ 32,110 $ 1,488 $ 483 $ -$ 34,081 62
-------------------------------------------------------------------------------- The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store, Acquisitions and Dispositions NOI for the three months endedMarch 31, 2020 : Non-Property (In thousands) Same Store Acquisitions Dispositions Specific Total Net income (loss) attributable to common stockholders (in accordance with GAAP)$ 26,659 $
281
(10,138) - 28,176 - 18,038 Operating fees to related parties - - - 6,049 6,049 Acquisition and transaction related 3 - - 324 327 General and administrative 47 - - 6,683 6,730 Depreciation and amortization 19,634 388 173 - 20,195 Interest expense 511 - - 12,746 13,257 Interest and other income - - - (5) (5) Gain on sale of real estate investments - - (2,306) - (2,306) Loss on non-designated derivative instruments - - - (16) (16) Income tax (benefit) expense - - - 332 332 Allocation for preferred stock - - - 742 742 Net loss attributable to non-controlling interests - - - (87) (87) NOI$ 36,716 $ 669$ 1,127 $ -$ 38,512 Distributions and Dividends Dividends on our Series A Preferred Stock accrue in an amount equal to$1.84375 per share each year ($0.460938 per share per quarter) to Series A Preferred Stock holders, which is equivalent to 7.375% of per annum in the$25.00 liquidation preference per share of Series A Preferred Stock. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us. FromMarch 1, 2018 untilJune 30, 2020 , we paid distributions to our common stockholders at a rate equivalent to$0.85 per annum per share of common stock. Distributions were payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. OnJune 29, 2020 , the Board approved a change in our common stock distribution policy whereby we would no longer declare distributions based on daily record dates. Instead, any future distributions authorized by the Board on shares of our common stock were to be paid on a monthly basis in arrears based on a single record date during the applicable month. As noted herein under our amended Credit Facility we may not pay distributions to holders of common stock in cash or any other cash distributions (including repurchases of shares of the Company's common stock), subject to certain exceptions. These exceptions include paying cash dividends on the Series A Preferred Stock or any other preferred stock we may issue and paying any cash distributions necessary to maintain our status as a REIT. We may not pay any cash distributions (including dividends on Series A Preferred Stock) if a default or event of default exists or would result therefrom. Beginning in theCommencement Quarter we will be able to pay cash distributions to holders of common stock, subject to the restrictions described below. There can be no assurance as to if, or when, we will be able to satisfy these conditions. We may only pay cash distributions beginning in theCommencement Quarter and the aggregate distributions (as defined in the Credit Facility and including dividends on Series A Preferred Stock) for any period of four fiscal quarters do not exceed 95% of Modified FFO (as defined in the Credit Facility) for the same period based only on fiscal quarters after theCommencement Quarter . Until four full fiscal quarters have elapsed after the commencement ofCommencement Quarter , the aggregate amount of permitted distributions and Modified FFO will be determined by using only the fiscal quarters that have elapsed from and after theCommencement Quarter and annualizing those amounts. 63 -------------------------------------------------------------------------------- OnAugust 13, 2020 , the Board changed our common stock distribution policy in order to preserve our liquidity and maintain additional financial flexibility in light of the continued COVID-19 pandemic and to comply with the amended Credit Facility described above. Under the new policy, distributions authorized by the Board on shares of our common stock, if and when declared, are now paid on a quarterly basis in arrears in shares of our common stock valued at the Estimated Per-Share NAV in effect on the applicable date, based on a single record date to be specified at the beginning of each quarter. In each ofOctober 2020 andJanuary 2021 , we declared and paid stock dividends equal to 0.01349 shares of common stock on each share of outstanding common stock , and, inApril 2021 , we declared and paid a stock dividend equal to 0.01466 shares of common stock on each share of outstanding common stock. The amounts of these stock dividends were based on our prior cash distribution rate of$0.85 per share per annum and the then applicable Estimated Per-Share NAV. We did not pay any cash dividends on our common stock during the first quarter of 2021. See "- Overview" for additional information on the impact of the stock dividends. Subject to the restrictions in our amended Credit Facility, the amount of dividends and other distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements ofMaryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986 (the "Code"). Distribution payments are dependent on the availability of funds. The Board may reduce the amount of dividends or distributions paid or suspend dividend or distribution payments at any time and therefore dividend and distribution payments are not assured. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof. The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and OP Units, but excluding distributions related to ClassB Units as these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated: Year-To-Date March 31, 2021 Percentage of (In thousands) Distributions Distributions:
Distributions to common stockholders not reinvested in common stock issued under the DRIP
$ -
Distributions reinvested in common stock issued under the DRIP
- Dividends to preferred stockholders 742 Distributions on OP Units - Total distributions$ 742 Source of distribution coverage: Cash flows provided by operations (1)$ 742
100.0 %
Total source of distribution coverage$ 742
100 %
Cash flows provided by operations (in accordance with GAAP)$ 13,959 Net loss attributable to stockholders (in accordance with GAAP)$ (12,230) ______ (1) Assumes the use of available cash flow from operations before any other sources. For the three months endedMarch 31, 2021 , cash flows provided by operations were$14.0 million . We had not historically generated sufficient cash flow from operations to fund the payment of dividends and other distributions at the current rate prior to switching from paying cash dividends to stock dividends on our common stock. As shown in the table above, we funded distributions with cash flows provided by operations, proceeds received from common stock issued under our DRIP and available cash on hand, comprised of proceeds from financings and dispositions. Because shares of common stock are only offered and sold pursuant to the DRIP in connection with the reinvestment of distributions paid in cash, participants in the DRIP will not be able to reinvest in shares thereunder for so long as we pay distributions in stock instead of cash. 64 -------------------------------------------------------------------------------- Our ability to pay dividends on our Series A Preferred Stock and starting with theCommencement Quarter , other distributions and maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including the duration and scope of the COVID-19 pandemic and its impact on our tenants and properties, our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties. There can be no assurance that we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, and there can be no assurance we will be successful in achieving this objective. We may still pay any cash distributions necessary to maintain our status as a REIT and may not pay any cash distributions (including dividends on Series A Preferred Stock) if a default or event of default exists or would result therefrom under the Credit Facility. The amendment provided that the covenants restricting payment of distributions to a threshold based on Modified FFO and requiring maintenance of a minimum ratio of consolidated total indebtedness to consolidated total asset value and a minimum ratio of adjusted consolidated EBITDA to consolidated fixed charges did not apply for the fiscal quarter endedJune 30, 2020 . In addition, the lenders waived any defaults or event of defaults under those covenants that may have occurred during the fiscal quarter endedJune 30, 2020 as well as any additional default or event of default resulting therefrom prior toAugust 10, 2020 . There can be no assurance our lenders will consent to any amendments or waivers that may become necessary to comply with our Credit Facility in the future. Loan Obligations The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Fannie Mae Master Credit Facilities require interest only payments throughNovember 2021 and principal and interest payments thereafter. Our loan agreements require us to comply with specific reporting covenants. As ofMarch 31, 2021 , we were in compliance with the financial and reporting covenants under our loan agreements. Under our amended Credit Facility, until the first day of theCommencement Quarter , we must use all the net cash proceeds from any capital event (such as an asset sale, financing or equity issuance) to prepay amounts outstanding under the Revolving Credit Facility. We may reborrow any amounts so repaid if all relevant conditions are met, including sufficient availability for future borrowings. There can be no assurance these conditions will be met. Contractual Obligations There were no material changes in our contractual obligations as ofMarch 31, 2021 , as compared to those reported in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Election as a REIT We elected to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year endedDecember 31, 2013 . Commencing with that taxable year, we have been organized and operated in a manner so that we qualify as a REIT under the Code. We intend to continue to operate in such a manner but we can provide no assurances that we will operate in a manner so as to remain qualified for taxation as a REIT. To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and comply with a number of other organizational and operational requirements. If we continue to qualify as a REIT, we generally will not be subject toU.S. federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well asU.S. federal income and excise taxes on our undistributed income. Inflation We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties, which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation. Related-Party Transactions and Agreements Please see Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees. 65
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Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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