Healthcare Trust Inc
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
NHP$15.24+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001561032-24-000012
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001561032-24-000017
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 181 previous paragraphs and 241 current paragraphs.
97 unchanged; 53 reworded; 68 added; 30 removed; 1 previous and 23 current paragraphs rearranged.
Tables are not compared: 11 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (68)
Current report
On July 1, 2024, we announced that, in anticipation of a potential future listing of our common stock on a national securities exchange, we provided notice to the Advisor in June 2024 of our intent to transition to self-management and internalize management functions (the “Internalization”). On August 6, 2024, we entered into the Internalization Agreement with the Merger Sub, the Advisor and the Advisor Parent (each of such terms as defined in Note 1 — Organization).
Current report
We expect the Internalization to take effect no later than the fourth quarter of 2024. There can be no assurance that the Internalization will close within the anticipated time frame, or at all, or that we will be able to list our shares of common stock on a national securities exchange. For additional information about the Internalization, including fees we expect to incur in connection therewith, please see Note 9 — Related Party Transactions and Arrangements.
Current report
(1)Our SHOP segment included 47 Same Store Properties (including two land parcels).
Current report
(3)Our SHOP segment included five Disposed Properties.
Current report
During the three months ended June 30, 2024, revenue increased $2.0 million in our SHOP segment as compared to the three months ended June 30, 2023, primarily from an increase in revenue from tenants of $3.0 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.0 million from our Disposed Properties.
Current report
Termination Fees to Related Parties
Current report
We recorded $98.2 million of termination fees to related parties in the three months ended June 30, 2024 as a result of our intent to terminate the Second A&R Advisory Agreement with the Advisor and transition to self-management through the Internalization. Pursuant to the terms of the Second A&R Advisory Agreement, the termination fee will be payable to the Advisor within 30 days after the effective date of the termination, and such fee is a component of the Closing Payments contemplated by the Internalization Agreement. We expect the Closing to occur no later than the fourth quarter of 2024.
Current report
Acquisition and transaction related expenses increased by $0.3 million to $0.4 million for the three months ended June 30, 2024 as compared to $0.1 million for the three months ended June 30, 2023. This increase was due to $0.2 million of increased dead deal costs, as well as $0.1 million of legal costs specifically related to our Internalization.
Current report
During the three months ended June 30, 2024 we disposed of one SHOP for a contract sales price of $3.3 million and recorded a loss on sale of $0.2 million. This SHOP had been previously impaired by $2.3 million.
Current report
During the three months ended June 30, 2023, we disposed of four SHOPs and one MOB for an aggregate contract sales price of $13.8 million. Two of these SHOPs were previously impaired by $6.2 million. As a result, we recorded an aggregate loss on sale of $0.3 million in the three months ended June 30, 2023.
Current report
Interest expense decreased by $1.0 million to $17.8 million for the three months ended June 30, 2024 from $18.7 million for the three months ended June 30, 2023. The decrease in interest expense mainly resulted from $2.9 million of increased deferred financing cost amortization recognized during the three months ended June 30, 2023 as a result of the termination of our Prior Credit Facility, partially offset by higher average rates and higher average balances of our indebtedness during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 and by $0.9 million of terminated swap amortization recognized during the three months ended June 30, 2023.
Current report
Gains on Non-Designated Derivatives
Current report
The increase in net loss attributable to non-controlling interests in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was due to the increase of our net loss, which primarily resulted from the termination fee to related parties of $98.2 million we recorded in the three months ended June 30, 2024 in connection with our intent to effect the Internalization as described above.
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Information based on Same Store, Acquisitions and Dispositions allows us to evaluate the performance of our portfolio based on a consistent population of properties. Net loss attributable to common stockholders was $138.9 million and $38.3 million, respectively, for the six months ended June 30, 2024 and 2023. The following table shows our results of operations for the six months ended June 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:
Current report
Segment Results — Medical Office Buildings
Current report
During the six months ended June 30, 2024, revenue from tenants increased by $1.7 million in our MOB segment as compared to the six months ended June 30, 2023, primarily as a result of increased revenue from tenants of $1.2 million due to our Acquired Properties and an increase in revenue from tenants of $0.6 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $0.1 million due to our Disposed Properties.
Current report
The increase in our Same Store Properties revenue from tenants was primarily driven by an increase of operating expense reimbursement revenue from increased property, operating and maintenance expenses, as well as from marginally higher occupancy in the six months ended June 30, 2024, as compared to June 30, 2023.
Current report
Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees. During the six months ended June 30, 2024, property operating and maintenance costs in our MOB segment increased by $1.0 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $1.2 million and our Acquired Properties of $0.1 million, partially offset by a decrease from our Disposed Properties of $0.2 million.
Current report
The increase in property operating and maintenance expenses from our Same Store properties is primarily the result of the impacts of inflation on utility and maintenance costs, which are largely reimbursed by tenants.
Current report
The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the six months ended June 30, 2024 and 2023:
Current report
(1)Our SHOP segment included 47 Same Store properties (including two land parcels).
Current report
(3) Our SHOP segment included five Disposed Properties.
Current report
During the six months ended June 30, 2024, revenue from tenants increased by $1.9 million in our SHOP segment as compared to the six months ended June 30, 2023, which was primarily driven by an increase in revenue from tenants of $4.8 million due to our Same Store Properties, partially offset by a decrease in revenue from tenants of $2.9 million due to our Disposed Properties.
Current report
The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, as well as by marginally higher occupancy in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. These increases were partially offset by $2.1 million of increased rent concessions offered during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023
Current report
During the six months ended June 30, 2024, property operating and maintenance expenses increased $1.7 million in our SHOP segment as compared to the six months ended June 30, 2023, primarily due to an increase in property operating and maintenance expenses of $4.2 million from our Same Store Properties, partially offset by a decrease of $2.5 million from our Disposed Properties.
Current report
Other Results of Operations
Current report
We recorded $2.7 million of impairment charges during the six months ended June 30, 2024 on one held-for-use MOB and one SHOP which was disposed in the six months ended June 30, 2024. The held-for-use MOB was impaired by $2.4 million and the disposed SHOP was impaired by $0.3 million. We did not record any impairment charges during the six months ended June 30, 2023.
Current report
Operating Fees to Related Parties
Current report
Operating fees to related parties were consistent at $12.8 million for each of the six months ended June 30, 2024 and 2023.
Current report
Termination Fees to Related Parties
Current report
We recorded $98.2 million of termination fees to related parties in the six months ended June 30, 2024 as a result of our intent to terminate the Second A&R Advisory Agreement with the Advisor and transition to self-management through the Internalization. Pursuant to the terms of the Second A&R Advisory Agreement, the termination fee is payable to the Advisor within 30 days after the effective date of the termination, and such a fee is a component of the Closing Payments contemplated by the Internalization Agreement. We expect the Closing to occur no later than the fourth quarter of 2024. We anticipate funding the Closing Payments primarily with net proceeds from strategic dispositions of MOBs, SHOPs and land parcels.
Current report
Acquisition and Transaction Related Expenses
Current report
Acquisition and transaction related expenses increased by $0.3 million, to $0.5 million for the six months ended June 30, 2024 from $0.2 million for the six months ended June 30, 2023. This increase was due to $0.2 million of increased dead deal costs and $0.1 million of legal costs specifically related to our Internalization.
Current report
General and Administrative Expenses
Current report
General and administrative expenses increased $2.1 million to $11.4 million for the six months ended June 30, 2024 compared to $9.4 million for the six months ended June 30, 2023, which includes $7.0 million and $4.8 million, respectively, for the six months ended June 30, 2024 and 2023, incurred in expense reimbursements. The increase in general and administrative expenses was primarily attributable to $0.7 million of severance payments incurred in the six months ended June 30, 2024 made to former employees of the Advisor.
Current report
Depreciation and Amortization Expenses
Current report
Depreciation and amortization expense increased by $2.0 million to $42.7 million for the six months ended June 30, 2024 as compared with $40.7 million for the six months ended June 30, 2023.
Current report
Gain (Loss) on Sale of Real Estate Investments
Current report
During the six months ended June 30, 2024, we disposed of one SHOP for a contract sales price of $3.3 million. This SHOP had been previously impaired by $2.3 million. As a result, the Company recorded an aggregate loss on sale of $0.2 million in the six months ended June 30, 2024.
Showing the first 40 of 68 passages. Open the source sections for the rest.
Removed paragraphs (30)
Previous report
Revenue from Tenants
Previous report
Property Operating and Maintenance
Previous report
(1)Our SHOP segment included 48 Same Store Properties (including two land parcels).
Previous report
(3)Our SHOP segment included four Disposed Properties.
Previous report
Revenue from Tenants
Previous report
During the three months ended March 31, 2024 and 2023, revenue from tenants was consistent in our SHOP segment, with an increase in revenue from tenants of $1.8 million from our Same Store Properties, partially offset by a decrease in revenue from tenants of $1.9 million from our Disposed Properties.
Previous report
Property Operating and Maintenance
Previous report
Impairment Charges
Previous report
Acquisition and transaction related expenses were consistent at $0.1 million for the three months ended March 31, 2024 and 2023.
Previous report
During the three months ended March 31, 2024 and 2023, we did not dispose of any properties. However, we did record a gain on sale of $0.1 million in the three months ended March 31, 2023, related to various settlements of liens and accruals on formerly disposed properties.
Previous report
This increase was partially offset by the amortization of our terminated swaps, which reduced interest expense in the three months ended March 31, 2024 by $1.0 million compared to March 31, 2023, as well as by a decrease in deferred financing cost amortization of $0.6 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. As of March 31, 2024, there are no unamortized amounts remaining related to terminated swaps.
Previous report
Gains (Losses) on Non-Designated Derivatives
Previous report
Subsequent to March 31, 2024, we drew $7.0 million under the MOB Warehouse Facility. Please see Note 17 — Subsequent Events for additional information.
Previous report
Subsequent to March 31, 2024, we purchased a new non-designated interest rate cap with a notional amount of $7.0 million and a strike price of 3.50%, which matures in January 2027. We paid premiums of $0.3 million for this interest rate cap.
Previous report
Acquisitions — Three Months Ended March 31, 2024
Previous report
Dispositions — Three Months Ended March 31, 2024
Previous report
We did not dispose of any properties during the three months ended March 31, 2024.
Previous report
We have not disposed of any properties subsequent to March 31, 2024. We have entered into a purchase and sale agreement to dispose of one SHOP for a contract sales price of $3.3 million. There can be no assurance that this sale will be completed on its contemplated terms, or at all.
Previous report
Funds from Operations and Modified Funds from Operations
Previous report
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.
Previous report
Because of these factors, the National 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.
Previous report
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 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 sales of certain real estate assets, gains and losses from changes in control and impairment charges 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 our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
Previous report
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.
Previous report
Because of these factors, the Institute 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 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.
Previous report
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 in November 2010, except that we adjust for deferred tax asset allowances based on management’s determination. 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 (with the added adjustment for deferred tax asset allowances based on management’s determination as noted above) and exclude acquisition fees and expenses, amortization of above- and below-market leases 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, mark-to-market adjustments included in net loss, gains or losses included in net loss from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and 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.
Previous report
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. 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.
Previous report
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.
Previous report
Neither the SEC, 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 the SEC 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.
Previous report
(1)Excludes non-real estate depreciation and amortization.
Previous report
(2)Represents additional non-cash reserves against our deferred tax asset, which we do not consider relevant to our operations.
Reworded paragraphs (53)
Previous wording
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. These risks and uncertainties include the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants and the global economy and financial markets; that any potential future acquisition by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. 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 ended December 31, 2023 (as amended) as well as Part II — Other Information, Item IA — Risk Factors below.
Current wording
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. These risks and uncertainties include the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on us, our tenants, operators and the global economy and financial markets; that any potential future acquisitions by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. 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 ended December 31, 2023 (as amended) as well as Part II — Other Information, Item IA — Risk Factors below.
Previous wording
We are an externally managed entity that for U.S. federal income tax purposes has qualified as a real estate investment trust (“REIT”). We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on medical office and other healthcare-related buildings and senior housing operating properties. As of March 31, 2024, we owned 208 properties located in 33 states and comprised of 9.1 million rentable square feet.
Current wording
We are an externally managed entity that for U.S. federal income tax purposes has qualified as a real estate investment trust (“REIT”). We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on medical office and other healthcare-related buildings and senior housing operating properties. As of June 30, 2024, we owned 207 properties located in 32 states and comprised of 9.0 million rentable square feet.
Previous wording
We operate in two reportable business segments for management and financial reporting purposes: medical office and other health-care related buildings (“MOBs”) and senior housing operating properties (“SHOPs”). All of our properties across both business segments are located throughout the United States. 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. Our Property Manager or third-party managers manage our MOBs. In our SHOP segment, we invest in seniors housing properties through the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure. As of March 31, 2024, we had four eligible independent contractors operating 46 SHOPs.
Current wording
We operate in two reportable business segments for management and financial reporting purposes: medical office and other health-care related buildings (“MOBs”) and senior housing operating properties (“SHOPs”). All of our properties across both business segments are located throughout the United States. 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. Our Property Manager or third-party managers manage our MOBs. In our SHOP segment, we invest in seniors housing properties through the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure. As of June 30, 2024, we had four eligible independent contractors operating 45 SHOPs.
Previous wording
Further, recent and continuing increases in inflation brought about by labor shortages, supply chain disruptions and increases in interest rates have had, and may continue to have, adverse impacts on our results of operations. Moreover, these increases in the rate of inflation, the ongoing wars in Ukraine, Israel and related sanctions, supply chain disruptions and increases in interest rates may also impact our tenants’ ability to pay rent and hence our results of operations and liquidity.
Current wording
Further, the significant increase in the rate of inflation in recent years brought about by labor shortages, supply chain disruptions and increases in interest rates have had, and may continue to have, adverse impacts on our results of operations. Moreover, these increases in the rate of inflation, the ongoing wars in Ukraine, Israel and related sanctions, supply chain disruptions and increases in interest rates may also impact our tenants’ ability to pay rent and hence our results of operations and liquidity.
Previous wording
Beginning in March 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 trended downward from 85.1% as of December 31, 2019 to a low of 72.0% as of March 31, 2021, and has since recovered to 75.3% as of March 31, 2024.
Current wording
Beginning in March 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 trended downward from 85.1% as of December 31, 2019 to a low of 72.0% as of March 31, 2021, and has since recovered to 76.4% as of June 30, 2024.
Previous wording
The below table presents SHOP occupancy since the onset of our downward occupancy trends, which was exacerbated by the COVID-19 pandemic in March 2020:
Current wording
The below table presents SHOP occupancy since the onset of our previous downward occupancy trends, which was exacerbated by the COVID-19 pandemic in March 2020:
Previous wording
Beginning with the second quarter of 2021, our occupancy and operating costs in our SHOP portfolio were relatively stable. During the year ended December 31, 2022, our third party operators needed to increase their use of temporary contract labor and agencies, and the amount paid for overtime, training and bonus wages, in response to a shortage of workers, the cost of labor generally, lack of qualified personnel that our third party operators are able to employ on a permanent basis and training hours and other onboarding costs for permanent staff which replaced previously utilized contract and agency labor. These contract and agency costs have declined since then. In particular, costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $0.4 million, from $0.7 million in the three months ended March 31, 2023, to $0.3 million as compared to the three months ended March 31, 2024.
Current wording
Beginning with the second quarter of 2021, our occupancy and operating costs in our SHOP portfolio were relatively stable. During the year ended December 31, 2022, our third party operators needed to increase their use of temporary contract labor and agencies, and the amount paid for overtime, training and bonus wages, in response to a shortage of workers, the cost of labor generally, lack of qualified personnel that our third party operators are able to employ on a permanent basis and training hours and other onboarding costs for permanent staff which replaced previously utilized contract and agency labor. These contract and agency costs have declined since then. In particular, costs incurred from contract labor and agencies for care providers decreased in our SHOP segment by $0.3 million, from $0.6 million in the three months ended June 30, 2023, to $0.3 million as compared to the three months ended June 30, 2024.
Previous wording
However, these costs were offset by increased wage costs for direct employees of our third party operators of $0.7 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Likewise, occupancy levels have not recovered to their pre-pandemic rates (as noted in the table above), thus the results of operations in our SHOP segment have been significantly adversely affected by the increase in labor costs even though resident fees have increased.
Current wording
However, these costs were offset by increased wage costs for direct employees of our third party operators of $1.0 million in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Likewise, occupancy levels have not recovered to their pre-pandemic rates (as noted in the table above), thus the results of operations in our SHOP segment have been significantly adversely affected by the increase in labor costs even though resident fees have increased.
Previous wording
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 17, 2023. 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.
Current wording
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 15, 2024, as amended on March 22, 2024. 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.
Previous wording
(3)Gross asset value represents total real estate investments, at cost ($2.6 billion total as of March 31, 2024) net of gross market lease intangible liabilities ($23.5 million total as of March 31, 2024). Cumulative impairment charges are reflected within gross asset value.
Current wording
(3)Gross asset value represents total real estate investments, at cost ($2.6 billion total as of June 30, 2024) net of gross market lease intangible liabilities ($21.0 million total as of June 30, 2024). Cumulative impairment charges are reflected within gross asset value.
Previous wording
(5)Weighted by unit count as of March 31, 2024. As of March 31, 2024, we had 4,164 rentable units in our SHOP segment. The SHOP segment includes one closed SHOP with 30 rentable units, and excludes land parcels.
Current wording
(5)Weighted by unit count as of June 30, 2024. As of June 30, 2024, we had 4,069 rentable units in our SHOP segment. The SHOP segment includes one closed SHOP with 30 rentable units, and excludes land parcels.
Previous wording
Information based on Same Store Properties, Acquired Properties and Disposed Properties (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 of March 31, 2024, we owned 208 properties. There were 197 properties owned for the entire year ended December 31, 2022 and the three months ended March 31, 2024 (our “Same Store Properties), including two vacant land parcels. Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of five properties (our “Disposed Properties”).
Current wording
Information based on Same Store Properties, Acquired Properties and Disposed Properties (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 of June 30, 2024, we owned 207 properties. There were 196 properties owned for the entire year ended December 31, 2023 and the six months ended June 30, 2024 (our “Same Store Properties”), including two vacant land parcels. Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of six properties (our “Disposed Properties”).
Previous wording
Net loss attributable to common stockholders was $19.0 million and $17.5 million, respectively, for the three months ended March 31, 2024, and 2023. The following table shows our results of operations for the three months ended March 31, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:
Current wording
Net loss attributable to common stockholders was $119.9 million and $20.8 million, respectively, for the three months ended June 30, 2024, and 2023. The following table shows our results of operations for the three months ended June 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:
Previous wording
During the three months ended March 31, 2024, revenue from tenants increased by $1.0 million in our MOB segment as compared to the three months ended March 31, 2023, which was primarily driven by an increase in revenue from tenants of $0.7 million due to our Acquired Properties and by an increase in revenue from tenants of $0.3 million due to our Same Store Properties.
Current wording
During the three months ended June 30, 2024, revenue from tenants increased by $0.8 million in our MOB segment as compared to the three months ended June 30, 2023, which was primarily driven by an increase in revenue from tenants of $0.5 million due to our Acquired Properties and by an increase in revenue from tenants of $0.3 million due to our Same Store Properties.
Previous wording
Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees. During the three months ended March 31, 2024, property operating and maintenance expenses increased by $0.7 million in our MOB segment as compared to the three months ended March 31, 2023. This increase was primarily driven by our Same Store Properties.
Current wording
Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees. During the three months ended June 30, 2024, property operating and maintenance expenses increased by $0.3 million in our MOB segment as compared to the three months ended June 30, 2023. This increase was primarily driven by our Same Store Properties.
Previous wording
(4)Our SHOP segment included 48 total properties (including two land parcels).
Current wording
(4)Our SHOP segment included 47 total properties (including two land parcels).
Previous wording
The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, as well as by marginally higher occupancy in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Additionally, we offered more rent concessions to drive occupancy during the three months ended March 31, 2024, which amounted to $1.9 million as compared to $0.6 million during the three months ended March 31, 2023.
Current wording
The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, as well as by marginally higher occupancy in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. Additionally, we offered more rent concessions to drive occupancy during the three months ended June 30, 2024, which amounted to $1.6 million as compared to $0.8 million during the three months ended June 30, 2023.
Previous wording
During the three months ended March 31, 2024, property operating and maintenance expenses increased $0.5 million in our SHOP segment as compared to the three months ended March 31, 2023, primarily due to an increase in property operating and maintenance expenses of $2.4 million in our Same Store Properties, partially offset by a decrease of $1.9 million from our Disposed Properties.
Current wording
During the three months ended June 30, 2024, property operating and maintenance expenses increased $1.1 million in our SHOP segment as compared to the three months ended June 30, 2023, primarily due to an increase in property operating and maintenance expenses of $2.1 million in our Same Store Properties, partially offset by a decrease of $1.0 million from our Disposed Properties.
Previous wording
Our Same Store Properties property operating and maintenance expenses increased in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily from $1.5 million of increased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, $0.7 million of higher insurance expense and the effects of inflation which raised the general costs of food, supplies, and utilities generally. These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $0.4 million.
Current wording
Our Same Store Properties property operating and maintenance expenses increased in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily from $1.4 million of increased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, $0.5 million of higher insurance expense and the effects of inflation which raised the general costs of food, supplies, and utilities generally. These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $0.3 million.
Previous wording
We recorded $0.3 million of impairment charges during the three months ended March 31, 2024. This impairment was recorded to reduce the carrying value of a held-for-use SHOP to its contract sales price of $3.3 million. We have previously recorded impairment charges of $2.3 million on this SHOP in the years ended December 31, 2023 and 2022.
Current wording
We recorded $2.4 million of impairment charges during the three months ended June 30, 2024. This impairment was recorded to reduce the carrying value of a held-for-use MOBto its estimated fair value. This MOB has been marketed for sale since September 2021 and had been previously impaired by$8.6 million in the years ended December 31, 2023 and 2021. We did not record any impairment charges in the three months ended June 30, 2023.
Previous wording
Property management fees were consistent at $0.9 million for the three months ended March 31, 2024 and 2023. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed and depending on the mix of properties managed, as the fee payable for different types of properties varies.
Current wording
Property management fees were consistent at $1.0 million for the three months ended June 30, 2024 and 2023. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed and depending on the mix of properties managed, as the fee payable for different types of properties varies.
Previous wording
General and administrative expenses increased by $1.7 million to $6.8 million for the three months ended March 31, 2024 compared to $5.0 million for the three months ended March 31, 2023, which includes $4.0 million and $2.4 million, respectively, for the three months ended March 31, 2024 and March 31, 2023, incurred in expense reimbursements. The increase in expense reimbursements during the three months ended March 31, 2024 is partly attributable to $0.7 million of severance costs not present in the three months ended March 31, 2023.
Current wording
General and administrative expenses increased by $0.3 million to $4.7 million for the three months ended June 30, 2024 compared to $4.3 million for the three months ended June 30, 2023, which includes $3.0 million and $2.4 million, respectively, for the three months ended June 30, 2024 and June 30, 2023, incurred in expense reimbursements.
Previous wording
Depreciation and amortization expense increased $0.5 million to $20.7 million for the three months ended March 31, 2024 from $20.2 million for the three months ended March 31, 2023.
Current wording
Depreciation and amortization expense increased $1.3 million to $21.9 million for the three months ended June 30, 2024 from $20.6 million for the three months ended June 30, 2023.
Previous wording
As of March 31, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.60% per year. As of March 31, 2023, we had total borrowings of $1.1 billion, at a weighted average interest rate of 5.18% per year. The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.
Current wording
As of June 30, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.61% per year. As of June 30, 2023, we had total borrowings of $1.2 billion, at a weighted average interest rate of 5.49% per year. The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.
Previous wording
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 $0.1 million and $5,000, respectively, for the three months ended March 31, 2024 and 2023. Interest income increased in the three months ended March 31, 2024 due to a higher balance of cash (including restricted cash) as well as higher interest rates on our cash accounts.
Current wording
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 $0.5 million and $0.3 million, respectively, for the three months ended June 30, 2024 and 2023. Interest and other income increased in the three months ended June 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.
Previous wording
The gain in the three months ended March 31, 2024 and the loss in the three months ended March 31, 2023 on non-designated derivative instruments related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our credit facilities, which have floating interest rates. The relevant amounts in each period represent the change in value and any cash received on the non-designated derivatives.
Current wording
The gains in the three months ended June 30, 2024 and 2023 on non-designated derivative instruments related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our credit facilities, which have floating interest rates. The relevant amounts in each period represent the change in value and any cash received on the non-designated derivatives.
Previous wording
Net loss attributable to non-controlling interests was approximately $0 for the three months ended March 31, 2024 and net loss attributable to non-controlling interests was approximately $9,000 for the three months ended March 31, 2023. These amounts represent the portion of our net loss that is related to the Series A Preferred Units held by third parties, Common OP Units held by third parties, and non-controlling interest holders in our subsidiaries that own certain properties.
Current wording
Net loss attributable to non-controlling interests was approximately $0.5 million for the three months ended June 30, 2024 and net loss attributable to non-controlling interests was approximately $22,000 for the three months ended June 30, 2023. These amounts represent the portion of our net loss that is related to the Series A Preferred Units held by third parties, Common OP Units held by third parties, and non-controlling interest holders in our subsidiaries that own certain properties.
Previous wording
Interest expense increased by $0.6 million to $16.4 million for the three months ended March 31, 2024 from $15.8 million for the three months ended March 31, 2023. The increase in interest expense mainly resulted from higher average rates and higher average balances of our indebtedness during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
Interest expense decreased $0.4 million to $34.1 million for the six months ended June 30, 2024 from $34.5 million for the six months ended June 30, 2023. The increase in interest expense mainly resulted from the acceleration of deferred financing costs of $2.6 million from the termination of our Prior Credit Facility, as well as from higher average rates and higher average balances of amounts outstanding under our indebtedness during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.
Previous wording
The following table presents a reconciliation of our net cash provided by operations from our net loss for the three months ended March 31, 2024 and 2023:
Current wording
The following table presents a reconciliation of our net cash provided by operations from our net loss for the six months ended June 30, 2024 and 2023:
Previous wording
The following table presents our net cash used in investing activities for thethree months ended March 31, 2024 and 2023:
Current wording
The following table presents our net cash used in investing activities for thesix months ended June 30, 2024 and 2023:
Previous wording
The following table presents our net cash provided by financing activities for the three months ended March 31, 2024 and 2023:
Current wording
The following table presents our net cash provided by financing activities for the six months ended June 30, 2024 and 2023:
Previous wording
As of March 31, 2024, we had $28.7 million of cash and cash equivalents. The Barclays MOB Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.
Current wording
As of June 30, 2024, we had $29.5 million of cash and cash equivalents. The Barclays MOB Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.
Previous wording
As of March 31, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.4%. Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($28.7 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 ($23.5 million). Cumulative impairment charges are reflected within gross asset value.
Current wording
As of June 30, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.5%. Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($29.5 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 ($21.0 million). Cumulative impairment charges are reflected within gross asset value.
Previous wording
As of March 31, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.60% and a weighted-average remaining term of 4.9 years. The weighted-average interest rate includes the impact of “pay-fixed” swaps that are designated as hedging instruments on a portion of our variable-rate debt, but does not include the impact of our non-designated interest rate caps (discussed below). Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.00% as of March 31, 2024.
Current wording
As of June 30, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.61% and a weighted-average remaining term of 4.6 years. The weighted-average interest rate includes the impact of “pay-fixed” swaps that are designated as hedging instruments on a portion of our variable-rate debt, but does not include the impact of our non-designated interest rate caps (discussed below). Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.01% as of June 30, 2024.
Previous wording
As of March 31, 2024, the carrying value of our real estate investments, at cost was $2.6 billion, with $1.4 billion of this asset value pledged as collateral for mortgage notes payable and $637.9 million of this asset value pledged to secure advances under our credit facilities. 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 facilities, which would impact availability thereunder.
Current wording
As of June 30, 2024, the carrying value of our real estate investments, at cost was $2.6 billion, with $1.4 billion of this asset value pledged as collateral for mortgage notes payable and $649.6 million of this asset value pledged to secure advances under our credit facilities. 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 facilities, which would impact availability thereunder.
Previous wording
Unencumbered real estate investments, at cost as of March 31, 2024 was $634.9 million. There can be no assurance as to the amount of liquidity we would be able to generate from leveraging these unencumbered real estate investments, if we are able to leverage them at all.
Current wording
Unencumbered real estate investments, at cost as of June 30, 2024 was $621.0 million. There can be no assurance as to the amount of liquidity we would be able to generate from leveraging these unencumbered real estate investments, if we are able to leverage them at all.
Previous wording
As of March 31, 2024, we had $828.6 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap at a weighted-average annual interest rate of 4.60% and a weighted-average remaining term of 5.9 years. Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.9 million and $13.3 million, respectively.
Current wording
As of June 30, 2024, we had $828.3 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap at a weighted-average annual interest rate of 4.60% and a weighted-average remaining term of 5.6 years. Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.6 million and $13.3 million, respectively.
Previous wording
As of March 31, 2024, $359.6 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.89% and had a weighted-average remaining term of 2.6 years. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.93% as of March 31, 2024.
Current wording
As of June 30, 2024, $365.1 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.90% and had a weighted-average remaining term of 2.3 years. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.95% as of June 30, 2024.
Previous wording
As of March 31, 2024, $344.8 million was outstanding under our Fannie Mae Master Credit Facilities which bore interest at a weighted-average annual rate of 7.87%. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on the Fannie Mae Master Credit Facilities was 5.91% as of March 31, 2024.
Current wording
As of June 30, 2024, $343.4 million was outstanding under our Fannie Mae Master Credit Facilities which bore interest at a weighted-average annual rate of 7.87%. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on the Fannie Mae Master Credit Facilities was 5.91% as of June 30, 2024.
Previous wording
We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. We do not expect to draw any further amounts on 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 SOFR for one month U.S. dollar-denominated deposits and a spread (2.41% and 2.46% for the Capital One Facility and the KeyBank Facility, respectively) with a combined floor of 2.62%. The Fannie Mae Master Credit Facilities mature on November 1, 2026. Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2024 and 2025 are $4.3 million and $5.8 million, respectively.
Current wording
We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. We do not expect to draw any further amounts on 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 SOFR for one month U.S. dollar-denominated deposits and a spread (2.41% and 2.46% for the Capital One Facility and the KeyBank Facility, respectively) with a combined floor of 2.62%. The Fannie Mae Master Credit Facilities mature on November 1, 2026. Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2024 and 2025 are $2.9 million and $5.8 million, respectively.
Showing the first 40 of 53 pairs. Open the source sections for the rest.
Rearranged current paragraphs (23)
Current report — wording carried from elsewhere
The following table presents the revenue and property operating and maintenance expense and the period to period change within our MOB segment for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
(1)Our MOB segment included 149 Same Store properties.
Current report — wording carried from elsewhere
(2)Our MOB segment included 11 Acquisition properties.
Current report — wording carried from elsewhere
(3)Our MOB segment included one Disposition property.
Current report — wording carried from elsewhere
(4)Our MOB segment included 160 properties.
Current report — wording carried from elsewhere
Revenue from tenants primarily reflects contractual rent received from tenants in our MOBs and operating expense reimbursements. These reimbursements 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.
Current report — wording carried from elsewhere
Segment Results — Seniors Housing - Operating Properties
Current report — wording carried from elsewhere
(2)Our SHOP segment did not include any Acquired Properties.
Current report — wording carried from elsewhere
(4)Our SHOP segment included 47 total properties (including two land parcels).
Current report — wording carried from elsewhere
Revenues 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 relate 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.
Current report — wording carried from elsewhere
Our Same Store properties operating and maintenance expenses increased in the six months ended June 30, 2024 compared to the same period last year, primarily from (i) $2.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $1.3 million of increased management fees paid to our third party operators, (iii) $1.2 million of higher insurance expense, (iv) the effects of inflation which raised the general costs of food, supplies, and utilities generally. These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $0.5 million.
Current report — wording carried from elsewhere
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 six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis (see —Results of Operations— Comparison of the Three Months Ended June 30, 2024 and 2023 for additional information). Asset management fees were $10.9 million for both the six months ended June 30, 2024 and 2023. Variable asset management fees will further increase if we issue additional equity securities in the future. There were no incentive fees incurred in either of the six months ended June 30, 2024 or 2023.
Current report — wording carried from elsewhere
Property management fees were consistent at $1.9 million and $1.8 million, respectively, for the six months ended June 30, 2024 and 2023. Property management fees increase or decrease in direct correlation with gross revenues of the properties managed and depending on the mix of properties managed, as the fee payable for different types of properties varies.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
As of June 30, 2024, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.61% per year. As of June 30, 2023, we had total borrowings of $1.2 billion, at a weighted average interest rate of 5.49% per year. The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.
Current report — wording carried from elsewhere
Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings, among other factors (including the impact of variable rates to the extent such borrowings are not hedged). Recent and continuing increases in interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.
Current report — wording carried from elsewhere
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 $0.5 million for the six months ended June 30, 2024 and approximately $0.3 million for the six months ended June 30, 2023. Interest and other income increased in the six months ended June 30, 2024 from $0.4 million of excess insurance reimbursement as well as higher interest rates on, and balances of, our cash accounts.
Current report — wording carried from elsewhere
Gain (loss) on non-designated derivative instruments for the six months ended June 30, 2024 and 2023 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with the Fannie Mae Master Credit Facilities, which have floating interest rates.
Current report — wording carried from elsewhere
Income taxes generally relate to our SHOPs, which are leased to our TRS. We recorded an income tax expense of approximately $0.1 million for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Because of our TRS’s recent operating history of losses and the impacts of the COVID-19 pandemic on the results of operations of our SHOP assets, in the third quarter of 2020, we were not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets and recorded a full valuation allowance. Since that time, our TRS’s operating performance has not significantly improved and thus we have recorded a 100% valuation allowance on our net deferred tax assets through June 30, 2024. 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).
Current report — wording carried from elsewhere
Net loss attributable to non-controlling interests was approximately $0.5 million for the six months ended June 30, 2024 and net loss attributable to non-controlling interests was approximately $31,000 for the six months ended June 30, 2023, which represents the portion of our net income that is related to the Series A Preferred Units held by third parties (issued in connection with a property acquisition in September, 2021), Common OP Units held by third parties, and other non-controlling interest holders in our subsidiaries that own certain properties.
Current report — wording carried from elsewhere
Allocation for preferred stock was $6.9 million for the six months ended June 30, 2024 and 2023. These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and holders of Series B Preferred Stock.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We did not record any impairment charges in the three months ended March 31, 2023.