National Healthcare Properties, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of National Healthcare Properties, Inc. (formerly known as Healthcare Trust, Inc.) and the notes thereto. As used herein, the terms the “Company,” “we,” “our” and “us” refer to National Healthcare Properties, Inc., a Maryland corporation, including, as required by context, National Healthcare Properties Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries. Prior to consummation of the Internalization (as defined below), the Company was externally managed by Healthcare Trust Advisors, LLC (the “Advisor”), a Delaware 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.

Current wording

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of National Healthcare Properties, Inc. and the notes thereto. As used herein, the terms the “Company,” “we,” “our” and “us” refer to National Healthcare Properties, Inc., a Maryland corporation, including, as required by context, National Healthcare Properties Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries. Prior to consummation of the Internalization (as defined below), the Company was externally managed by Healthcare Trust Advisors, LLC (the “Advisor”), a Delaware 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.

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, 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 additional 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 internalization of our property management and advisory functions; the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine, including related impact on us, our tenants, operators and the global economy and financial markets; the increased economic and political uncertainties due to the tariffs imposed by, or imposed on, the United States and its trading relationships; and that our ongoing or potential future transactions are subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. Some of the additional 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, 2024 as well as Part II — Other Information, Item IA — Risk Factors below.

Previous wording

We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on outpatient medical facilities and senior housing operating properties. As of September 30, 2024, we owned 198 properties located in 32 states and comprised of 8.6 million rentable square feet.

Current wording

We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on outpatient medical facilities and senior housing operating properties. As of March 31, 2025, we owned 181 properties (including one land parcel) located in 30 states and comprised of 7.6 million rentable square feet.

Previous wording

Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”). Prior to the Internalization, the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us. In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce after terminating the Advisory Agreement; the Property Manager became our wholly-owned subsidiary as a result of the Internalization and the Property Management Agreement remains in place as an intercompany agreement (see Note 9 — Related Party Transactions and Arrangements in Part I, Item 1 in this Quarterly Report on Form 10-Q).

Current wording

Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”); the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us. In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce; the Property Manager became our wholly-owned subsidiary as a result of the Internalization (See Note 1 - Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q).

Previous wording

On March 27, 2024, we published a new Estimated Per-Share NAV equal to $13.00 as of December 31, 2023. The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV. Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding will increase when dividends paid in stock are issued; however, because each stockholder will receive the same number of new shares, the total value of our common stockholder’s investment, all things equal, will not change assuming no sales or other transfers. Since October 2020, we issued an aggregate of approximately 5.2 million shares as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)). No other additional shares of common stock have been issued since October 2020. We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless and until we list our common stock.

Current wording

On March 26, 2025, we published a new Estimated Per-Share NAV equal to $32.15 as of December 31, 2024. The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until our board of directors (“Board”) determines a new Estimated Per-Share NAV. We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless and until we list our common stock.

Previous wording

On September 27, 2024, we consummated the Internalization after, among other things, terminating the Advisory Agreement with the Advisor. For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q. As a result of the Internalization, our termination of the Advisory Agreement and the Property Manager becoming our wholly-owned subsidiary, we will no longer incur the asset management, property management and other fees and expenses that we were obligated to pay to the Advisor and its affiliates prior to the Internalization. With an internalized workforce, we have incurred and will continue to incur costs for employee compensation and other general and administrative expenses.

Current wording

On September 27, 2024, we consummated the Internalization after, among other things, terminating the advisory agreement with the Advisor. For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q. As a result of the Internalization, our termination of the advisory agreement and the Property Manager becoming our wholly-owned subsidiary, we no longer incur the asset management, property management and other fees and expenses that we were obligated to pay to the Advisor and its affiliates prior to the Internalization. With an internalized workforce, we have incurred and will continue to incur costs for employee compensation and other general and administrative expenses.

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, 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.

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, 2024 filed with the SEC on February 27, 2025. 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($2.5 billion total as of September 30, 2024) net of gross market lease intangible liabilities ($23.5 million total as of September 30, 2024). Cumulative impairment charges are reflected within gross asset value.

Current wording

(3)Gross asset value represents total real estate investments, at cost($2.3 billion total as of March 31, 2025) net of gross market lease intangible liabilities ($20.0 million total as of March 31, 2025). Cumulative impairment charges are reflected within gross asset value.

Previous wording

(4)Includes one parcel of land. As of September 30, 2024, we had 3,919 rentable units in our SHOP segment. The SHOP segment excludes one closed SHOP with 39 rentable units, one SHOP with 20 units under renovation and land parcel.

Current wording

(4)Includes one parcel of land. As of March 31, 2025, we had 3,939 rentable units in our SHOP segment. The SHOP segment excludes one closed SHOP with 39 rentable units and a land parcel.

Previous wording

Net loss attributable to common stockholders was $44.1 million and $19.6 million, respectively, for the three months ended September 30, 2024, and 2023. The following table shows our results of operations for the three months ended September 30, 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 $5.0 million and $19.0 million, respectively, for the three months ended March 31, 2025, and 2024. The following table shows our results of operations for the three months ended March 31, 2025 and 2024 and the period to period change by line item of the consolidated statements of operations:

Previous wording

Revenue from tenants primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our OMF segment. Pursuant to many of our lease agreements in our OMFs, 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 wording

Revenue from tenants primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our OMF segment. Pursuant to many of our lease agreements in our OMFs, 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 expenses reflect the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees.

Previous wording

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 wording

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents 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.

Previous wording

See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges.

Current wording

We recorded $11.9 million of impairment charges during the three months ended March 31, 2025, related primarily to two held-for-use SHOPs ($11.2 million) and one held-for-use OMF ($0.7 million). These properties were impaired to their contractual sales price as determined by their purchase and sale agreements and were subsequently sold in April 2025 or expected to be sold. See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges.

Previous wording

Prior to the consummation of the Internalization, the Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis. Operating fees to these related parties were consistent at $6.4 million for the three months ended September 30, 2024 and 2023, including asset management fees of $5.5 million and property management fees of $0.9 million for both the three months ended September 30, 2024 and 2023. There were no incentive fees incurred in either of the three months ended September 30, 2024 or 2023.

Current wording

Prior to the consummation of the Internalization, our former Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis. Following the consummation of the Internalization, we are no longer paying the above-referenced fees to the related parties.

Previous wording

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 wording

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 to our former Advisor.

Previous wording

Depreciation and amortization expense decreased by $0.1 million to $20.7 million for the three months ended September 30, 2024 from $20.8 million for the three months ended September 30, 2023.

Current wording

Depreciation and amortization expense increased by$3.0 million to $23.7 million for the three months ended March 31, 2025 from $20.7 million for the three months ended March 31, 2024. The increase was primarily attributable to amortization of deferred leasing commissions.

Previous wording

Gain (Loss) on Sale of Real Estate Investments

Current wording

Gain on Sale of Real Estate Investments

Previous wording

During the three months ended September 30, 2024, we disposed of seven OMFs, one SHOP and one land parcel for an aggregate contract sales price of $79.3 million and recorded an aggregate gain on sale of $1.6 million. These seven OMFs had been previously impaired by $10.6 million in the year ended December 31, 2022.

Current wording

During the three months ended March 31, 2025, we disposed of twelve OMFs for an aggregate contract sales price of $168.4 million and recorded an aggregate gain on sale of $25.0 million. During the three months ended March 31, 2024, we did not dispose of any properties.

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 $0.5 million and $0.3 million, respectively, for the three months ended September 30, 2024 and 2023. Interest and other income increased in the three months ended September 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Current wording

Interest and other (expense) income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period. Interest and other (expense) income was relatively flat for the three months ended March 31, 2025 and 2024.

Previous wording

Income taxes generally relate to our SHOPs, which are leased to our TRS. We recorded an income tax expense of approximately nil and $0.2 million for the three months ended September 30, 2024 and 2023, respectively.

Current wording

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 three months ended March 31, 2024. Income tax expense for the three months ended March 31, 2025 was not material.

Previous wording

Allocation for preferred stock was $3.5 million for the three months ended September 30, 2024 and 2023. These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and Series B Preferred Stock.

Current wording

Allocation for preferred stock was $3.5 million for each of the three months ended March 31, 2025 and 2024. These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and Series B Preferred Stock.

Previous wording

The following table presents a reconciliation of our net cash provided by operations from our net loss for the nine months ended September 30, 2024 and 2023:

Current 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, 2025 and 2024:

Previous wording

Our existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), the repayment of the Promissory Note (as discussed below) and distributions to holders of our Series A Preferred Stock and Series B 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 to meet our financial obligations for at least the next twelve months. Our future liquidity requirements and available liquidity, however, depend on many factors, such as recent and continuing increases in inflation, labor shortages, supply chain disruptions and higher property insurance, property tax and interest rates, all of which have and may continue to have adverse impacts on our results of operations and thus ultimately our liquidity. Moreover, these adverse impacts, as well as the ongoing wars in Ukraine, Israel and related sanctions, may also impact our tenant and residents’ ability to pay rent and thus our cash flows.

Current wording

Our future liquidity requirements and available liquidity, however, depend on many factors, such as recent and continuing increases in inflation, labor shortages, supply chain disruptions and higher property insurance, property tax and interest rates, all of which have and may continue to have adverse impacts on our results of operations and thus ultimately our liquidity. Moreover, these adverse impacts, as well as the increased economic and political uncertainties due to the ongoing wars in Ukraine, Israel and related sanctions and the tariffs imposed by, or imposed on, the United States and its trading relationships, may also adversely impact our tenants’ and residents’ ability to pay rent and thus our cash flows.

Previous wording

We expect to fund our future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our operating activities, potential future advances under our Fannie Mae Master Credit Facilities and OMF Warehouse Facility, net cash provided by our property dispositions (as discussed below) and potential new financings utilizing certain of our currently unencumbered properties.

Current wording

We expect to fund our future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our operating activities, potential future advances under our Fannie Mae Master Credit Facilities, net cash provided by our property dispositions (as discussed below) and potential new financings utilizing certain of our currently unencumbered properties.

Previous wording

As of September 30, 2024, we had $32.9 million of cash and cash equivalents. The Barclays OMF 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 March 31, 2025, we had $71.4 million of cash and cash equivalents. The Barclays OMF Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.

Previous wording

Pursuant to the merger agreement dated August 6, 2024 (the “Internalization Agreement”) effecting the Internalization, (i) the outstanding membership interests of the Advisor were converted into the right to receive from us an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that we would have been required to pay to the Advisor during the remaining three month notice period required to terminate the Advisory Agreement, and (y) a property management fee of $2.9 million, representing the aggregate Management Fees (as defined in the Property Management Agreement) that we would have been required to pay to the Property Manager through the current term of the Property Management Agreement, subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million). For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

Pursuant to the merger agreement dated August 6, 2024 (the “Internalization Agreement”) effecting the Internalization, (i) the outstanding membership interests of the Advisor were converted into the right to receive from us an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate base management fee that we would have been required to pay to our former Advisor during the remaining three month notice period required to terminate the advisory agreement, and (y) a property management fee of $2.9 million, representing the aggregate management fees that we would have been required to pay to the Property Manager through the current term of the property management agreement, subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million). For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Previous wording

Following the Internalization, we are no longer required to pay asset management and property management fees to the Advisor Parent. We paid total asset management fees of $5.5 million and $16.4 million, respectively, during the three and nine months ended September 30, 2024 and total property management fees, including capitalized leasing commissions, of $1.1 million and $3.6 million, respectively, during the three and nine months ended September 30, 2024, exclusive of the asset management fee and property management fee paid to the Advisor Parent as part of the Closing Payments discussed above.

Current wording

Following the Internalization, we are no longer required to pay asset management and property management fees to the Advisor Parent.

Previous wording

As of September 30, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 46.1%. Net debt totaled $1.2 billion, which represents gross debt ($1.2 billion) less cash and cash equivalents ($32.9 million). Gross asset value totaled $2.5 billion, which represents total real estate investments, at cost ($2.5 billion) net of gross market lease intangible liabilities ($23.5 million). Cumulative impairment charges are reflected within gross asset value.

Current wording

As of March 31, 2025, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.6%. Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($71.4 million). Gross asset value totaled $2.3 billion, which represents total real estate investments, at cost ($2.3 billion) net of gross market lease intangible liabilities ($20.0 million). Cumulative impairment charges are reflected within gross asset value.

Previous wording

As of September 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 4.4 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 September 30, 2024.

Current wording

As of March 31, 2025, we had total gross borrowings of $1.1 billion, at a weighted-average interest rate of 5.40% and a weighted-average remaining term of 3.9 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 5.1% as of March 31, 2025.

Previous wording

As of September 30, 2024, the carrying value of our real estate investments, at cost was $2.5 billion, with $1.3 billion of this asset value pledged as collateral for mortgage notes payable and $650.4 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 March 31, 2025, the carrying value of our real estate investments, at cost was $2.3 billion, with $1.2 billion of this asset value pledged as collateral for mortgage notes payable and $655.1 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 September 30, 2024 was $523.4 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 March 31, 2025 was $427.0 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 September 30, 2024, we had $828.0 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 5.4 years. Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.3 million and $13.3 million, respectively.

Current wording

As of March 31, 2025, we had $721.0 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 4.63% and a weighted-average remaining term of 5.1 years.

Previous wording

During the nine months ended September 30, 2024, we entered into the BMO CPC Mortgage Loan in connection with a four-property acquisition also completed in the nine months ended September 30, 2024. The mortgage has a principal balance of $7.5 million, bears interest at an annual fixed rate of 6.84% and matures in February 2034 with no principal amounts due until that time.

Current wording

During the three months ended March 31, 2024, we entered into the BMO CPC Mortgage Loan in connection with a four-property acquisition also completed in the three months ended March 31, 2025. The mortgage has a principal balance of $7.5 million, bears interest at an annual fixed rate of 6.84% and matures in March 2034 with no principal amounts due until that time.

Previous wording

As of September 30, 2024, $363.7 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.91% and had a weighted-average remaining term of 2.1 years. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.94% as of September 30, 2024.

Current wording

As of March 31, 2025, $360.8 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 6.93% and had a weighted-average remaining term of 1.6 years. Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.95% as of March 31, 2025.

Previous wording

As SOFR has increased beyond 3.50%, we received cash payments of $5.4 million in the three months ended September 30, 2024. We received $3.9 million of cash payments in the three months ended September 30, 2023.

Current wording

As SOFR has increased beyond 3.50%, we received cash payments of $0.9 million in the three months ended March 31, 2025. We received $1.8 million of cash payments in the three months ended March 31, 2024.

Previous wording

We paid total premiums of $1.7 million to renew one cap with an aggregate notional amount of $58.1 million which matures in April 2024, and to execute a new cap of $7.0 million, which matures in January 2027. We have five interest rate caps with a notional amount of $289.4 million which mature in 2025, which represents the next maturing interest rate caps. During the year ended December 31, 2023, we paid premiums of $10.0 million to renew expiring interest rate cap contracts.

Current wording

We have five interest rate caps with a notional amount of $289.4 million which mature in 2025, which represents the next maturing interest rate caps.

Previous wording

During the nine months ended September 30, 2024, our capital expenditures were $16.4 million, of which $6.1 million related to our OMF segment and $10.3 million related to our SHOP segment. We anticipate this rate of capital expenditures for the OMF and SHOP segments throughout the remainder of 2024.

Current wording

During the three months ended March 31, 2025, our capital expenditures were $5.7 million, of which $3.6 million related to our OMF segment and $2.1 million related to our SHOP segment. We anticipate our quarterly rate of capital expenditures for the OMF and SHOP segments throughout the remainder of 2025 to be relatively stable.

Previous wording

This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”). A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net loss attributable to common stockholders, are provided below.

Current wording

This section discusses certain of the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”). A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net loss attributable to common stockholders, are provided below.

Previous wording

We consider FFO and AFFO to be useful supplemental measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent, nor are they meant to replace, cash flows from operations and net income or loss as defined by GAAP, and should not be considered alternatives to those measures in evaluating our liquidity or operating performance. Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements and are not necessarily indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders. Additionally, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition or that interpret the current NAREIT definition or define AFFO differently than we do.

Current wording

We consider FFO and AFFO to be useful supplemental measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed below, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent, nor are they meant to replace, cash flows from operations and net income or loss as defined by GAAP, and should not be considered alternatives to those measures in evaluating our liquidity or operating performance. Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements as an indication of our operational performance and are not necessarily indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders. Additionally, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition or that interpret the current NAREIT definition or define AFFO differently than we do.

Previous wording

We also believe that AFFO is a meaningful supplemental non-GAAP measure of our operating results. We calculate AFFO by further adjusting FFO to reflect the performance of our portfolio for items we believe are not directly attributable to our operations. We believe that AFFO is a beneficial indicator of our ongoing portfolio performance and isolates the financial results of our operations. Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs (including certain expenses directly related to the Internalization and the Reverse Stock-Split), (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense and (ix) similar adjustments for non-controlling interests and unconsolidated entities. We believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry and is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.

Current wording

We also believe that AFFO is a meaningful supplemental non-GAAP measure of our operating results. We calculate AFFO by further adjusting FFO to reflect the performance of our portfolio for items we believe are not directly attributable to our operations. We believe that AFFO is a beneficial indicator of our ongoing portfolio performance and isolates the financial results of our operations. Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs (including certain expenses directly related to the Internalization and the Reverse Stock-Split), (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties, (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense, (ix) casualty-related charges, (x) gains or losses on extinguishment of debt and (xi) similar adjustments for non-controlling interests and unconsolidated entities. We believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry and is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.