National Healthcare Properties Inc

Previous wording

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

Previous wording

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts may be forward-looking statements. Such forward-looking statements include the intent, belief or current expectations of Healthcare Trust, Inc. (“we,” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,”, “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,”, “projects,” “potential,” “predicts,” “intends,” “would,” “could,” “should” or similar expressions, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

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 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 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.

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 June 30, 2024, we owned 207 properties located in 32 states and comprised of 9.0 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 September 30, 2024, we owned 198 properties located in 32 states and comprised of 8.6 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 June 30, 2024, we had four eligible independent contractors operating 45 SHOPs.

Current wording

We operate in two reportable business segments for management and financial reporting purposes: outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”). All of our properties across both business segments are located throughout the United States. In our OMF operating segment, we own, manage and lease single- and multi-tenant OMFs 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 OMFs. In our SHOP segment, we invest in seniors housing properties through the REIT Investment Diversification and Empowerment Act of 2007 structure. As of September 30, 2024, we had four eligible independent contractors operating 44 SHOPs.

Previous wording

On March 27, 2024, we published a new Estimated Per-Share NAV equal to $13.00 as of December 31, 2023. Our previous Estimated Per-Share NAV was equal to $14.00 as of December 31, 2022. 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 20.7 million shares as stock dividends. 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 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.

Previous wording

Please see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Current wording

See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

Previous 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.

Current 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.

Previous 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.

Current 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.

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 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”).

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 September 30, 2024, we owned 198 properties. There were 187 properties owned for the entire year ended December 31, 2023 and the nine months ended September 30, 2024 (our “Same Store Properties”), including one vacant land parcel. Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of 15 properties (our “Disposed Properties”).

Previous 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:

Current 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:

Previous wording

(2)Our MOB segment included 11 Acquired Properties.

Current wording

(2)Our OMF segment included 11 Acquired Properties.

Previous wording

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 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.

Previous wording

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 wording

During the three months ended September 30, 2024, revenue from tenants decreased by $0.6 million in our OMF segment as compared to the three months ended September 30, 2023, which was primarily driven by a $1.3 million decrease in revenue from tenants associated with our Disposed Properties, partially offset by an increase in revenue from tenants of $1.4 million from 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 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.

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 September 30, 2024, property operating and maintenance expenses increased by $1.3 million in our OMF segment as compared to the three months ended September 30, 2023. This increase was primarily driven by our Same Store Properties, partially offset by our Disposed Properties.

Previous wording

(4)Our SHOP segment included 47 total properties (including two land parcels).

Current wording

(4)Our SHOP segment included 45 total properties (including one land parcel).

Previous wording

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 wording

During the three months ended September 30, 2024, revenue increased by $2.6 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily from an increase in revenue from tenants of $3.5 million from our Same Store Properties, partially offset by a $0.9 million decrease in revenue from tenants associated with our Disposed Properties.

Previous 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.

Current wording

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Additionally, we offered more rent concessions to drive occupancy during the three months ended September 30, 2024, which amounted to $1.9 million as compared to $0.8 million during the three months ended September 30, 2023.

Previous 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.

Current wording

During the three months ended September 30, 2024, property operating and maintenance expenses increased by $0.8 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $1.8 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 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.

Current wording

Our Same Store Properties property operating and maintenance expenses increased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily from $1.2 million of increased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, partially offset by decreased costs for contract labor of $0.2 million.

Previous 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.

Current wording

We recorded $8.8 million of impairment charges during the three months ended September 30, 2024. This impairment was recorded to reduce the carrying value of a held-for-use OMFto its estimated fair value. This OMF has been marketed for sale since June 2024. We did not record any impairment charges in the three months ended September 30, 2023.

Previous wording

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.

Current 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.

Previous wording

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 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.

Previous wording

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 wording

We recorded $8.4 million of termination fees to related parties in the three months ended September 30, 2024 as a result of our termination of the Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Previous wording

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 wording

General and administrative expenses increased by $0.7 million to $5.5 million for the three months ended September 30, 2024 compared to $4.8 million for the three months ended September 30, 2023, which includes $3.0 million and $2.8 million, respectively, for the three months ended September 30, 2024 and September 30, 2023, incurred in expense reimbursements. The increase in general and administrative expenses was also attributable to $0.4 million of employee compensation expenses incurred for the three months ended September 30, 2024.

Previous wording

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 wording

Interest expense increased by $2.3 million to $18.0 million for the three months ended September 30, 2024 from $15.7 million for the three months ended September 30, 2023. The increase in interest expense was mainly due to higher average balances of our indebtedness during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Previous wording

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 wording

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). Continued high interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Previous 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.

Current wording

The gain (loss) in the three months ended September 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

Income taxes generally relate to our SHOPs, which are leased to our TRS. We recorded negligible income tax expense for the three months ended June 30, 2024 and 2023.

Current 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.

Previous wording

Because of our TRS’s historical operating losses and the continuing adverse economic impacts since the COVID-19 pandemic on the results of operations of our SHOP assets, we have not been able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets, and accordingly we have retained a full valuation allowance on our deferred tax assets. 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 operations and comprehensive loss.

Current wording

Because of our TRS’s recent operating history of losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets; thus we have recorded a 100% valuation allowance on our net deferred tax assets through September 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 loss.

Previous wording

Allocation for preferred stock was $3.5 million for the three 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.

Current 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.

Previous wording

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 wording

Net loss attributable to common stockholders was $183.1 million and $57.8 million, respectively, for the nine months ended September 30, 2024 and 2023. The following table shows our results of operations for the nine months ended September 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Previous wording

(2)Our MOB segment included 11 Acquisition properties.

Current wording

(2)Our OMF segment included 11 Acquisition Properties.

Previous wording

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 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.

Previous wording

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 wording

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 higher occupancy in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

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 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 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 nine months ended September 30, 2024, property operating and maintenance costs in our OMF segment increased by $2.3 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $2.9 million and our Acquired Properties of $0.2 million, partially offset by a decrease from our Disposed Properties of $0.8 million.

Previous wording

(4)Our SHOP segment included 47 total properties (including two land parcels).

Current wording

(4)Our SHOP segment included 45 total properties (including one land parcel).

Previous wording

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 wording

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. These increases were partially offset by $3.2 million of increased rent concessions offered to drive occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

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 wording

During the nine months ended September 30, 2024, property operating and maintenance expenses increased by $2.5 million in our SHOP segment as compared to the nine months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $6.1 million from our Same Store Properties, partially offset by a decrease of $3.7 million from our Disposed Properties.

Previous wording

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 wording

Our Same Store properties operating and maintenance expenses increased in the nine months ended September 30, 2024 compared to the same period last year, primarily from (i) $4.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $0.5 million of increased management fees paid to our third party operators, (iii) $1.2 million of higher insurance expense and (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 $0.6 million.