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What changed in Sila Realty Trust, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Sila Realty Trust, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+210 added−251 removedSource: 10-K (2024-03-06) vs 10-K (2023-03-16)

Top changes in Sila Realty Trust, Inc.'s 2023 10-K

210 paragraphs added · 251 removed · 173 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+3 added−23 removed43 unchanged
Biggest changeInvestment Decisions In evaluating investments in properties, we consider various factors, including, to the extent such information is available with respect to such property, the following: • proposed purchase price, terms and conditions; • physical condition, age, curb appeal and environmental reports; • location, visibility and access; • historical financial performance; 4 Table of Contents • tenant rent roll and tenant creditworthiness; • lease terms, including rent, rent increases, length of lease term, specific tenant and landlord responsibilities, renewal, expansion, termination, purchase options, exclusive and permitted uses provisions, assignment and sublease provisions, and co-tenancy requirements; • local market economic conditions, demographics and population growth patterns; • neighboring properties; and • potential for new property construction in the area.
Biggest changeWe monitor tenant credit by: (1) reviewing the credit ratings of tenants (or their parent companies) that are rated by nationally recognized rating agencies; (2) reviewing financial statements that are publicly available or that are required to be delivered to us under the applicable lease; (3) monitoring industry reports and other available information regarding our tenants and their underlying businesses; (4) monitoring the timeliness of rent collections; and (5) conducting periodic inspections of our properties to ascertain proper maintenance, repair and upkeep. 3 Table of Contents Investment Decisions In evaluating investments in properties, we consider various factors, including, to the extent such information is available with respect to such property, the following: • proposed purchase price, terms and conditions; • physical condition, age, and environmental reports; • location, visibility and access; • historical financial performance; • tenants in place and tenant creditworthiness; • lease terms, including rent, rent increases, length of lease term, specific tenant and landlord responsibilities, renewal, expansion, termination, purchase options, exclusive and permitted uses provisions, assignment and sublease provisions, and co-tenancy requirements; • local market economic conditions, demographics and population growth patterns; • neighboring properties; and • potential for new property construction in the area.
Our compensation and benefits program is designed to attract and retain talent and we review our compensation and benefits against market and industry benchmarks to ensure they are competitive. Our employees are offered significant flexibility to meet personal and family needs.
Our compensation and benefits program is designed to attract and retain talent. We review our compensation and benefits against market and industry benchmarks to ensure they are competitive. Our employees are offered significant flexibility to meet personal and family needs.
We raised the equity capital for our real estate investments through two public offerings, or our Offerings, from May 2014 through November 2018, and we have offered shares pursuant to our distribution reinvestment plan, or the DRIP, pursuant to two Registration Statements on Form S-3, together the DRIP Offerings and each a DRIP Offering, since November 2017.
We raised the equity capital for our real estate investments through two public offerings, or our Offerings, from May 2014 through November 2018, and we have offered shares through our distribution reinvestment plan, or the DRIP, pursuant to three Registration Statements on Form S-3, together the DRIP Offerings and each a DRIP Offering, since November 2017.
Substantially all of Sila Realty Trust, Inc.'s business is conducted through Sila Realty Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. Sila Realty Trust, Inc. is the sole general partner of the Operating Partnership and directly owns 100% of the Operating Partnership.
Substantially all of Sila Realty Trust, Inc.'s business is conducted through Sila Realty Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. Sila Realty Trust, Inc. is the sole general partner of the Operating Partnership and directly and indirectly owns 100% of the Operating Partnership.
At the time we determine to dispose of our properties, we are typically in competition with sellers of similar properties to locate suitable purchasers for our properties. Concentration of Credit Risk and Significant Tenants As of December 31, 2022, we had cash on deposit in certain financial institutions that had deposits in excess of current federally insured levels.
At the time we determine to dispose of our properties, we are typically in competition with sellers of similar properties to locate suitable purchasers for our properties. Concentration of Credit Risk and Significant Tenants As of December 31, 2023, we had cash on deposit in certain financial institutions that had deposits in excess of current federally insured levels.
The Board may revise our investment objectives and policies if it determines that it is in the best interest of our stockholders. Investment Strategy We focus our investment activities on acquiring preferably net-leased properties that are primarily in the healthcare sector.
The Board may revise our investment objectives and policies if it determines that it is in the best interest of our stockholders. Investment Strategy We focus our investment activities on acquiring properties, preferably on a net-leased basis, that are primarily in the healthcare sector.
Investment Objectives and Policies Our primary investment objectives at this time are to: • acquire high quality healthcare properties leased to tenants along the continuum of care, capitalizing on critical and structural economic growth drivers; 3 Table of Contents • pay regular cash distributions to stockholders; • preserve, protect and return capital contributions to stockholders; • realize appreciated growth in the value of our investments upon the sale of such investments in whole or in part; and • be prudent, patient and deliberate with respect to the purchase and sale of our investments considering current and future real estate markets.
Investment Objectives and Policies Our primary investment objectives at this time are to: • acquire high quality healthcare properties leased to tenants along the continuum of care, capitalizing on critical and structural economic growth drivers; • pay regular cash distributions to stockholders; • preserve, protect and return capital contributions to stockholders; • realize appreciated growth in the value of our investments upon the sale of such investments in whole or in part; and • be prudent, patient and deliberate with respect to the purchase and sale of our investments considering current and projected real estate markets.
The determination of whether an asset will be sold or otherwise disposed of is made after consideration of relevant factors, including prevailing economic conditions, specific real estate market conditions, tax implications for our stockholders, and other factors.
The determination of whether an asset will be sold or otherwise disposed of is made after consideration of relevant factors, including prevailing economic conditions, specific real 4 Table of Contents estate market conditions, tax implications for our stockholders, and other factors.
We seek to obtain investments that are (i) essential to the successful business operations of the tenants; (ii) leased to creditworthy and investment grade tenants, preferably on a net-leased basis; (iii) long-term leases, preferably with terms of six years or longer, which typically include annual or periodic fixed rental increases; and (iv) located in geographically diverse, established markets with superior access and visibility.
We seek to obtain investments that are (i) essential to the successful business operations of the tenants; (ii) leased to creditworthy and investment grade tenants, preferably on a net-leased basis; (iii) leased to tenants on a long-term basis, which typically include annual or periodic fixed rental increases; and (iv) located in geographically diverse, established markets with superior access and visibility.
The neighborhood in which the new office building is located is part of a community that has achieved the WELL Design & Operations designation under the WELL Community Standard, the first neighborhood to do so globally. The WELL Building Standard takes a holistic approach to health in the built environment addressing behavior, operations and design.
The neighborhood in which the office building is located is part of a community that has achieved the WELL Design & Operations designation under the WELL Community Standard, the first neighborhood to do so in North America. The WELL Building Standard takes a holistic approach to health in the built environment addressing behavior, operations and design.
The following table shows the tenant that accounted for 10% or more of our rental revenue for the year ended December 31, 2022: Tenant Total Number of Leases Leased Sq Ft 2022 Rental Revenue (in thousands) Percentage of 2022 Rental Revenue Post Acute Medical, LLC, and its affiliates (1) 15 708,817 $ 27,279 15.2 % (1) The leases are with tenants under the common control of Post Acute Medical, LLC and its affiliates and have lease expiration dates between 2030 and 2042. 6 Table of Contents The following table shows the geographic diversification of our real estate properties that accounted for 10% or more of our rental revenue for the year ended December 31, 2022: Location Total Number of Leases Leased Sq Ft 2022 Rental Revenue (in thousands) Percentage of 2022 Rental Revenue Houston-The Woodlands-Sugar Land, TX 5 490,742 19,828 11.0 % Compliance with Governmental Regulations Our real estate properties are subject to various federal, state and local regulatory laws and requirements, including, but not limited to, zoning regulations, building codes and land use laws and building, accessibility, occupancy and other permit requirements.
The following table shows the tenant that accounted for 10% or more of our rental revenue for the year ended December 31, 2023: Tenant Total Number of Leases Leased Sq Ft 2023 Rental Revenue (in thousands) Percentage of 2023 Rental Revenue Post Acute Medical, LLC, and its affiliates (1) 15 708,817 $ 27,342 14.5 % (1) The leases are with tenants under the common control of Post Acute Medical, LLC and its affiliates and have lease expiration dates between 2030 and 2042. 5 Table of Contents The following table shows the geographic diversification of our real estate properties that accounted for 10% or more of our rental revenue for the year ended December 31, 2023: Location Total Number of Leases Leased Sq Ft 2023 Rental Revenue (in thousands) Percentage of 2023 Rental Revenue Houston-Pasadena-The Woodlands, TX 5 490,742 $ 19,217 10.2 % Compliance with Governmental Regulations Our real estate properties are subject to various federal, state and local regulatory laws and requirements, including, but not limited to, zoning regulations, building codes and land use laws and building, accessibility, occupancy and other permit requirements.
The ESG Steering Committee meets at least quarterly to discuss our strategy, initiatives, and progress, in support of our on-going commitment to corporate governance, social responsibility, environmental matters, sustainability, health and safety. Environmental Taking aim at climate concerns and employees' desire for workplace flexibility, we established a hybrid workplace model.
The ESG Steering Committee meets at least quarterly to discuss our strategy, initiatives, and progress, in support of our on-going commitment to corporate governance, social responsibility, environmental matters, sustainability, health and safety. Environmental In light of climate concerns and employees' continuing desire for workplace flexibility, we maintain a hybrid workplace model.
To the extent that our distributions exceed our current and accumulated earnings and profits, such amounts constitute a return of capital to our stockholders for federal income tax purposes, to the extent of their basis in their stock, and thereafter will constitute a capital gain. See Part II, Item 5.
To the extent that our distributions exceed our current and accumulated earnings and profits, such amounts constitute a return of capital to our stockholders for federal income tax purposes, to the extent of their basis in their stock, and thereafter will constitute a capital gain.
Human Capital Resources As of December 31, 2022, we had 54 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Human Capital Resources As of December 31, 2023, we had 48 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
The operations of the data center segment have been classified as income from discontinued operations on the consolidated statements of comprehensive income for the years ended December 31, 2021 and 2020.
The operations of the data center segment have been classified as income from discontinued operations on the consolidated statements of comprehensive income for the year ended December 31, 2021.
The following table outlines the established Estimated Per Share NAV as determined by the Board for the last three years as of each valuation date presented below: Valuation Date Effective Date Estimated Per Share NAV October 31, 2019 December 18, 2019 $8.65 September 30, 2020 December 8, 2020 $8.69 May 31, 2021 July 26, 2021 $9.95 (1) May 31, 2021 July 26, 2021 $8.20 (1) June 30, 2022 August 25, 2022 $8.22 (1) On July 22, 2021, we announced the Estimated Per Share NAV that the Board, at the recommendation of our audit committee, or the Audit Committee, approved on July 20, 2021, which was calculated as of May 31, 2021, of $9.95.
The following table outlines the established Estimated Per Share NAV as determined by the Board for the last three years as of each valuation date presented below: Valuation Date Effective Date Estimated Per Share NAV May 31, 2021 July 26, 2021 $9.95 (1) May 31, 2021 July 26, 2021 $8.20 (1) June 30, 2022 August 25, 2022 $8.22 March 31, 2023 May 11, 2023 $8.13 October 31, 2023 December 18, 2023 $7.48 (1) On July 22, 2021, we announced the Estimated Per Share NAV that the Board, at the recommendation of our audit committee, or the Audit Committee, approved on July 20, 2021, which was calculated as of May 31, 2021, of $9.95.
In January 2022, we leased Class A Office space in a newly constructed building that intends to deliver a restorative professional environment that cultivates productivity, collaboration, engagement, and balance.
We lease Class A Office space in a recently constructed building that intends to deliver a restorative professional environment that cultivates productivity, collaboration, engagement, and balance.
The decision of the Board to sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on our results and operations for the periods presented. As of December 31, 2021 and subsequent, we had no assets or liabilities related to the data center segment.
The decision of the Board to sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on our results and operations for the periods presented.
The Estimated Per Share NAV is not subject to audit by our independent registered public accounting firm. The Estimated Per Share NAV was calculated for purposes of assisting broker-dealers participating in public offerings in meeting their customer account statement reporting obligations under the National 2 Table of Contents Association of Securities Dealers Conduct Rule 2340.
The Estimated Per Share NAV was calculated for purposes of assisting broker-dealers participating in public offerings in meeting their customer account statement reporting obligations under the National Association of Securities Dealers Conduct Rule 2340.
We will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but may do so in order to manage or mitigate our interest rate risk on variable rate debt.
The form of our indebtedness will vary and could be long-term or short-term, secured or unsecured, or fixed-rate or floating rate. We will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but may do so in order to manage or mitigate our interest rate risk on variable rate debt.
Available Information We electronically file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports with the SEC. We have also filed our Registration Statement on Form S-11, amendments to our Registration Statements and supplements to our prospectus in connection with our Offerings with the SEC.
Available Information We electronically file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports with the SEC.
We currently pay, and intend to continue to pay, distributions to our stockholders. If we do not have enough cash from operations to fund distributions, we may sell assets in order to fund distributions, or make distributions out of net proceeds from potential future offerings.
We currently pay, and intend to continue to pay, distributions to our stockholders. If we do not have enough cash from operations to fund distributions, we may sell assets or draw on our credit facility in order to fund distributions. We have paid, and may continue to pay, distributions from sources other than from our cash flows from operations.
Employees are encouraged to drive positive change by dedicating their time and money to non-profit organizations. The Company has a volunteer program whereby employees are provided three paid days each year to use for service to the community. Our social impact programs are in support of several non-for-profit organizations.
The Company has a volunteer program whereby employees are provided 24 paid hours each year to use for service to the community. In addition, the Company organizes several group volunteer opportunities each year to support our local communities and foster a culture of giving back. Our social impact programs are in support of several non-for-profit organizations.
We may originate loans from mortgage brokers or personal solicitations of suitable borrowers, or we may purchase existing loans that were originated by other lenders. We evaluate all potential loan investments to decide whether the term of the loan, the security for the loan and the loan-to-value ratio meet our investment criteria and objectives.
We evaluate all potential loan investments to decide whether the term of the loan, the security for the loan and the loan-to-value ratio meet our investment criteria and objectives.
The building is WELL Gold v2 Certified and LEED Silver Certified. 7 Table of Contents Social and Governance Corporate Culture: Our strong tone at the top begins with the Board, which has demonstrated its focus on advancing openness, honesty, fairness and integrity within the Company.
We also carry environmental liability insurance on our properties, which provides coverage for pollution liability, for third-party bodily injury and property damage claims. 6 Table of Contents Social and Governance Corporate Culture: Our strong tone at the top begins with the Board, which has demonstrated its focus on advancing openness, honesty, fairness and integrity within the Company.
Copies of our filings with the SEC may be obtained from the SEC’s website, http://www.sec.gov. Access to these filings is free of charge. In addition, we make certain materials that are electronically filed with the SEC available at www.silarealtytrust.com as soon as reasonably practicable. 8 Table of Contents
In addition, we make certain materials that are electronically filed with the SEC available at www.silarealtytrust.com as soon as reasonably practicable.
During the second quarter of 2021, our board of directors, or the Board, made a determination to sell our data center properties.
We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities. We formerly invested in data center properties. During the second quarter of 2021, our board of directors, or the Board, made a determination to sell our data center properties.
Except as the context otherwise requires, “we,” “our,” “us,” and the “Company” refer to Sila Realty Trust, Inc., our Operating Partnership and all wholly-owned subsidiaries. We invest in high-quality properties leased to long-term tenants.
Except as the context otherwise requires, “we,” “our,” “us,” and the “Company” refer to Sila Realty Trust, Inc., our Operating Partnership and all wholly-owned subsidiaries. We are an internally managed company primarily focused on investing in high quality healthcare assets across the continuum of care, which we believe typically generate predictable, durable and growing income streams.
With this in mind, we provide multiple channels to speak up, ask for guidance, and report concerns. We continue to prioritize having "The Right People, In The Right Places, Doing The Right Things." In 2022, we were recognized as fourteenth place in the Tampa Bay Business Journal 2022 Best Places to Work contest in the Large Business Category.
With this in mind, we provide multiple channels to speak up, ask for guidance, and report concerns. We continue to prioritize having "The Right People, In The Right Places, Doing The Right Things." Core Values: We believe that our employees are aligned around core values that inspire our behavior as individuals and as an organization.
In connection with ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. We intend to take all reasonable steps to fully comply with these laws, including obtaining environmental assessments of all properties that we acquire.
The building is WELL Gold v2 Certified and LEED Silver Certified. We intend to take all reasonable steps to fully comply with environmental laws and regulations for our real estate properties, including obtaining environmental assessments of all properties that we acquire.
Core Values: We believe that our employees are aligned around core values that inspire our behavior as individuals and as an organization. Our core values are essential to the Company's culture. These values are critical to the success of the Company and are aligned with the Company's mission and vision statements.
Our core values are essential to the Company's culture. These values are critical to the success of the Company and are aligned with the Company's mission and vision statements. They define expectations for how all employees collaborate, communicate, interact and perform their roles within the Company.
Key Developments During 2022 and Subsequent • During the year ended December 31, 2022, we purchased seven operating healthcare properties, in five separate transactions, comprising approximately 244,000 rentable square feet for an aggregate purchase price of approximately $157,194,000.
Key Developments During 2023 • During the year ended December 31, 2023, we purchased two operating healthcare properties, comprising approximately 130,000 rentable square feet for an aggregate purchase price of approximately $69,822,000. 2 Table of Contents • During the year ended December 31, 2023, we sold three healthcare facilities for an aggregate sale price of $271,107,000 and generated net proceeds of $270,306,000.
Social Impact and Community: Our mission is to engage, inspire, and empower our employees to make a positive impact on our community where we work and live. We strive to support each of our employees in engaging in the community in areas where they are passionate about and taking on causes that are personally meaningful to them.
They describe for each employee the expectation of a "HI ACT" and that is with humility, with integrity, with accountability, with transparent and honest communication and by embracing teamwork. Social Impact and Community: Our mission is to engage, inspire, and empower our employees to make a positive impact on our community where we work and live.
We have historically established, and intend to continue to establish, an estimated per share net asset value, or Estimated Per Share NAV, on at least an annual basis. Each Estimated Per Share NAV was determined by the Board, after consultation with an independent third-party valuation firm.
Each Estimated Per Share NAV was determined by the Board, after consultation with an independent third-party valuation firm. The Estimated Per Share NAV is not subject to audit by our independent registered public accounting firm.
We also carry environmental liability insurance on our properties, which provides coverage for pollution liability, for third-party bodily injury and property damage claims. Environmental, Social and Governance Matters We are committed to maintaining healthy, prosperous, and sustainable communities through thoughtful stewardship of the environment and conscientious management of our own corporate culture.
In connection with ownership and operation of real estate, we may be potentially liable for costs and damages related to environmental matters. Corporate Responsibility We are committed to maintaining healthy, prosperous, and sustainable communities through thoughtful stewardship of the environment and conscientious management of our own corporate culture.
Our underwriting process typically involves comprehensive financial, structural, operational and legal due diligence. We do not require an appraisal of the underlying property from a certified independent appraiser for an investment in mortgage, bridge or mezzanine loans.
Our underwriting process typically involves comprehensive financial, structural, operational and legal due diligence. We may originate loans from mortgage brokers or personal solicitations of suitable borrowers, or we may purchase existing loans that were originated by other lenders.
Removed
We are primarily focused on investing in healthcare assets across the continuum of care, with emphasis on lower cost patient settings, which, we believe, typically generate predictable, durable and growing income streams. We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities. We formerly invested in data center properties.
Added
As of December 31, 2023, we owned 131 real estate healthcare properties and two undeveloped land parcels. We have historically established, and intend to continue to establish, an estimated per share net asset value, or Estimated Per Share NAV, on at least an annual basis.
Removed
Prior to September 30, 2020, our former advisor was responsible for managing our affairs on a day-to-day basis and for identifying and making investments on our behalf pursuant to an advisory agreement among us, the Operating Partnership and our former advisor.
Added
We strive to support each of our employees engaging in the community in areas in which they are passionate and supporting causes that are personally meaningful to them. Employees are encouraged to drive positive change by dedicating their time and talent to non-profit organizations.
Removed
On July 28, 2020, we and the Operating Partnership entered into a Membership Interest Purchase Agreement, or the Purchase Agreement, to provide for the internalization of the external management functions previously performed for us and the Operating Partnership by our former advisor and its affiliates, or the Internalization Transaction. On September 30, 2020, we closed the Internalization Transaction.
Added
We have also filed our Registration Statements on Form S-11, Registration Statements on Form S-3, amendments to our Registration Statements and supplements to our prospectus in connection with our Offerings with the SEC. Copies of our filings with the SEC may be obtained from the SEC’s website, http://www.sec.gov. Access to these filings is free of charge.
Removed
Effective September 30, 2020, as a result of the Internalization Transaction, our former advisor is no longer affiliated with us. Upon completion of the Internalization Transaction, individuals who were previously employed by an affiliate of our former advisor became employees of us and the functions previously performed by our former advisor were internalized by us.
Removed
As an internally managed company, we no longer pay our former advisor and its affiliates any fees or expense reimbursements arising from the advisory agreement.
Removed
As of December 31, 2022, we had accepted investors’ subscriptions for and issued approximately 157,508,000 shares of Class A, Class I, Class T and Class T2 common stock in our Offerings, resulting in receipt of gross proceeds of approximately $1,520,086,000, before share repurchases of $135,701,000, selling commissions and dealer manager fees of approximately $96,734,000 and other offering costs of approximately $27,631,000.
Removed
As of December 31, 2022, we owned 132 real estate healthcare properties, comprised of approximately 5,535,000 rentable square feet of single-tenant and multi-tenant commercial spaces, and two undeveloped land parcels. As of December 31, 2022, the rentable space of these real estate healthcare properties was 99.5% leased.
Removed
In addition, we placed one operating healthcare property into service. • During the year ended December 31, 2022, we sold one land parcel that formerly contained a healthcare property for an aggregate sale price of $24,000,000 and generated net proceeds of $22,701,000. • During the year ended December 31, 2022, we, the Operating Partnership and certain of our subsidiaries, entered into a senior unsecured revolving credit agreement, or the Revolving Credit Agreement, with Truist Bank, as Administrative Agent for the lenders, for aggregate commitments available of up to $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000.
Removed
The maturity date for the Revolving Credit Agreement is February 15, 2026, which, at our election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee.
Removed
Simultaneously with the Revolving Credit Agreement’s execution, on February 15, 2022, we, the Operating Partnership, and certain of our subsidiaries, entered into a senior unsecured term loan agreement, or the 2024 Term Loan Agreement, with Truist Bank, as Administrative Agent for the lenders.
Removed
The 2024 Term Loan Agreement, with aggregate commitments of up to $300,000,000, may be increased, subject to lender approval, to an aggregate amount not to exceed $600,000,000.
Removed
In addition, we, the Operating Partnership and certain of our subsidiaries, entered into a new senior unsecured term loan agreement, or the 2028 Term Loan Agreement, with Truist Bank, as Administrative Agent for the lenders, with aggregate commitments of up to $275,000,000.
Removed
The Revolving Credit Agreement was entered into to replace our prior revolving line of credit, which had a maturity date of April 27, 2022, with the option to extend for one twelve-month period. We did not exercise the option to extend. Upon closing of the Revolving Credit Agreement, we extinguished all commitments associated with the prior revolving line of credit.
Removed
The 2024 Term Loan Agreement was entered into to replace our prior term loan, which was paid off in its entirety upon closing of the Revolving Credit Agreement and the 2024 Term Loan Agreement.
Removed
We refer to the 2028 Term Loan Agreement, the Revolving Credit Agreement and the 2024 Term Loan Agreement, collectively, as the “Unsecured Credit Facility,” which has aggregate commitments available of $1,075,000,000. At our election, loans under the Unsecured Credit Facility may be made as Base Rate Loans or Secured Overnight Financing Rate, or SOFR, Loans. See Part II, Item 7.
Removed
"Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources," for additional information. • As of March 10, 2023, we owned 132 real estate healthcare properties, comprising approximately 5,535,000 rentable square feet of single-tenant and multi-tenant commercial spaces. As of March 10, 2023, the rentable space of our healthcare properties was 99.5% leased.
Removed
Additionally, we owned two undeveloped land parcels as of March 10, 2023. • As of March 10, 2023, we had an outstanding principal balance of $575,000,000 under our Unsecured Credit Facility.
Removed
We monitor tenant credit by: (1) reviewing the credit ratings of tenants (or their parent companies) that are rated by nationally recognized rating agencies; (2) reviewing financial statements that are publicly available or that are required to be delivered to us under the applicable lease; (3) monitoring industry reports and other available information regarding our tenants and their underlying businesses; (4) monitoring the timeliness of rent collections; and (5) conducting periodic inspections of our properties to ascertain proper maintenance, repair and upkeep.
Removed
The form of our indebtedness will vary and could 5 Table of Contents be long-term or short-term, secured or unsecured, or fixed-rate or floating rate.
Removed
We have paid, and may continue to pay, distributions from sources other than from our cash flows from operations. Subject to certain exceptions, there is no limit to the amount of distributions that we may pay out of net proceeds from potential future offerings.
Removed
"Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Distributions," for further discussion on distribution rates approved by the Board.
Removed
The survey results from the competition revealed that our employees feel recognized for their performance, are valued and cared for as employees and individuals, and have great trust in senior leaders to guide the Company to future success. We have once again been nominated by our valued employees for this notable award in 2023.
Removed
They define expectations for how all employees collaborate, communicate, interact and perform their roles within the Company. They describe for each employee the expectation of how "I ACT" and that is with Integrity, with Accountability, with transparent and honest Communication and by embracing Teamwork.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

50 edited+17 added−9 removed146 unchanged
Biggest changeThe healthcare industry is currently experiencing, among other things: changes in the demand for and methods of delivering healthcare services, particularly as telemedicine and telehealth gain popularity; a shift in the provision of healthcare services from inpatient to outpatient settings; changes in third party reimbursement methods and policies, including an increased focus on value-based reimbursement with downside provider risk; consolidation and pressure to integrate within the healthcare industry through acquisitions, joint ventures and managed service organizations; increased scrutiny of billing, referral, and other practices by U.S. federal and state authorities; consolidation of health insurers; competition among healthcare providers; staffing shortages (particularly nursing staff) and increases in wages as well as inflation in the cost of supplies; regulatory and government reimbursement uncertainty, increased price transparency resulting from the Transparency in Coverage rule and the Consolidated Appropriations Act of 2021, the Hospital Price Transparency regulation of 2021, the No Surprises Act and other healthcare reform laws and court decisions on cases challenging the legality of such laws; federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicaid payment rates; increased scrutiny of control over release of confidential patient medical information and increased attention to compliance with regulations designed to safeguard protected health information and cyberattacks on healthcare entities and their business associates (i.e., vendors who handle patient protected health information); increased federal government enforcement of the requirements of and fraud in relation to programs under which healthcare providers received COVID-19 13 Table of Contents funding, including programs under the Coronavirus, Aid, Relief, and Economic Security Act; anticipated increased scrutiny and enforcement of anti-trust laws by the Federal Trade Commission and Department of Justice Antitrust Division; and increased scrutiny of billing, referral and other practices by federal and state authorities.
Biggest changeThe healthcare industry is currently experiencing, among other things: changes in the demand for and methods of delivering healthcare services, particularly as telemedicine and telehealth continue to gain popularity, as well as continued innovation and integration of technological advancements and artificial intelligence; a shift in the provision of healthcare services from inpatient to outpatient settings; changes in third party reimbursement methods and policies, including an increased focus on value-based reimbursement with downside provider risk; consolidation and pressure to integrate within the healthcare industry through acquisitions, joint ventures and managed service organizations; increased scrutiny of billing, referral, and other practices by U.S. federal and state authorities; consolidation of health insurers; competition among healthcare providers including competition for patients among healthcare providers in areas with significant unused capacity; increased 12 Table of Contents expense for uninsured patients; increased expense arising from an older and sicker patient mix; increased liability insurance expenses; increased emphasis on compliance with privacy and security requirements related to health information; pressures on healthcare providers to control or reduce costs; staffing shortages (particularly nursing staff) and increases in wages as well as inflation in the cost of supplies; regulatory and government reimbursement uncertainty, increased price transparency resulting from the Transparency in Coverage rule and the Consolidated Appropriations Act of 2021, the Hospital Price Transparency regulation of 2021, the No Surprises Act and other healthcare reform laws and court decisions on cases challenging the legality of such laws; federal and state government plans to reduce budget deficits and address debt ceiling limits by lowering healthcare provider Medicaid payment rates; increased scrutiny of control over release of confidential patient medical information and increased attention to compliance with regulations designed to safeguard protected health information and cyberattacks on healthcare entities and their business associates (i.e., vendors who handle patient protected health information); anticipated increased scrutiny and enforcement of anti-trust laws by the Federal Trade Commission and Department of Justice Antitrust Division; and increased scrutiny of billing, referral and other practices by federal and state authorities.
Even in the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets, will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of.
Even in the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets, will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed.
Under applicable provisions of the Code regarding "prohibited transactions" by REITs, we would be subject to a 100% tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own, directly or through any subsidiary entity, including our Operating Partnership, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of trade or business.
Under applicable provisions of the Code regarding "prohibited transactions" by REITs, we would be subject to a 100% tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own, directly or through any subsidiary entity, including our Operating Partnership, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
Accordingly, if we need additional capital to improve or maintain our properties or for any other reason, we will have to obtain financing from other sources, such as cash flow from operations, borrowings, property sales or future equity offerings. These sources of funding may not be available on attractive terms or at all.
If we need additional capital to improve or maintain our properties or for any other reason, we will have to obtain financing from sources such as cash flow from operations, borrowings, property sales or future equity offerings. These sources of funding may not be available on attractive terms or at all.
These factors may adversely affect demand for healthcare facilities by potential future tenants and/or the economic performance of some or all of our tenants and, in turn, our lease revenues, which may have a material adverse effect on our business, financial condition, results of operations, operation, and our ability to make distributions to our stockholders.
These factors may adversely affect demand for healthcare facilities by potential future tenants and/or the economic performance of some or all of our tenants and, in turn, our lease revenues, which may have a material adverse effect on our business, financial condition, results of operations, and our ability to make distributions to our stockholders.
Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, to the extent that the reduced rates continue to apply to regular corporate qualified dividends, investors that are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including our common stock.
These rules do not adversely affect the taxation of REITs or dividends payable by REITs, to the extent that the reduced rates continue to apply to regular corporate qualified dividends; however, investors that are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including our common stock.
Accordingly, with respect to the Estimated Per Share NAV, we can give no assurance that: (i) a stockholder would be able to resell his or her shares at the Estimated Per Share NAV; (ii) a stockholder would ultimately realize distributions per share equal to the Estimated Per Share NAV upon liquidation of our assets and settlement of our liabilities or a sale of the company; (iii) our shares of common stock would trade at the Estimated Per Share NAV on a national securities exchange; (iv) a different independent third-party appraiser or other third-party valuation firm would agree with the Estimated Per Share NAV; or (v) the methodology used to estimate our NAV per share would be acceptable to FINRA or comply with ERISA reporting requirements.
Accordingly, with respect to the Estimated Per Share NAV, we can give no assurance that: (i) a stockholder would be able to resell his or her shares at the Estimated Per Share NAV; (ii) a stockholder would ultimately realize distributions per share equal to the Estimated Per Share NAV upon liquidation of our assets and settlement of our liabilities or a sale of the company; (iii) our shares of common stock would trade at the Estimated Per Share NAV on a national securities exchange; (iv) a different independent third-party appraiser or other third-party 17 Table of Contents valuation firm would agree with the Estimated Per Share NAV; or (v) the methodology used to estimate our NAV per share would be acceptable to FINRA or comply with ERISA reporting requirements.
The factors affecting economic conditions in the continental United States real estate market include, but are not limited to: financial performance and productivity of, among others, the publishing, advertising, financial, technology, retail, insurance and real estate industries; business layoffs or downsizing; industry slowdowns; relocations of businesses; changing demographics; increased telecommuting and use of alternative workplaces; infrastructure quality; any oversupply of, or reduced demand for, real estate; concessions or reduced rental rates under new leases for properties where tenants defaulted; increased insurance premiums; and increased interest rates.
The factors affecting economic conditions in the continental United States real estate market include, but are not limited to: financial performance and productivity of, among others, the publishing, advertising, financial, technology, retail, insurance and real estate industries; business layoffs or downsizing; industry slowdowns; potential government shutdowns; relocations of businesses; changing demographics; increased telecommuting and use of alternative workplaces; infrastructure quality; any oversupply of, or reduced demand for, real estate; concessions or reduced rental rates under new leases for properties where tenants defaulted; increased insurance premiums; and increased interest rates.
General Risk Factors Our shares of common stock are not listed on an exchange, and we are not required to provide for a liquidity event. Therefore, it may be difficult for stockholders to sell their shares and, if stockholders are able to sell their shares, they will likely sell them at a substantial discount.
General Risk Factors Our shares of common stock are not listed on an exchange, and we are not required to provide for a liquidity event. Therefore, it may be difficult for stockholders to sell their shares and, if stockholders are able to sell their shares, they may sell them at a substantial discount.
Risks Associated with Debt Financing and Investments Interest rate exposure could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level. Our revenues are generated by our leases, which are typically medium-to-long-term leases with fixed rental rates, subject to periodic rent escalators.
Risks Associated with Debt Financing and Investments Interest rate exposure could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level. Our revenues are generated by our leases, which typically have fixed rental rates, subject to periodic rent escalators.
We cannot assure our stockholders that we will be able to maintain our current level of distributions or that distributions will increase over time. 9 Table of Contents Provisions of the Maryland General Corporation Law, or the MGCL, and of our charter and bylaws could deter takeover attempts and have an adverse impact on a stockholder’s ability to exit the investment .
We cannot assure our stockholders that we will be able to maintain our current level of distributions or that distributions will increase over time. Provisions of the Maryland General Corporation Law, or the MGCL, and of our charter and bylaws could deter takeover attempts and have an adverse impact on a stockholder’s ability to exit the investment .
In this respect, among other things, unless exempted (prospectively or retroactively) by the Board, no person may own (i) more than 9.8% in value of the aggregate of our outstanding shares (of any class or series, including common shares or preferred shares) of stock, or (ii) more than 9.8% (in value or number, whichever is more restrictive) of the aggregate of the outstanding shares of only our common stock.
In this respect, among other things, unless exempted (prospectively or retroactively) by the Board, no person may own (i) more than 9.8% in value of the aggregate of our outstanding shares (of any class or series, including common shares or preferred shares) of stock, or (ii) more than 9.8% (in value or number, whichever is more 7 Table of Contents restrictive) of the aggregate of the outstanding shares of only our common stock.
This is 17 Table of Contents known as the "look-through rule." Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA and Section 4975 of the Code, as applicable, may be applicable, and there may be liability under these and other provisions of ERISA and the Code.
This is known as the "look-through rule." Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA and Section 4975 of the Code, as applicable, may be applicable, and there may be liability under these and other provisions of ERISA and the Code.
However, stockholders that are tax-exempt, such as charities or qualified 15 Table of Contents pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax.
However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax.
Although REITs generally receive better tax treatment than entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that 16 Table of Contents invests in real estate to elect to be treated for U.S. federal income tax purposes as a regular corporation.
Although REITs generally receive better tax treatment than entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a regular corporation.
Although a substantial portion of our tenant leases may 11 Table of Contents permit us to pass through such tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis.
Although a substantial portion of our tenant leases may permit us to pass through such tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis.
Our desire to avoid the prohibited transactions tax may cause us to forego disposition opportunities that would otherwise be advantageous if we were not a REIT. In certain circumstances, we may be subject to U.S. federal, state and local income taxes as a REIT, which would reduce our cash available for distribution to our stockholders.
Our desire to avoid the prohibited transactions tax may cause us to forego disposition opportunities that would otherwise be advantageous if we were not a REIT. 14 Table of Contents In certain circumstances, we may be subject to U.S. federal, state and local income taxes as a REIT, which would reduce our cash available for distribution to our stockholders.
In addition, if we pay fees to lock in a favorable interest rate, falling interest rates or other factors could require us to forfeit these fees. All of these events would have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level. 14 Table of Contents U.S.
In addition, if we pay fees to lock in a favorable interest rate, falling interest rates or other factors could require us to forfeit these fees. All of these events could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level. U.S.
Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect our taxation and our ability to continue to qualify as a REIT or the taxation of a stockholder.
Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect our taxation 15 Table of Contents and our ability to continue to qualify as a REIT or the taxation of a stockholder.
Such laws include, but are not limited to: the Medicare and Medicaid statutes; the Stark Law; the civil False Claims Act; the federal False Claims Law; the federal Anti-Kickback Statute; applicable state law prohibitions against kickbacks, fraud and abuse, patient brokering, advertising and marketing of healthcare items and services and fee splitting; state laws regulating the corporate practice of medicine; the federal Eliminating Kickbacks in Recovery Act; the Program Fraud Civil Remedies Act; the Civil Monetary Penalties Law; the Exclusion Laws; the Health Insurance Portability and Accountability Act of 1996 and applicable state laws regarding patient privacy and the security of patient health information; the Clinical Laboratory Improvement Amendments of 1988; the Travel Act; and all of the foregoing as may be amended and including any regulations or decisions promulgated thereunder.
Such laws and regulations include, but are not limited to: the Medicare and Medicaid statutes; the Stark Law; the civil False Claims Act; the federal False Claims Law; the federal Anti-Kickback Statute; applicable state law prohibitions against kickbacks, fraud and abuse, patient brokering, advertising and marketing of healthcare items and services and fee splitting; state laws regulating the corporate practice of medicine; the federal Eliminating Kickbacks in Recovery Act; the Program Fraud Civil Remedies Act; the Civil Monetary Penalties Law; the Exclusion Laws; the Health Insurance Portability and Accountability Act of 1996 and applicable state laws regarding patient privacy and the security of patient health information; the Clinical Laboratory Improvement Amendments of 1988; the Travel Act; OIG compliance program elements; and all amendments thereto of the foregoing, including any regulations or decisions promulgated thereunder.
If our stockholders are able to find a buyer for their shares, our stockholders likely will have to sell them at a substantial discount to their purchase price.
If our stockholders are able to find a buyer for their shares, our stockholders may have to sell them at a substantial discount to their purchase price.
Payment of distributions from any of the aforementioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability and/or affect the distributions payable upon a liquidity event, any or all of which may have an adverse effect on an investment in us. Item 1B. Unresolved Staff Comments. None.
Payment of distributions from any of the aforementioned sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability and/or affect the distributions payable upon a liquidity event, any or all of which may have an adverse effect on an investment in us.
Our current and potential properties and our tenants may face competition from nearby hospitals and other properties that provide comparable services.
Our current and potential properties and our tenants may face competition from nearby healthcare facilities and other properties that provide comparable services.
If we amend our bylaws to repeal the exemption from the Maryland Control Share Acquisition Act, the Maryland Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.
If we amend our bylaws to repeal this exemption, the Maryland Control Share Acquisition Act would apply and would very likely make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.
During the year ended December 31, 2022, approximately 16.0% of our total rental revenue was derived from tenants that had an investment grade credit rating from a major ratings agency, 6.2% of our total rental revenue was derived from tenants that were rated but did not have an investment grade credit rating from a major ratings agency and 77.8% of our total rental revenue was derived from tenants that were not rated.
During the year ended December 31, 2023, approximately 44.3% of our total rental revenue was derived from tenants that had an investment grade credit rating from a major ratings agency, or an investment grade rated guarantor or affiliate, 6.2% of our total rental revenue was derived from tenants that were rated but did not have an investment grade credit rating from a major ratings agency and 49.5% of our total rental revenue was derived from tenants that were not rated.
Some of our competing facilities may be owned by governmental agencies and are supported by 12 Table of Contents tax revenues, and others are owned by non-profit corporations and therefore are supported to a large extent by endowments and charitable contributions and pay little or no taxes.
Some of our competing facilities may be owned by governmental agencies and are supported by tax revenues, and others are owned by non-profit corporations and therefore are supported to a large extent by endowments and charitable contributions and pay little or no taxes. Not all of our properties will be affiliated with non-profit corporations and receive such support.
In addition, although we expect that our leases with tenants will require tenants to pay routine property maintenance costs, we will likely be responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops. We have used substantially all of our gross offering proceeds to buy real estate and pay various fees and expenses.
In addition, although we expect that our leases with tenants will require tenants to pay routine property maintenance costs, we will likely be responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops.
A foreign investor also may be subject to FIRPTA tax upon the payment of any capital gain dividend by us, which dividend is attributable to gain from sales or exchanges of U.S. real property interests. We encourage our stockholders to consult their own tax advisor to determine the tax consequences applicable to them if they are a foreign investor.
A foreign investor also may be subject to FIRPTA tax upon the payment of any capital gain dividend by us, which dividend is attributable to gain from sales or exchanges of U.S. real property interests.
Risks Associated with Investments in the Healthcare Property Sector Our properties and tenants may be unable to compete successfully, which could result in lower rent payments, reduce our cash flows from operations and the amount available for distributions to our stockholders.
If any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to pay cash distributions to our stockholders. 11 Table of Contents Risks Associated with Investments in the Healthcare Property Sector Our properties and tenants may be unable to compete successfully, which could result in lower rent payments, reduce our cash flows from operations and the amount available for distributions to our stockholders.
Therefore, the value of the property to a potential purchaser may not increase over time, which may restrict our ability to sell a property, or if we are able to sell such property, may lead to a sale price less than the price that we paid to purchase the property.
Therefore, the value of the property to a potential purchaser may not increase over time, which may restrict our ability to sell a property, or if we are able to sell such property, may lead to a sale price less than the price that we paid to purchase the property. 10 Table of Contents Real estate-related taxes may increase and if these increases are not passed on to tenants, our income will be reduced.
High debt levels would cause us to incur higher interest charges, would result in higher debt service payments, and could be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our stockholders’ investments.
We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the value of our stockholders’ investments. High debt levels would cause us to incur higher interest charges, would result in higher debt service payments, and could be accompanied by restrictive covenants.
If a given lease, or guaranty of a lease, is not assumed, our cash flow and the amounts available for distributions to our stockholders may be adversely affected. A high concentration of our properties in a particular geographic area would magnify the effects of downturns or natural disasters in that geographic area.
If a given lease, or guaranty of a lease, is not assumed, our cash flow and the amounts available for distributions to our stockholders may be adversely affected.
A regional or local recession or a natural disaster in any of these areas could adversely affect our ability to generate or increase operating revenues, attract new tenants or dispose of unproductive properties. 10 Table of Contents Our investments in properties where the underlying tenant has a below investment grade credit rating, as determined by major credit rating agencies, or unrated tenants, may have a greater risk of default and therefore may have an adverse impact on our returns on that asset and our operating results.
Our investments in properties where the underlying tenant has a below investment grade credit rating, as determined by major credit rating agencies, or unrated tenants, may have a greater risk of default and therefore may have an adverse impact on our returns on that asset and our operating results.
The trend of increasing private equity investment in healthcare providers could also increase competition in the healthcare market. Our tenants’ failure to compete successfully with other healthcare providers could adversely affect their ability to make rental payments, which could adversely affect our rental revenues.
Our tenants’ failure to compete successfully with other healthcare providers could adversely affect their ability to make rental payments, which could adversely affect our rental revenues.
We expect to engage an independent valuation firm to update the Estimated Per Share NAV at least annually. 18 Table of Contents Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
The value of our shares will fluctuate over time in response to developments related to individual assets in the portfolio and the management of those assets and in response to the real estate and finance markets.
The value of our shares will fluctuate over time in response to developments related to individual assets in the portfolio and the management of those assets and in response to the real estate and finance markets. We expect to engage an independent valuation firm to update the Estimated Per Share NAV at least annually.
From time to time our property taxes may increase as property values or assessment rates change or for other reasons deemed relevant by the assessors. An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property.
Some local real property tax assessors may seek to reassess some of our properties as a result of our acquisition of such properties. From time to time our property taxes may increase as property values or assessment rates change or for other reasons deemed relevant by the assessors.
There is no guarantee that any processes, procedures and internal controls we have implemented or will implement will prevent cyber intrusions, which could have a negative impact on our financial results, operations, business relationships or confidential information.
There is no guarantee that any processes, procedures and internal controls we have implemented, or will implement, will prevent cybersecurity threats that could adversely affect our business, financial condition, and results of operations.
We have previously paid, and may pay in the future, distributions from sources other than from our cash flows from operations. We may pay, and have no limits on the amounts we may pay, distributions from any source, such as the sale of assets and the sale of additional securities.
We have previously paid, and may pay in the future, distributions from sources other than from our cash flows from operations.
Not all of our properties will be affiliated with non-profit corporations and receive such support. Additionally, the introduction and expansion of new stakeholders competing with traditional providers in the healthcare market and telemedicine are disrupting "agents" in the healthcare industry and could lead to decreased demand for healthcare properties and new trends in payments.
Additionally, the introduction and expansion of new stakeholders competing with traditional providers in the healthcare market and telemedicine are disrupting "agents" in the healthcare industry and could lead to decreased demand for healthcare properties and new trends in payments. The trend of increasing private equity investment in healthcare providers could also increase competition in the healthcare market.
Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to stockholders at our current level. When providing financing, a lender could impose restrictions on us that affect our distribution and operating policies, and our ability to incur additional debt.
When providing financing, a lender could impose restrictions on us that affect our distribution and operating policies, and our ability to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to discontinue insurance coverage.
ERISA Risks If our assets are deemed to be ERISA plan assets, we may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.
We encourage our stockholders to consult their own tax advisor to determine the tax consequences applicable to them if they are a foreign investor. 16 Table of Contents ERISA Risks If our assets are deemed to be ERISA plan assets, we may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.
We may also borrow if we deem it necessary or advisable to ensure that we qualify and maintain our qualification as a REIT for federal income tax purposes. If there is a shortfall between the cash flow from our properties and the cash flow needed to service debt, then the amount available for distribution to our stockholders may be reduced.
We may borrow if we need funds to pay a desired distribution rate to our stockholders. We may also borrow if we deem it necessary or advisable to ensure that we qualify and maintain our qualification as a REIT for federal income tax purposes.
Increases in interest rates may not be matched by increases in our rental income, which could increase our expenses and adversely affect our business, financial condition, results of operations, and our ability to make distributions to our stockholders. During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings.
The generally fixed nature of revenues and the variable rate of debt obligations could create interest rate risk for us. Increases in interest rates may not be matched by increases in our rental income, which could increase our expenses and adversely affect our business, financial condition, results of operations, and our ability to make distributions to our stockholders.
If these disruptions in the credit markets resurface, our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets will be negatively impacted.
These disruptions in the credit markets have not thus far affected our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets, but they 13 Table of Contents may do so in the future.
We incur borrowings, which may increase our business risks, and could hinder our ability to make distributions to our stockholders. We have obtained a credit facility and may obtain other similar financing arrangements in order to acquire properties. We may also decide to later further leverage our properties.
We have obtained a credit facility and may obtain other similar financing arrangements in order to acquire properties. We may also decide to later further leverage our properties. We may pledge all or some of our real properties as security for that debt to obtain funds to acquire real properties.
Disruptions in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level. In the past, domestic and international financial markets experienced significant disruptions which were brought about in large part by failures in the U.S. banking system.
These or other limitations may adversely affect our flexibility and limit our ability to make distributions to stockholders at our current level. Disruptions in the credit markets could have a material adverse effect on our results of operations, financial condition and ability to pay distributions to stockholders at our current level.
Our bylaws, as permitted by the MGCL, contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions of our stock by any person.
As permitted by the MGCL, however, our bylaws exempt the Company from the application of the Maryland Control Share 8 Table of Contents Acquisition Act.
International conflicts and resultant U.S. response, including financial sanctions, may also disrupt credit markets. These disruptions severely impacted the availability of credit and contributed to rising costs associated with obtaining credit. If debt financing is not available on terms and conditions we find acceptable, we may not be able to obtain financing for investments.
If debt financing is not available on terms and conditions we find acceptable, we may not be able to obtain financing for investments.
Therefore, a significant increase in interest rates could have an adverse impact on our financing costs and interest expense. We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the value of our stockholders’ investments.
These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our stockholders’ investments. We incur borrowings, which may increase our business risks, and could hinder our ability to make distributions to our stockholders.
Removed
Approximately 24.4% of our total rental revenue was derived from non-rated tenants that were affiliates of companies having an investment grade credit rating.
Added
GenesisCare USA, Inc. and its affiliates, or GenesisCare, a sponsor and owner of the tenant in 17 of our real estate properties, announced that it filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code on June 1, 2023. GenesisCare emerged from bankruptcy on February 16, 2024.
Removed
Real estate-related taxes may increase and if these increases are not passed on to tenants, our income will be reduced. Some local real property tax assessors may seek to reassess some of our properties as a result of our acquisition of such properties.
Added
The master lease related to our 17 properties was assumed by the emerging entity and therefore remains in force under its existing terms.
Removed
If any purchaser defaults under a financing arrangement with us, it could negatively impact our ability to pay cash distributions to our stockholders.
Added
Although GenesisCare continues to make its lease payments to us in accordance with their contractual terms, we continue to negotiate with GenesisCare regarding certain adjustments to this lease and there can be no assurances that GenesisCare will continue to make its lease payments to us.
Removed
The unhedged portion of the Unsecured Credit Facility is subject to Term SOFR. The generally fixed nature of revenues and the variable rate of our debt obligations create interest rate risk for us.
Added
At this time there can be no assurance as to how our lease negotiations will be resolved and how such negotiations may impact GenesisCare's obligations under the lease, as further discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, of this Annual Report on Form 10-K.
Removed
Our exposure to increases in interest rates is limited to our variable rate borrowings, which consist of borrowings under the Unsecured Credit Facility. As of December 31, 2022, our total principal debt outstanding was $583,000,000, of which 16.8% was unhedged variable-rate debt and 83.2% was variable rate debt fixed through interest rate swaps.
Added
We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us. We had one exposure to tenant concentration that accounted for 10.0% or more of rental revenue for the year ended December 31, 2023.
Removed
We may pledge all or some of our real properties as security for that debt to obtain funds to acquire real properties. We may borrow if we need funds to pay a desired distribution rate to our stockholders.
Added
The leases with tenants under common control of Post Acute Medical LLC accounted for 14.5% of rental revenue for the year ended December 31, 2023.
Removed
Loan documents we enter into may contain covenants that limit our ability to discontinue insurance coverage. These or other limitations may adversely affect our flexibility and limit our ability to make distributions to stockholders at our current level.
Added
In the event that a tenant that occupies a significant number of our properties or whose lease payments represent a significant portion of our rental revenue were to experience financial difficulty or file for bankruptcy, it could have a material adverse effect on us.
Removed
Our stockholders are urged to consult with their own tax advisors with respect to the impact of recent legislation on their investment in our shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.
Added
As discussed above, GenesisCare, a sponsor and owner of the tenant in 17 of our real estate properties, filed for Chapter 11 bankruptcy protection on June 1, 2023.
Removed
While the changes in the Tax Cuts and Jobs Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Internal Revenue Code may have unanticipated effects on us or our stockholders.
Added
Although GenesisCare’s bankruptcy proceeds did not have a material adverse effect on our business, there can be no assurance that similar proceedings will not cause such a material adverse effect in the future. 9 Table of Contents A high concentration of our properties in a particular geographic area would magnify the effects of downturns or natural disasters in that geographic area.
Added
A regional or local recession or a natural disaster in any of these areas could adversely affect our ability to generate or increase operating revenues, attract new tenants or dispose of unproductive properties.
Added
An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property.
Added
During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. As of December 31, 2023, we have hedged all of our variable rate debt by using interest rate swaps to effectively fix the interest rate.
Added
If there is a shortfall between the cash flow from our properties and the cash flow needed to service debt, then the amount available for distribution to our stockholders may be reduced. Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to stockholders at our current level.
Added
In the past, domestic and international financial markets experienced significant disruptions which were brought about in large part by failures in the U.S. banking system. International conflicts and resultant U.S. response, including financial sanctions, have recently disrupted credit markets. These disruptions have severely impacted the availability of credit in the market and contributed to rising costs associated with obtaining credit.
Added
Additionally, as increased regulatory compliance for cybersecurity protocols and disclosures are required by state or federal authorities, there is no guarantee that the increased amount of resources, both time and expense, will not adversely affect our business.
Added
We may pay, and have no limits on the amounts we may pay, distributions from any source, such as the sale of assets, the sale of additional securities and funds equal to amounts reinvested in the DRIP, which may reduce the amount of capital we ultimately invest in properties or other permitted investments.
Added
Funding distributions to our stockholders will result in us having less funds available for acquiring properties or real estate-related investments. Our inability to acquire such properties or investments may have a negative effect on our ability to generate sufficient cash flows from operations to pay distributions.

Item 2. Properties

Properties — owned and leased real estate

11 edited+0 added−2 removed1 unchanged
Biggest changeLouis, MO-IL 10/04/2019 2012 — 100% 66,914 (1) Covington Healthcare Facility New Orleans-Metairie, LA 10/04/2019 1984 — 100% 43,250 (1) Crestview Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2004 2010 100% 5,685 (1) Dallas Healthcare Facility Dallas-Fort Worth-Arlington, TX 10/04/2019 2011 — 100% 62,390 (1) De Pere Healthcare Facility Green Bay, WI 10/04/2019 2005 — 100% 7,100 (1) Denver Healthcare Facility Denver-Aurora-Lakewood, CO 10/04/2019 1962 2018 100% 131,210 (1) El Segundo Healthcare Facility Los Angeles-Long Beach-Anaheim, CA 10/04/2019 2009 — 100% 12,163 (1) Fairlea Healthcare Facility Hagerstown-Martinsburg, MD-WV 10/04/2019 1999 — 100% 5,200 (1) Fayetteville Healthcare Facility Fayetteville-Springdale-Rogers, AR-MO 10/04/2019 1994 2009 100% 55,740 (1) Fort Myers Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 1999 — 100% 32,148 (1) Fort Myers Healthcare Facility II Cape Coral-Fort Myers, FL 10/04/2019 2010 2022 100% 47,089 (1) Fort Walton Beach Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2005 — 100% 9,017 (1) Frankfort Healthcare Facility Lexington-Fayette, KY 10/04/2019 1993 2019 100% 4,000 (1) Frisco Healthcare Facility Dallas-Fort Worth-Arlington, TX 10/04/2019 2010 2020 100% 57,051 (1) Goshen Healthcare Facility Elkhart-Goshen, IN 10/04/2019 2010 — 100% 15,462 (1) Hammond Healthcare Facility Hammond, LA 10/04/2019 2006 — 100% 63,000 (1) Hammond Healthcare Facility II Hammond, LA 10/04/2019 2004 — 100% 23,835 (1) Harlingen Healthcare Facility Brownsville-Harlingen, TX 10/04/2019 2007 — 100% 38,111 (1) Henderson Healthcare Facility Las Vegas-Henderson-Paradise, NV 10/04/2019 2000 — 100% 6,685 (1) Houston Healthcare Facility III Houston-The Woodlands-Sugar Land, TX 10/04/2019 1998 2018 100% 16,217 (1) Howard Healthcare Facility Green Bay, WI 10/04/2019 2011 — 100% 7,552 (1) Jacksonville Healthcare Facility Jacksonville, FL 10/04/2019 2009 — 100% 13,082 (1) Lafayette Healthcare Facility Lafayette, LA 10/04/2019 2004 2005 100% 73,824 (1) Lakewood Ranch Healthcare Facility North Port-Sarasota-Bradenton, FL 10/04/2019 2008 — 100% 10,919 (1) Las Vegas Healthcare Facility II Las Vegas-Henderson-Paradise, NV 10/04/2019 2007 — 100% 6,963 (1) Lehigh Acres Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 2002 — 100% 5,746 (1) Lubbock Healthcare Facility Lubbock, TX 10/04/2019 2003 — 100% 102,143 (1) Manitowoc Healthcare Facility Green Bay, WI 10/04/2019 2003 — 100% 7,987 (1) Manitowoc Healthcare Facility II Green Bay, WI 10/04/2019 1964 2010 100% 36,090 (1) Marinette Healthcare Facility Green Bay, WI 10/04/2019 2008 — 100% 4,178 (1) New Bedford Healthcare Facility Providence-Warwick, RI-MA 10/04/2019 1942 1995 100% 70,657 (1) New Braunfels Healthcare Facility San Antonio-New Braunfels, TX 10/04/2019 2007 — 100% 27,971 (1) 21 Table of Contents Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) North Smithfield Healthcare Facility Providence-Warwick, RI-MA 10/04/2019 1965 2000 100% 92,944 (1) Oklahoma City Healthcare Facility IX Oklahoma City, OK 10/04/2019 2007 — 100% 34,970 (1) Oshkosh Healthcare Facility Oshkosh-Neenah, WI 10/04/2019 2010 — 100% 8,717 (1) Palm Desert Healthcare Facility Riverside-San Bernardino-Ontario, CA 10/04/2019 2005 — 100% 6,963 (1) Rancho Mirage Healthcare Facility II Riverside-San Bernardino-Ontario, CA 10/04/2019 2008 — 100% 7,432 (1) San Antonio Healthcare Facility III San Antonio-New Braunfels, TX 10/04/2019 2012 — 100% 50,000 (1) San Antonio Healthcare Facility IV San Antonio-New Braunfels, TX 10/04/2019 1987 — 100% 113,136 (1) San Antonio Healthcare Facility V San Antonio-New Braunfels, TX 10/04/2019 2017 — 100% 57,929 (1) Santa Rosa Beach Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2003 — 100% 5,000 (1) Savannah Healthcare Facility Savannah, GA 10/04/2019 2014 — 100% 48,184 (1) Sturgeon Bay Healthcare Facility Green Bay, WI 10/04/2019 2007 — 100% 3,100 (1) Victoria Healthcare Facility Victoria, TX 10/04/2019 2013 — 100% 34,297 (1) Victoria Healthcare Facility II Victoria, TX 10/04/2019 1998 — 100% 28,752 (1) Webster Healthcare Facility II Houston-The Woodlands-Sugar Land, TX 10/04/2019 2014 2019 100% 373,070 (1) Wilkes-Barre Healthcare Facility Scranton–Wilkes-Barre–Hazleton, PA 10/04/2019 2012 — 100% 15,996 (1) Yucca Valley Healthcare Facility Riverside-San Bernardino-Ontario, CA 10/04/2019 2009 — 100% 12,240 (1) Tucson Healthcare Facility II Tucson, AZ 12/26/2019 2021 — 100% 60,913 (1) Tucson Healthcare Facility III Tucson, AZ 12/27/2019 2020 — 100% 20,000 (1) Grimes Healthcare Facility Des Moines-West Des Moines, IA 02/19/2020 2018 — 100% 14,669 (1) Tampa Healthcare Facility Tampa-St.
Biggest changeLouis, MO-IL 10/04/2019 2012 — 100% 66,914 (1) Covington Healthcare Facility New Orleans-Metairie, LA 10/04/2019 1984 — 100% 43,250 (1) Crestview Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2004 2010 100% 5,685 — Dallas Healthcare Facility Dallas-Fort Worth-Arlington, TX 10/04/2019 2011 — 100% 62,390 (1) De Pere Healthcare Facility Green Bay, WI 10/04/2019 2005 — 100% 7,100 (1) Denver Healthcare Facility Denver-Aurora-Centennial, CO 10/04/2019 1962 2018 100% 131,210 (1) El Segundo Healthcare Facility Los Angeles-Long Beach-Anaheim, CA 10/04/2019 2009 — 100% 12,163 — Fairlea Healthcare Facility Hagerstown-Martinsburg, MD-WV 10/04/2019 1999 — 100% 5,200 — Fayetteville Healthcare Facility Fayetteville-Springdale-Rogers, AR 10/04/2019 1994 2009 100% 55,740 (1) Fort Myers Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 1999 — 100% 32,148 — Fort Myers Healthcare Facility II Cape Coral-Fort Myers, FL 10/04/2019 2010 2022 100% 47,089 — Fort Walton Beach Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2005 — 100% 9,017 — Frankfort Healthcare Facility Lexington-Fayette, KY 10/04/2019 1993 2019 100% 4,000 — Frisco Healthcare Facility Dallas-Fort Worth-Arlington, TX 10/04/2019 2010 2020 100% 57,051 (1) Goshen Healthcare Facility Elkhart-Goshen, IN 10/04/2019 2010 — 100% 15,462 (1) Hammond Healthcare Facility Hammond, LA 10/04/2019 2006 — 100% 63,000 (1) Hammond Healthcare Facility II Hammond, LA 10/04/2019 2004 — 100% 23,835 (1) Henderson Healthcare Facility Las Vegas-Henderson-North Las Vegas, NV 10/04/2019 2000 — 100% 6,685 — Houston Healthcare Facility III Houston-Pasadena-The Woodlands, TX 10/04/2019 1998 2018 100% 16,217 (1) Howard Healthcare Facility Green Bay, WI 10/04/2019 2011 — 100% 7,552 (1) Jacksonville Healthcare Facility Jacksonville, FL 10/04/2019 2009 — 100% 13,082 — Lafayette Healthcare Facility Lafayette, LA 10/04/2019 2004 2005 100% 73,824 (1) Lakewood Ranch Healthcare Facility North Port-Bradenton-Sarasota, FL 10/04/2019 2008 — 100% 10,919 — Las Vegas Healthcare Facility II Las Vegas-Henderson-North Las Vegas, NV 10/04/2019 2007 — 100% 6,963 — Lehigh Acres Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 2002 — 100% 5,746 — Lubbock Healthcare Facility Lubbock, TX 10/04/2019 2003 — 100% 102,143 (1) Manitowoc Healthcare Facility Green Bay, WI 10/04/2019 2003 — 100% 7,987 (1) Manitowoc Healthcare Facility II Green Bay, WI 10/04/2019 1964 2010 100% 36,090 (1) Marinette Healthcare Facility Green Bay, WI 10/04/2019 2008 — 100% 4,178 (1) 22 Table of Contents Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) New Bedford Healthcare Facility Providence-Warwick, RI-MA 10/04/2019 1942 1995 100% 70,657 — New Braunfels Healthcare Facility San Antonio-New Braunfels, TX 10/04/2019 2007 — 100% 27,971 (1) North Smithfield Healthcare Facility Providence-Warwick, RI-MA 10/04/2019 1965 2000 100% 92,944 (1) Oklahoma City Healthcare Facility IX Oklahoma City, OK 10/04/2019 2007 — 100% 34,970 (1) Oshkosh Healthcare Facility Oshkosh-Neenah, WI 10/04/2019 2010 — 100% 8,717 (1) Palm Desert Healthcare Facility Riverside-San Bernardino-Ontario, CA 10/04/2019 2005 — 100% 6,963 — Rancho Mirage Healthcare Facility II Riverside-San Bernardino-Ontario, CA 10/04/2019 2008 2022 100% 7,432 — San Antonio Healthcare Facility III San Antonio-New Braunfels, TX 10/04/2019 2012 — 100% 50,000 (1) San Antonio Healthcare Facility IV San Antonio-New Braunfels, TX 10/04/2019 1987 — 100% 113,136 (1) San Antonio Healthcare Facility V San Antonio-New Braunfels, TX 10/04/2019 2017 — 81% 47,091 (1) Santa Rosa Beach Healthcare Facility Crestview-Fort Walton Beach-Destin, FL 10/04/2019 2003 — 100% 5,000 — Savannah Healthcare Facility Savannah, GA 10/04/2019 2014 — 100% 48,184 — Sturgeon Bay Healthcare Facility Green Bay, WI 10/04/2019 2007 — 100% 3,100 (1) Victoria Healthcare Facility Victoria, TX 10/04/2019 2013 — 100% 34,297 (1) Victoria Healthcare Facility II Victoria, TX 10/04/2019 1998 — 100% 28,752 (1) Wilkes-Barre Healthcare Facility Scranton–Wilkes-Barre, PA 10/04/2019 2012 — 100% 15,996 (1) Yucca Valley Healthcare Facility Riverside-San Bernardino-Ontario, CA 10/04/2019 2009 — 100% 12,240 — Tucson Healthcare Facility II Tucson, AZ 12/26/2019 2021 — 100% 60,913 (1) Tucson Healthcare Facility III Tucson, AZ 12/27/2019 2020 — 100% 20,000 (1) Grimes Healthcare Facility Des Moines-West Des Moines, IA 02/19/2020 2018 — 100% 14,669 (1) Tampa Healthcare Facility Tampa-St.
As of December 31, 2022, all of our real estate investments are in healthcare properties and undeveloped land parcels. 19 Table of Contents Property Statistics The following table shows the property statistics of our real estate portfolio as of December 31, 2022: Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) Houston Healthcare Facility Houston-The Woodlands-Sugar Land, TX 07/31/2014 1993 — 100% 13,645 (1) Cincinnati Healthcare Facility Cincinnati, OH-KY-IN 10/29/2014 2001 — 100% 14,868 (1) Winston-Salem Healthcare Facility Winston-Salem, NC 12/17/2014 2004 — 100% 22,200 (1) Stoughton Healthcare Facility Boston-Cambridge-Newton, MA-NH 12/23/2014 1973 1997 100% 180,744 (1) Fort Worth Healthcare Facility Dallas-Fort Worth-Arlington, TX 12/31/2014 2014 — 100% 83,464 (1) Fort Worth Healthcare Facility II Dallas-Fort Worth-Arlington, TX 12/31/2014 2014 — 100% 8,268 (1) Winter Haven Healthcare Facility Lakeland-Winter Haven, FL 01/27/2015 2009 — 100% 7,560 (1) Overland Park Healthcare Facility Kansas City, MO-KS 02/17/2015 2014 — 100% 54,568 (1) Clarion Healthcare Facility Pittsburgh, PA 06/01/2015 2012 — 100% 33,000 (1) Webster Healthcare Facility Houston-The Woodlands-Sugar Land, TX 06/05/2015 2015 — 100% 53,514 (1) Augusta Healthcare Facility Augusta-Waterville, ME (µSA) 07/22/2015 2010 — 100% 51,000 (1) Cincinnati Healthcare Facility II Cincinnati, OH-KY-IN 07/22/2015 1960 2014 100% 139,428 (1) Cincinnati Healthcare Facility III Cincinnati, OH-KY-IN 07/22/2015 2014 — 100% 41,600 (1) Florence Healthcare Facility Cincinnati, OH-KY-IN 07/22/2015 2014 — 100% 41,600 (1) Oakland Healthcare Facility Augusta-Waterville, ME (µSA) 07/22/2015 2004 — 100% 20,000 (1) Wyomissing Healthcare Facility Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 07/24/2015 2007 — 100% 33,217 (1) Luling Healthcare Facility Austin-Round Rock, TX 07/30/2015 2003 — 100% 40,901 (1) Omaha Healthcare Facility Omaha-Council Bluffs, NE-IA 10/14/2015 2014 — 100% 40,402 (1) Sherman Healthcare Facility Sherman-Denison, TX 11/20/2015 2005 2010 100% 57,576 (1) Sherman Healthcare Facility II Sherman-Denison, TX 11/20/2015 2005 — 100% 8,055 (1) Fort Worth Healthcare Facility III Dallas-Fort Worth-Arlington, TX 12/23/2015 1998 2007/2015 100% 36,800 (1) Oklahoma City Healthcare Facility Oklahoma City, OK 12/29/2015 1985 1998/2003 100% 94,076 (1) Oklahoma City Healthcare Facility II Oklahoma City, OK 12/29/2015 1994 1999 100% 41,394 (1) Edmond Healthcare Facility Oklahoma City, OK 01/20/2016 2002 — 100% 17,700 (1) Oklahoma City Healthcare Facility III Oklahoma City, OK 01/27/2016 2006 — 100% 5,000 (1) Oklahoma City Healthcare Facility IV Oklahoma City, OK 01/27/2016 2007 — 100% 8,762 (1) Newcastle Healthcare Facility Oklahoma City, OK 02/03/2016 1995 1999 100% 7,424 (1) Oklahoma City Healthcare Facility V Oklahoma City, OK 02/11/2016 2008 — 100% 43,676 (1) Rancho Mirage Healthcare Facility Riverside-San Bernardino-Ontario, CA 03/01/2016 2018 — 100% 47,008 (1) Oklahoma City Healthcare Facility VI Oklahoma City, OK 03/07/2016 2007 — 100% 14,676 (1) Oklahoma City Healthcare Facility VII Oklahoma City, OK 06/22/2016 2016 — 100% 102,978 (1) Las Vegas Healthcare Facility Las Vegas-Henderson-Paradise, NV 06/24/2016 2017 — 100% 56,220 (1) Oklahoma City Healthcare Facility VIII Oklahoma City, OK 06/30/2016 1997 2008 100% 62,857 (1) Marlton Healthcare Facility Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 11/01/2016 1995 — 100% 89,139 (1) Grand Rapids Healthcare Facility Grand Rapids-Wyoming, MI 12/07/2016 2008 — 80% 86,008 (1) Corpus Christi Healthcare Facility Corpus Christi, TX 12/22/2016 1992 2016 100% 25,102 (1) Aurora Healthcare Facility Chicago-Naperville-Elgin, IL-IN-WI 03/30/2017 2002 — 100% 24,722 (1) Allen Healthcare Facility Dallas-Fort Worth-Arlington, TX 03/31/2017 2007 — 100% 42,627 (1) Austin Healthcare Facility Austin-Round Rock, TX 03/31/2017 2012 — 100% 66,095 (1) Beaumont Healthcare Facility Beaumont-Port Arthur, TX 03/31/2017 1991 — 100% 61,000 (1) San Antonio Healthcare Facility San Antonio-New Braunfels, TX 06/29/2017 1984 — 100% 44,746 (1) Silverdale Healthcare Facility Bremerton-Silverdale, WA 08/25/2017 2005 — 100% 26,127 (1) Silverdale Healthcare Facility II Bremerton-Silverdale, WA 09/20/2017 2007 — 100% 19,184 (1) Saginaw Healthcare Facility Saginaw, MI 12/21/2017 2002 — 100% 87,843 (1) Carrollton Healthcare Facility Dallas-Fort Worth-Arlington, TX 04/27/2018 2015 — 100% 21,990 (1) Katy Healthcare Facility Houston-The Woodlands-Sugar Land, TX 06/08/2018 2015 — 100% 34,296 (1) Indianola Healthcare Facility Des Moines-West Des Moines, IA 09/26/2018 2014 — 100% 18,116 (1) Indianola Healthcare Facility II Des Moines-West Des Moines, IA 09/26/2018 2011 — 100% 20,990 (1) Benton Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 1992/1999 2012 100% 104,419 (1) 20 Table of Contents Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) Benton Healthcare Facility II Little Rock-North Little Rock-Conway, AR 10/17/2018 1983 — 100% 11,350 (1) Bryant Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 1995 — 100% 23,450 (1) Hot Springs Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 2009 — 100% 8,573 (1) Clive Healthcare Facility Des Moines-West Des Moines, IA 11/26/2018 2008 — 100% 58,156 (1) Valdosta Healthcare Facility Valdosta, GA 11/28/2018 2004 — 100% 24,750 (1) Valdosta Healthcare Facility II Valdosta, GA 11/28/2018 1992 — 100% 12,745 (1) Bryant Healthcare Facility II Little Rock-North Little Rock-Conway, AR 08/16/2019 2016 — 100% 16,425 (1) Laredo Healthcare Facility Laredo, TX 09/19/2019 1998 — 100% 61,677 (1) Laredo Healthcare Facility II Laredo, TX 09/19/2019 1998 — 100% 118,132 (1) Poplar Bluff Healthcare Facility Poplar Bluff, MO (µSA) 09/19/2019 2013 — 100% 71,519 (1) Tucson Healthcare Facility Tucson, AZ 09/19/2019 1998 — 100% 34,009 (1) Akron Healthcare Facility Akron, OH 10/04/2019 2012 — 100% 98,705 (1) Akron Healthcare Facility II Akron, OH 10/04/2019 2013 — 100% 38,564 (1) Akron Healthcare Facility III Akron, OH 10/04/2019 2008 — 100% 54,000 (1) Alexandria Healthcare Facility Alexandria, LA 10/04/2019 2007 — 100% 15,600 (1) Appleton Healthcare Facility Appleton, WI 10/04/2019 2011 — 100% 7,552 (1) Austin Healthcare Facility II Austin-Round Rock, TX 10/04/2019 2006 — 100% 18,275 (1) Bellevue Healthcare Facility Green Bay, WI 10/04/2019 2010 — 100% 5,838 (1) Bonita Springs Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 2002 2005 100% 9,800 (1) Bridgeton Healthcare Facility St.
As of December 31, 2023, all of our real estate investments are in healthcare properties and undeveloped land parcels. 20 Table of Contents Property Statistics The following table shows the property statistics of our real estate portfolio as of December 31, 2023: Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) Houston Healthcare Facility Houston-Pasadena-The Woodlands, TX 07/31/2014 1993 — 100% 13,645 (1) Cincinnati Healthcare Facility Cincinnati, OH-KY-IN 10/29/2014 2001 — 100% 14,868 (1) Winston-Salem Healthcare Facility Winston-Salem, NC 12/17/2014 2004 — 100% 22,200 (1) Stoughton Healthcare Facility Boston-Cambridge-Newton, MA-NH 12/23/2014 1973 1997 100% 180,744 (1) Fort Worth Healthcare Facility Dallas-Fort Worth-Arlington, TX 12/31/2014 2014 — 100% 83,464 (1) Fort Worth Healthcare Facility II Dallas-Fort Worth-Arlington, TX 12/31/2014 2014 — 100% 8,268 (1) Winter Haven Healthcare Facility Lakeland-Winter Haven, FL 01/27/2015 2009 — 100% 7,560 (1) Overland Park Healthcare Facility Kansas City, MO-KS 02/17/2015 2014 — 100% 54,568 (1) Clarion Healthcare Facility Pittsburgh, PA 06/01/2015 2012 — 100% 33,000 (1) Webster Healthcare Facility Houston-Pasadena-The Woodlands, TX 06/05/2015 2015 — 100% 53,514 (1) Augusta Healthcare Facility Augusta-Waterville, ME (µSA) 07/22/2015 2010 — 100% 51,000 (1) Cincinnati Healthcare Facility III Cincinnati, OH-KY-IN 07/22/2015 2014 — 100% 41,600 (1) Florence Healthcare Facility Cincinnati, OH-KY-IN 07/22/2015 2014 — 100% 41,600 (1) Oakland Healthcare Facility Augusta-Waterville, ME (µSA) 07/22/2015 2004 — 100% 20,000 (1) Wyomissing Healthcare Facility Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 07/24/2015 2007 — 100% 33,217 (1) Luling Healthcare Facility Austin-Round Rock-San Marcos, TX 07/30/2015 2003 — 100% 40,901 (1) Omaha Healthcare Facility Omaha, NE-IA 10/14/2015 2014 — 100% 40,402 (1) Sherman Healthcare Facility Sherman-Denison, TX 11/20/2015 2005 2010 100% 57,576 (1) Sherman Healthcare Facility II Sherman-Denison, TX 11/20/2015 2005 — 100% 8,055 (1) Fort Worth Healthcare Facility III Dallas-Fort Worth-Arlington, TX 12/23/2015 1998 2007/2015 100% 36,800 (1) Oklahoma City Healthcare Facility Oklahoma City, OK 12/29/2015 1985 1998/2003 100% 94,076 (1) Oklahoma City Healthcare Facility II Oklahoma City, OK 12/29/2015 1994 1999 100% 41,394 (1) Edmond Healthcare Facility Oklahoma City, OK 01/20/2016 2002 — 100% 17,700 (1) Oklahoma City Healthcare Facility III Oklahoma City, OK 01/27/2016 2006 — 100% 5,000 (1) Oklahoma City Healthcare Facility IV Oklahoma City, OK 01/27/2016 2007 — 100% 8,762 (1) Newcastle Healthcare Facility Oklahoma City, OK 02/03/2016 1995 1999 100% 7,424 (1) Oklahoma City Healthcare Facility V Oklahoma City, OK 02/11/2016 2008 — 100% 43,676 (1) Rancho Mirage Healthcare Facility Riverside-San Bernardino-Ontario, CA 03/01/2016 2018 — 100% 47,008 (1) Oklahoma City Healthcare Facility VI Oklahoma City, OK 03/07/2016 2007 — 100% 14,676 (1) Oklahoma City Healthcare Facility VII Oklahoma City, OK 06/22/2016 2016 — 100% 102,978 (1) Las Vegas Healthcare Facility Las Vegas-Henderson-North Las Vegas, NV 06/24/2016 2017 — 100% 56,220 (1) Oklahoma City Healthcare Facility VIII Oklahoma City, OK 06/30/2016 1997 2008 100% 62,857 (1) Marlton Healthcare Facility Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 11/01/2016 1995 — 100% 89,139 (1) Grand Rapids Healthcare Facility Grand Rapids-Wyoming-Kentwood, MI 12/07/2016 2008 — 84% 90,150 (1) Corpus Christi Healthcare Facility Corpus Christi, TX 12/22/2016 1992 2016 100% 25,102 (1) Aurora Healthcare Facility Chicago-Naperville-Elgin, IL-IN 03/30/2017 2002 — 100% 24,722 (1) Allen Healthcare Facility Dallas-Fort Worth-Arlington, TX 03/31/2017 2007 — 100% 42,627 (1) Austin Healthcare Facility Austin-Round Rock-San Marcos, TX 03/31/2017 2012 — 100% 66,095 (1) Beaumont Healthcare Facility Beaumont-Port Arthur, TX 03/31/2017 1991 — 100% 61,000 (1) San Antonio Healthcare Facility San Antonio-New Braunfels, TX 06/29/2017 1984 (2) 100% 44,746 (1) Silverdale Healthcare Facility Bremerton-Silverdale-Port Orchard, WA 08/25/2017 2005 — 100% 26,127 (1) Silverdale Healthcare Facility II Bremerton-Silverdale-Port Orchard, WA 09/20/2017 2007 — 100% 19,184 (1) Saginaw Healthcare Facility Saginaw, MI 12/21/2017 2002 — 100% 87,843 (1) Carrollton Healthcare Facility Dallas-Fort Worth-Arlington, TX 04/27/2018 2015 — 100% 21,990 (1) Katy Healthcare Facility Houston-Pasadena-The Woodlands, TX 06/08/2018 2015 — 100% 34,296 (1) Indianola Healthcare Facility Des Moines-West Des Moines, IA 09/26/2018 2014 — 100% 18,116 (1) 21 Table of Contents Property Name MSA/µSA Date Acquired Year Constructed Year Renovated % Leased Leased Sq Ft Encumbrances, $ (in thousands) Indianola Healthcare Facility II Des Moines-West Des Moines, IA 09/26/2018 2011 — 100% 20,990 (1) Benton Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 1992/1999 2012 100% 104,419 (1) Benton Healthcare Facility II Little Rock-North Little Rock-Conway, AR 10/17/2018 1983 — 100% 11,350 (1) Bryant Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 1995 — 100% 23,450 (1) Hot Springs Healthcare Facility Little Rock-North Little Rock-Conway, AR 10/17/2018 2009 — 100% 8,573 (1) Clive Healthcare Facility Des Moines-West Des Moines, IA 11/26/2018 2008 — 100% 58,156 (1) Valdosta Healthcare Facility Valdosta, GA 11/28/2018 2004 — 100% 24,750 (1) Valdosta Healthcare Facility II Valdosta, GA 11/28/2018 1992 — 100% 12,745 (1) Bryant Healthcare Facility II Little Rock-North Little Rock-Conway, AR 08/16/2019 2016 — 100% 16,425 (1) Laredo Healthcare Facility Laredo, TX 09/19/2019 1998 2023 100% 61,677 (1) Laredo Healthcare Facility II Laredo, TX 09/19/2019 1998 — 100% 118,132 (1) Poplar Bluff Healthcare Facility Poplar Bluff, MO (µSA) 09/19/2019 2013 — 100% 71,519 (1) Tucson Healthcare Facility Tucson, AZ 09/19/2019 1998 — 100% 34,009 (1) Akron Healthcare Facility Akron, OH 10/04/2019 2012 — 100% 98,705 (1) Akron Healthcare Facility II Akron, OH 10/04/2019 2013 — 100% 38,564 (1) Akron Healthcare Facility III Akron, OH 10/04/2019 2008 — 100% 54,000 (1) Alexandria Healthcare Facility Alexandria, LA 10/04/2019 2007 — 100% 15,600 (1) Appleton Healthcare Facility Appleton, WI 10/04/2019 2011 — 100% 7,552 (1) Austin Healthcare Facility II Austin-Round Rock-San Marcos, TX 10/04/2019 2006 — 100% 18,273 (1) Bellevue Healthcare Facility Green Bay, WI 10/04/2019 2010 — 100% 5,838 (1) Bonita Springs Healthcare Facility Cape Coral-Fort Myers, FL 10/04/2019 2002 2005 100% 9,800 — Bridgeton Healthcare Facility St.
Petersburg-Clearwater, FL 09/08/2020 2015 — 100% 33,822 (1) Tucson Healthcare Facility IV Tucson, AZ 12/22/2020 2022 — 89% 39,967 — Greenwood Healthcare Facility Indianapolis-Carmel-Anderson, IN 04/19/2021 2008 2018 100% 53,560 (1) Clive Healthcare Facility II Des Moines-West Des Moines, IA 12/08/2021 2008 — 100% 63,224 (1) Clive Healthcare Facility III Des Moines-West Des Moines, IA 12/08/2021 2008 — 100% 33,974 (1) Clive Healthcare Facility IV Des Moines-West Des Moines, IA 12/08/2021 2009 2018 100% 35,419 (1) Clive Undeveloped Land Des Moines-West Des Moines, IA 12/08/2021 — — —% — — Clive Undeveloped Land II Des Moines-West Des Moines, IA 12/08/2021 — — —% — — Yukon Healthcare Facility Oklahoma City, OK 03/10/2022 2020 — 100% 45,624 — Pleasant Hills Healthcare Facility Pittsburgh, PA 05/12/2022 1967 — 100% 33,712 — Prosser Healthcare Facility I Kennewick-Richland, WA 05/20/2022 2010 — 100% 6,000 — Prosser Healthcare Facility II Kennewick-Richland, WA 05/20/2022 2013 2019 100% 9,230 — Prosser Healthcare Facility III Kennewick-Richland, WA 05/20/2022 2013 — 100% 5,400 — Tampa Healthcare Facility II Tampa-St.
Petersburg-Clearwater, FL 09/08/2020 2015 — 100% 33,822 (1) Tucson Healthcare Facility IV Tucson, AZ 12/22/2020 2022 — 100% 44,692 (1) Greenwood Healthcare Facility Indianapolis-Carmel-Greenwood, IN 04/19/2021 2008 2018 100% 53,560 (1) Clive Healthcare Facility II Des Moines-West Des Moines, IA 12/08/2021 2008 — 100% 63,224 (1) Clive Healthcare Facility III Des Moines-West Des Moines, IA 12/08/2021 2008 — 100% 33,974 (1) Clive Healthcare Facility IV Des Moines-West Des Moines, IA 12/08/2021 2009 2018 100% 35,419 (1) Clive Undeveloped Land Des Moines-West Des Moines, IA 12/08/2021 — — —% — — Clive Undeveloped Land II Des Moines-West Des Moines, IA 12/08/2021 — — —% — — Yukon Healthcare Facility Oklahoma City, OK 03/10/2022 2020 — 100% 45,624 (1) Pleasant Hills Healthcare Facility Pittsburgh, PA 05/12/2022 2015 — 100% 33,712 (1) Prosser Healthcare Facility I Kennewick-Richland, WA 05/20/2022 2020 — 100% 6,000 (1) Prosser Healthcare Facility II Kennewick-Richland, WA 05/20/2022 2013 2019 100% 9,230 (1) Prosser Healthcare Facility III Kennewick-Richland, WA 05/20/2022 2013 — 100% 5,400 (1) Tampa Healthcare Facility II Tampa-St.
The properties generally are leased under net leases pursuant to which the tenant bears responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation, including utilities, property taxes and insurance. Certain leases provide for fixed increases in rent.
The properties generally are leased under net leases pursuant to which the tenant bears responsibility for substantially all property costs and expenses associated with ongoing maintenance and operation, including utilities, property taxes and insurance. The majority of our leases provide for fixed increases in rent.
Item 2. Properties. Our principal executive office is located at 1001 Water Street, Suite 800, Tampa, Florida 33602. As of December 31, 2022, we owned a portfolio of 132 real estate properties, composed of approximately 5,535,000 rentable square feet of commercial spaces, and two undeveloped land parcels.
Item 2. Properties. Our principal executive office is located at 1001 Water Street, Suite 800, Tampa, Florida 33602. As of December 31, 2023, we owned a portfolio of 131 real estate properties, composed of approximately 5,114,000 rentable square feet of commercial spaces, and two undeveloped land parcels.
As of December 31, 2022, 124 commercial real estate properties were contributed to the pool of unencumbered properties under our credit facility and we had an outstanding principal balance of $583,000,000. We believe the properties are adequately covered by insurance and are suitable for their respective intended purposes.
As of December 31, 2023, 111 commercial real estate properties were contributed to the pool of unencumbered properties under our credit facility and we had an outstanding principal balance of $525,000,000. (2) Property is currently under renovation. We believe the properties are adequately covered by insurance and are suitable for their respective intended purposes.
As of December 31, 2022, 118 of our real estate properties were single-tenant and 14 of our real estate properties were multi-tenant. As of December 31, 2022, 99.5% of our rentable square feet was leased, with a weighted average remaining lease term of 9.3 years.
As of December 31, 2023, 117 of our real estate properties were leased to a single-tenant and 14 of our real estate properties were leased to multiple tenants. As of December 31, 2023, 99.4% of our rentable square feet was leased, with a weighted average remaining lease term of 8.5 years.
Indebtedness For a discussion of our indebtedness, see Note 10—"Credit Facility" to the consolidated financial statements that are a part of this Annual Report on Form 10-K. Item 3. Legal Proceedings. We are not aware of any material pending legal proceedings to which we are a party or to which our properties are the subject. Item 4. Mine Safety Disclosures.
Item 3. Legal Proceedings. We are not aware of any material pending legal proceedings to which we are a party or to which our properties are the subject. Item 4. Mine Safety Disclosures. Not applicable. PART II
Petersburg-Clearwater, FL 07/20/2022 2022 — 100% 87,649 — Escondido Healthcare Facility San Diego-Carlsbad, CA 07/21/2022 2021 — 100% 56,800 — 5,507,777 $ — (1) Property is contributed to the pool of unencumbered properties of our credit facility.
Petersburg-Clearwater, FL 07/20/2022 2022 — 100% 87,649 (1) Escondido Healthcare Facility San Diego-Carlsbad, CA 07/21/2022 2021 — 100% 56,800 (1) West Palm Beach Healthcare Facility Miami-Fort Lauderdale-West Palm Beach, FL 06/15/2023 1999 2007/2019 100% 25,150 (1) Burr Ridge Healthcare Facility Chicago-Naperville-Elgin, IL-IN 09/27/2023 2010 — 100% 104,912 — 5,085,257 — (1) Property is contributed to the pool of unencumbered properties of our credit facility.
Lease expirations of our real properties based on annualized contractual base rent as of December 31, 2022, for each of the next ten years ending December 31 and thereafter, are as follows: Year of Lease Expiration Total Number of Leases Leased Sq Ft Annualized Contractual Base Rent (in thousands) (1) Percentage of Annualized Contractual Base Rent 2023 6 26,994 $ 607 0.4 % 2024 18 162,001 4,792 2.8 % 2025 13 372,447 9,487 5.6 % 2026 13 202,884 5,837 3.4 % 2027 10 315,340 7,777 4.6 % 2028 10 236,527 5,126 3.0 % 2029 15 498,702 10,485 6.2 % 2030 13 550,814 18,120 10.7 % 2031 12 403,342 16,479 9.7 % 2032 6 174,560 7,005 4.1 % Thereafter 41 2,564,166 83,655 49.5 % 157 5,507,777 $ 169,370 100.0 % (1) Annualized contractual base rent is based on contractual base rent from leases in effect as of December 31, 2022.
Lease expirations of our real properties based on annualized contractual base rent as of December 31, 2023, for each of the next ten years ending December 31 and thereafter, are as follows: Year of Lease Expiration Total Number of Leases Leased Sq Ft Annualized Contractual Base Rent (in thousands) (1) Percentage of Annualized Contractual Base Rent 2024 18 143,230 $ 4,432 2.7 % 2025 12 246,413 7,768 4.8 % 2026 13 202,884 5,977 3.7 % 2027 9 277,229 7,107 4.4 % 2028 11 238,571 5,301 3.3 % 2029 19 520,887 11,239 7.0 % 2030 14 553,432 18,635 11.5 % 2031 12 497,414 20,412 12.6 % 2032 6 175,658 7,188 4.5 % 2033 12 478,568 20,744 12.8 % Thereafter 32 1,750,971 52,642 32.7 % 158 5,085,257 $ 161,445 100.0 % (1) Annualized contractual base rent is based on leases in effect as of December 31, 2023.
Tenant improvements are depreciated on a straight-line basis over the shorter of their respective lease term or expected useful life. 22 Table of Contents Leases Although there are variations in the specific terms of the leases in our portfolio, the following is a summary of the structure of our leases.
Real estate assets, other than land, are depreciated on a straight-line basis over each asset's useful life. Tenant improvements are depreciated on a straight-line basis over the shorter of the respective lease term or expected useful life. 23 Table of Contents Leases As of December 31, 2023, the weighted average remaining lease term of our properties was 8.5 years.
Removed
Real estate assets, other than land, are depreciated on a straight-line basis over each asset's useful life.
Removed
Generally, the leases of our properties provide for initial terms ranging from 10 to 20 years. As of December 31, 2022, the weighted average remaining lease term of our properties was 9.3 years.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 23 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38
Biggest changeItem 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

19 edited+2 added−0 removed39 unchanged
Biggest changeAs of December 31, 2022, the offering price for the shares in the DRIP Offering was $8.22 per Class A share, $8.22 per Class I share and $8.22 per Class T share, which is equal to the Estimated Per Share NAV, as approved by the Board and effective on August 25, 2022. 23 Table of Contents We will continue to issue shares of Class A common stock, Class I common stock and Class T common stock under the current DRIP Offering until such time as we sell all of the shares registered for sale under the current DRIP Offering, unless we file a new registration statement with the SEC or the current DRIP Offering is terminated by the Board.
Biggest changeWe will continue to issue shares of Class A common stock, Class I common stock and Class T common stock under the current DRIP Offering until such time as we sell all of the shares registered for sale under the current DRIP Offering, unless we file a new registration statement with the SEC or the current DRIP Offering is terminated by the Board.
During any calendar year, we will not repurchase in excess of 5.0% of the number of shares of common stock outstanding on December 31st of the previous calendar year, or the 5% Share Limitation. b. Quarterly Share Limitations.
During any calendar year, we will not repurchase shares in excess of 5.0% of the number of shares of common stock outstanding on December 31st of the previous calendar year, or the 5% Share Limitation. b. Quarterly Share Limitations.
We will notify our stockholders of such developments: (1) in a current report on Form 8-K, an annual report on Form 10-K or a quarterly report on Form 10-Q; or (2) by means of a separate mailing to you.
We will notify our stockholders of such developments: (1) in a current report on Form 8-K, an annual report on Form 10-K or a quarterly report on Form 10-Q; or (2) by means of a separate mailing to our stockholders.
We are not obligated to repurchase shares under our SRP. We can only repurchase shares due to death and involuntary exigent circumstances in accordance with our SRP, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation, and DRIP funding limitations.
We are not obligated to repurchase shares under our SRP. We currently only repurchase shares due to death and involuntary exigent circumstances in accordance with our SRP, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation, and DRIP funding limitations.
Subject to the conditions and limitations described below, we may waive certain of the terms and requirements of our share repurchase program in the event of the death of a stockholder who is a natural person, including shares held by such stockholder through an IRA or other retirement or profit-sharing plan, and certain trusts meeting the requirements detailed in this program.
Subject to the conditions and limitations described below, we may waive certain of the terms and requirements of our share repurchase program in the event of the death of a stockholder who is a natural person, including shares held by such stockholder through an IRA or other retirement or profit-sharing plan, and certain trusts meeting the 25 Table of Contents requirements detailed in this program.
Because share repurchases will be funded with the net proceeds we receive from the sale of shares under our DRIP or other operating funds reserved by the Board in its sole discretion, the discontinuance or termination of the DRIP or the Board’s decision not to reserve other operating funds to fund our SRP would adversely affect our ability to repurchase shares under our SRP.
Because share repurchases will be funded with the net proceeds we receive from the sale of shares under our DRIP or other operating funds reserved by the Board in its sole discretion, the discontinuance or termination 27 Table of Contents of the DRIP or the Board’s decision not to reserve other operating funds to fund our SRP would adversely affect our ability to repurchase shares under our SRP.
We will issue such shares at the applicable Estimated Per Share NAV. In May 2022, all outstanding shares of Class T2 common stock (including associated shares of Class T2 DRIP common stock) were converted into shares of Class I common stock.
We will issue such shares at the applicable Estimated Per Share NAV. As of May 2022, all outstanding shares of Class T2 common stock (including associated shares of Class T2 DRIP common stock) were converted into shares of Class I common stock.
In the event that a 24 Table of Contents stockholder requests a repurchase of its shares, and such stockholder is participating in the DRIP, the stockholder will be deemed to have notified us, at the time the stockholder submits the repurchase request, that the stockholder is terminating participation in the DRIP and has elected to receive future distributions in cash.
In the event that a stockholder requests a repurchase of its shares, and such stockholder is participating in the DRIP, the stockholder will be deemed to have notified us, at the time the stockholder submits the repurchase request, that the stockholder is terminating participation in the DRIP and has elected to receive future distributions in cash.
We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable Repurchase Date. 25 Table of Contents a. 5% Share Limitation.
We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable Repurchase Date. a. 5% Share Limitation.
Stockholders received a confirmation notice when their shares of Class T2 common stock were converted into shares of Class I common stock. Pursuant to the terms of our charter, certain restrictions are imposed on the ownership and transfer of shares.
Stockholders received a confirmation notice when their shares of Class T2 common stock were converted into shares of Class I common stock. 24 Table of Contents Pursuant to the terms of our charter, certain restrictions are imposed on the ownership and transfer of shares.
We limit the number of shares repurchased each quarter pursuant to our SRP as follows (subject to the DRIP Funding Limitation (as defined below)): • On the first quarter Repurchase Date, which generally will be January 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; • On the second quarter Repurchase Date, which generally will be April 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; • On the third quarter Repurchase Date, which generally will be July 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; and • On the fourth quarter Repurchase Date, which generally will be October 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year.
We limit the number of shares repurchased each quarter pursuant to our SRP as follows (subject to the DRIP Funding Limitation (as defined below)): • On the first quarter Repurchase Date, which generally will be on or about January 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; 26 Table of Contents • On the second quarter Repurchase Date, which generally will be on or about April 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; • On the third quarter Repurchase Date, which generally will be on or about July 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year; and • On the fourth quarter Repurchase Date, which generally will be on or about October 30 of the applicable year, we will not repurchase in excess of 1.25% of the number of shares outstanding on December 31st of the previous calendar year.
Because we generally only repurchase shares on a quarterly basis, depending upon when during the quarter the Board makes this determination, it is possible that you would not have any additional opportunities to have your shares repurchased under the prior terms of the program, or at all, upon receipt of the notice.
Because we generally only repurchase shares on a quarterly basis, depending upon when during the quarter the Board makes this determination, it is possible that our stockholders would not have any additional opportunities to have their shares repurchased under the prior terms of the program, or at all, upon receipt of the notice.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the quarter ended December 31, 2022.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the quarter ended December 31, 2023.
In addition, we prepare annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in our shares. For these purposes, the Estimated Per Share NAV of our common shares was $8.22 as of December 31, 2022.
In addition, we prepare annual statements of estimated share values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in our shares. For these purposes, the Estimated Per Share NAV of our common shares was $7.48 as of December 31, 2023.
During the three months ended December 31, 2022, we fulfilled the following repurchase requests pursuant to our SRP: Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans and Programs Approximate Dollar Value of Shares Available that may yet be Repurchased under the Program October 1, 2022 - October 31, 2022 336,322 $ 8.22 — $ — November 1, 2022 - November 30, 2022 — $ — — $ — December 1, 2022 - December 31, 2022 — $ — — $ — Total 336,322 — During the three months ended December 31, 2022, we repurchased approximately $2,765,000 of Class A shares, Class I shares and Class T shares of common stock.
During the three months ended December 31, 2023, we fulfilled the following repurchase requests pursuant to our SRP: Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans and Programs Approximate Dollar Value of Shares Available that may yet be Repurchased under the Program October 1, 2023 - October 31, 2023 368,926 $ 8.13 — $ — November 1, 2023 - November 30, 2023 — $ — — $ — December 1, 2023 - December 31, 2023 — $ — — $ — Total 368,926 — During the three months ended December 31, 2023, we repurchased approximately $2,998,000 of Class A shares, Class I shares and Class T shares of common stock.
In the event any stockholder fails to maintain a minimum balance of $2,000 of Class A shares, Class I shares, Class T shares, or Class T2 shares, we may repurchase all of the shares held by that stockholder at the NAV per share repurchase price in effect on the date we determine that the stockholder has failed to meet the minimum balance. 26 Table of Contents Termination, Amendment or Suspension of the Program.
In the event any stockholder fails to maintain a minimum balance of $2,000 of Class A shares, Class I shares, or Class T shares, we may repurchase all of the shares held by that stockholder at the NAV per share repurchase price in effect on the date we determine that the stockholder has failed to meet the minimum balance.
However, as set forth above, there is no public trading market for the shares at this time and stockholders may not receive $8.22 per share if a market did exist. The Estimated Per Share NAV was approved by the Board, at the recommendation of the Audit Committee, on August 25, 2022, using a methodology that conformed to standard industry practice.
However, as set forth above, there is no public trading market for the shares at this time and stockholders may not receive $7.48 per share if a market did exist. The Estimated Per Share NAV was approved by the Board, at the recommendation of the Audit Committee, on December 18, 2023, using a methodology that conformed to standard industry practice.
See our Current Report on Form 8-K filed with the SEC on August 26, 2022 for additional information regarding Cushman & Wakefield of Pennsylvania, LLC, and its valuation materials and the methodology used to determine the Estimated Per Share NAV. Stockholder Information As of March 10, 2023, we had 64,679 stockholders of record.
See our Current Report on Form 8-K filed with the SEC on December 19, 2023 for additional information regarding Cushman & Wakefield of Pennsylvania, LLC, and its valuation materials and the methodology used to determine the Estimated Per Share NAV. Stockholder Information As of February 29, 2024, we had 63,474 stockholders of record.
Our SRP will immediately terminate if our shares are listed on any national securities exchange.
Termination, Amendment or Suspension of the Program. Our SRP will immediately terminate if our shares are listed on any national securities exchange.
Added
As of December 31, 2023, the offering price for the shares in the DRIP Offering was $7.48 per Class A share, $7.48 per Class I share and $7.48 per Class T share, which is equal to the Estimated Per Share NAV, as approved by the Board and effective on December 18, 2023.
Added
Item 6. [Reserved] Information pertaining to Item 6 is not presented in accordance with amendments to Item 301 of Regulation S-K. 28 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+14 added−40 removed37 unchanged
Biggest changeFinancing Activities • Net cash provided by financing activities for the year ended December 31, 2022, was due to proceeds from our credit facility, partially offset by payments on our credit facility, payments of deferred financing costs as a result of entering into the 2024 Term Loan Agreement and Revolving Credit Agreement on February 15, 2022 and the 2028 Term Loan Agreement on May 17, 2022, repurchases of our common stock under our share repurchase program, distributions to our common stockholders and payment of offering costs on issuance of common stock.
Biggest changeFinancing Activities Significant financing activities included: • Payment of $66,515,000 in cash distributions to common stockholders during the year ended December 31, 2023, compared to $65,310,000 during the year ended December 31, 2022. • Repurchase of $12,374,000 of common stock under our share repurchase program during the year ended December 31, 2023, compared to $9,217,000 during the year ended December 31, 2022. • The following Unsecured Credit Facility related activity during the year ended December 31, 2023: ◦ Repayment of $58,000,000 on the Revolving Credit Agreement with cash flows from operations and proceeds from a disposition; ◦ Repayment of $50,000,000 on the 2024 Term Loan Agreement with proceeds from dispositions, the collection of a note receivable related to a disposition and cash flows from operations; and ◦ Draw of $50,000,000 on the Revolving Credit Agreement to fund an acquisition. • The following Unsecured Credit Facility related activity during the year ended December 31, 2022: ◦ Draw of $70,000,000 on the Revolving Credit Agreement to fund acquisitions; ◦ Draw of $70,000,000 on the 2028 Term Loan Agreement to fund acquisitions; ◦ Repayment of $57,000,000 on the Revolving Credit Agreement with proceeds from dispositions and cash flows from operations; ◦ Replacement of $500,000,000 from our prior unsecured credit facility with borrowings from our new Revolving Credit Agreement and 2024 Term Loan Agreement; ◦ Draw of $205,000,000 on the 2028 Term Loan Agreement at closing to pay down the $205,000,000 outstanding balance on the Revolving Credit Agreement; and ◦ Payment of $6,937,000 in deferred financing costs as a result of entering into the Revolving Credit Agreement, 2024 Term Loan Agreement and 2028 Term Loan Agreement during the year ended December 31, 2022.
Our results of operations are influenced by the timing of acquisitions and the performance of our real estate properties.
Results of Operations Our results of operations are influenced by the timing of acquisitions and the performance of our real estate properties.
Net (Loss) Income and FFO, Core FFO and AFFO A description of FFO, Core FFO, and AFFO and reconciliations of these non-GAAP measures to net (loss) income, the most directly comparable GAAP measure, are provided below.
Net Income (Loss) and FFO, Core FFO and AFFO A description of FFO, Core FFO, and AFFO and reconciliations of these non-GAAP measures to net income (loss), the most directly comparable GAAP measure, are provided below.
We define FFO, consistent with NAREIT’s definition, as net (loss) income (calculated in accordance with GAAP), excluding gains (or losses) from sales of real estate assets and impairments of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.
We define FFO, consistent with NAREIT’s definition, as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of real estate assets and impairments of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.
Short-term Liquidity and Capital Resources For at least the next twelve months, we expect our principal demands for funds will be for operating expenses, including our general and administrative expenses, as well as the acquisition of real estate and real estate-related investments and funding of capital improvements and tenant improvements, distributions to and repurchases from stockholders, and interest payments on our credit facility.
Short-term Liquidity and Capital Resources For at least the next twelve months, we expect our principal demands for funds will be for operating expenses, including our general and administrative expenses, as well as the acquisition of real estate and real estate-related investments and funding of capital improvements and tenant improvements, distributions to and stock repurchases from stockholders, and interest payments on our credit facility.
By evaluating the results of our same store properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and readily observe the expected effects of our new acquisitions and dispositions on net (loss) income.
By evaluating the results of our same store properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and readily observe the expected effects of our new acquisitions and dispositions on net income.
(2) Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions. Same Store Properties This section describes and compares our results of operations for the years ended December 31, 2022 and 2021. We generate substantially all of our revenue from property operations. In order to evaluate our overall portfolio, management analyzes the results of our same store properties.
(2) Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions. This section describes and compares our results of operations for the years ended December 31, 2023 and 2022. We generate substantially all of our revenue from property operations. In order to evaluate our overall portfolio, management analyzes the results of our same store properties.
Under the SRP, we can only repurchase shares due to death or involuntary exigent circumstances, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations. See Part II, Item 5.
Under the SRP, we currently only repurchase shares due to death or involuntary exigent circumstances, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations. See Part II, Item 5.
A discussion of the changes in our financial condition and results of operations for the years ended December 31, 2021, and 2020 may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal years ended December 31, 2021 and December 31, 2020.
A discussion of the changes in our financial condition and results of operations for the years ended December 31, 2022, and 2021 may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal years ended December 31, 2022 and December 31, 2021.
Furthermore, FFO, Core FFO and AFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net (loss) income as an indication of our performance, as an indication of our liquidity, or indicative of funds available for our cash needs, including our ability to make distributions to our stockholders.
Furthermore, FFO, Core FFO and AFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance or as an indication of our liquidity, including our ability to make distributions to our stockholders.
Significant increases or decreases in any of these inputs, particularly with regards to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being assessed.
Significant increases or decreases in any of these inputs, particularly with regard to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being assessed.
FFO is not equivalent to our net (loss) income as determined under GAAP.
FFO is not equivalent to our net income as determined under GAAP.
The 2024 Term Loan Agreement has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee.
The 2024 Term Loan Agreement has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions (which we currently meet), including the payment of an extension fee.
This section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The discounted cash flow method is based on estimated future cash flow projections utilizing discount rates, terminal capitalization rates, and planned capital expenditures. We use judgment to determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation.
The discounted cash flow method is based on estimated future cash flow projections utilizing discount rates, terminal capitalization rates, and planned capital expenditures. We use 29 Table of Contents judgment to determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation.
Liquidity and Capital Resources Our principal uses of funds are for acquisitions of real estate and real estate-related investments, capital expenditures, operating expenses, distributions to, and share repurchases from, stockholders and principal and interest payments on any current and future indebtedness.
Liquidity and Capital Resources Our principal uses of funds are for acquisitions of real estate and real estate-related investments, capital expenditures, operating expenses, distributions to, and share repurchases from, stockholders, and principal and interest payments on current 32 Table of Contents and future indebtedness.
Overview We invest in high-quality properties leased to tenants capitalizing on critical and structural economic growth drivers. We are primarily focused on investing in strategic healthcare assets across the continuum of care, with emphasis on lower cost patient settings, which, we believe, typically generate predictable, durable and growing income streams.
Overview We invest in high quality properties leased to tenants capitalizing on critical and structural economic growth drivers. We are primarily focused on investing in healthcare assets across the continuum of care, which we believe typically generate predictable, durable and growing income streams.
The following table shows the property statistics of our real estate properties as of December 31, 2022 and 2021: December 31, 2022 2021 Number of real estate properties (1) 132 125 Leased square feet 5,508,000 5,219,000 Weighted average percentage of rentable square feet leased 99.5 % 99.5 % (1) As of December 31, 2022, we owned 132 real estate properties and two undeveloped land parcels.
The following table shows the property statistics of our real estate properties as of December 31, 2023 and 2022: December 31, 2023 2022 Number of real estate properties (1) 131 132 Leased square feet 5,085,000 5,508,000 Weighted average percentage of rentable square feet leased 99.4 % 99.5 % (1) As of December 31, 2023, we owned 131 real estate properties and two undeveloped land parcels.
While interest rates on variable rate debt have increased and we expect will continue to increase globally, we believe our exposure is limited at this time due to our hedging strategy, which has effectively fixed 83% of our outstanding debt as of December 31, 2022, allowing us to reasonably project our liquidity needs.
While interest rates on variable rate debt have increased and may continue to increase, we believe our exposure is limited at this time due to our hedging strategy, which has effectively fixed 100% of our outstanding debt as of December 31, 2023, allowing us to reasonably project our liquidity needs.
The maturity date for the Revolving Credit Agreement is February 15, 2026, which, at our election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee.
The maturity date for the Revolving Credit Agreement is February 15, 2026, which, at our election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee. As of December 31, 2023, the Revolving Credit Agreement had no outstanding principal balance.
As of December 31, 2022, we had a total pool availability under our Unsecured Credit Facility of $1,075,000,000 and an aggregate outstanding principal balance of $583,000,000; therefore, $492,000,000 was available to be drawn under our Unsecured Credit Facility. We were in compliance with all the financial covenant requirements as of December 31, 2022.
As of December 31, 2023, we had a total pool availability under our Unsecured Credit Facility of $1,025,000,000 and an aggregate outstanding principal balance of $525,000,000; therefore, $500,000,000 was available to be drawn under our Unsecured Credit Facility. We were in compliance with all the financial covenant requirements as of December 31, 2023.
“Risk Factors” of this Annual Report on Form 10-K, affecting our real estate properties, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the acquisition, management and operation of our properties .
"Risk Factors" of this Annual Report on Form 10-K, affecting our real estate properties, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income, management and operation of our properties.
As of December 31, 2022, we were in compliance with all such cross-default provisions. Debt Service Requirements Credit Facility As of December 31, 2022, the maximum commitments available under the Revolving Credit Agreement, were $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000.
As of December 31, 2023, we were in compliance with all such cross-default provisions. 33 Table of Contents Debt Service Requirements Credit Facility As of December 31, 2023, the maximum commitments available under our senior unsecured revolving line of credit with Truist Bank, as Administrative Agent for the lenders, or the Revolving Credit Agreement, were $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table represents the breakdown of total rental revenue for the year ended December 31, 2022 compared to the comparable period in 2021 (amounts in thousands).
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table allocates total rental revenue for the year ended December 31, 2023 compared to the comparable period in 2022 (amounts in thousands).
As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for these tenants to the extent we have received cash. In addition, we wrote off $2,434,000 of previously recorded straight line rent receivable, during the year ended December 31, 2022, as a reduction in rental revenue, because the amounts were determined to be uncollectible.
As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for GenesisCare to the extent we have received cash. In addition, during the year ended December 31, 2023, we wrote off $1,630,000 of straight-line rent receivables related to GenesisCare, as a reduction in rental revenue, because the amounts were determined to be uncollectible.
For operating properties, these indicators could include a tenant being delinquent or not paying rent, a reduction in our estimated hold period, a significant decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a significant decline in lease rates for that property or others in the property’s market, a significant change in the market value of the property, or an adverse change in the financial condition of significant tenants. 28 Table of Contents If we determine that an asset has indicators of impairment, we then determine whether the undiscounted cash flows associated with the asset group exceed the carrying amount of the asset group.
For operating properties, these indicators could include a tenant being delinquent or not paying rent, a reduction in our estimated hold period, a significant decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a significant decline in lease rates for that property or others in the property’s market, a significant change in the market value of the property, or an adverse change in the financial condition of significant tenants.
We may pay distributions from any source, such as the sale of assets, the sale of additional securities, and offering proceeds and we do not 34 Table of Contents currently have any limits on the amounts we may pay from such sources.
We do not currently have any limits on the sources of funding distribution payments to our stockholders. We may pay distributions from any source, such as the sale of assets, the sale of additional securities, and offering proceeds and we do not currently have any limits on the amounts we may pay from such sources.
As of December 31, 2022, the aggregate notional amount under our derivative instruments was $485,000,000. We have agreements with each derivative counterparty that contain cross-default provisions; if we default on our indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment of any net amounts due under our derivative contracts.
We have agreements with each derivative counterparty that contain cross-default provisions; if we default on our indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment of any net amounts due under our derivative contracts.
We, along with many of our peers in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance, because it is based on a net income (loss) analysis of real estate portfolio performance that excludes non-cash items such as real estate depreciation and amortization and real estate impairments, which we believe provides a useful understanding of our performance to the investors and to our management, and when compared to year over year, FFO reflects the impact on our operations from trends in occupancy.
We, along with many of our peers in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance, because it is based on a net income (loss) analysis of real estate portfolio performance that excludes non-cash items such as real estate depreciation and amortization and real estate impairments.
We currently expect that substantially all net cash flows from our operations will be used to fund acquisitions, certain capital expenditures identified at acquisition, ongoing capital expenditures, interest and principal payments on outstanding debt and distributions to our stockholders.
We currently expect that substantially all net cash flows from our operations will be used to fund acquisitions, certain capital expenditures identified at acquisition, ongoing capital expenditures, interest and principal payments on outstanding debt and distributions to our stockholders. Material Cash Requirements As of December 31, 2023, we had approximately $202,019,000 in cash and cash equivalents.
As of December 31, 2022, we had $583,000,000 of principal outstanding under our Unsecured Credit Facility. We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of December 31, 2022, we were in compliance with all such covenants and requirements on our Unsecured Credit Facility (as defined below).
One of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. As of December 31, 2023, we had $525,000,000 of principal outstanding under our Unsecured Credit Facility (as defined below). We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements.
For the year ended December 31, 2021, our cash flows provided by operations of approximately $136,942,000 covered 100% of our distributions paid (total ordinary distributions were approximately $100,748,000, of which $73,164,000 was cash and $27,584,000 was reinvested in shares of our common stock pursuant to the DRIP) during such period.
For the year ended December 31, 2023, our cash flows provided by operations of approximately $128,924,000 covered 100% of our ordinary distributions paid (total ordinary distributions were approximately $91,266,000, of which $66,515,000 was cash and $24,751,000 was reinvested in shares of our common stock pursuant to the DRIP) during such period.
The following table summarizes our real estate activity for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Real estate properties acquired 7 4 Real estate properties disposed — (1) 2 Aggregate purchase price of real estate properties acquired (2) $ 157,194,000 $ 69,951,000 Net book value of real estate properties disposed $ — (1) $ 12,553,000 Leased square feet of real estate property additions 284,000 247,000 (1) During the year ended December 31, 2022, we disposed of one land parcel that formerly contained a healthcare property.
As of December 31, 2022, we owned 132 real estate properties and two undeveloped land parcels. 30 Table of Contents The following table summarizes our real estate activity for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Real estate properties acquired 2 7 Real estate properties disposed 3 — (1) Aggregate purchase price of real estate properties acquired (2) $ 69,822,000 $ 157,194,000 Net book value of real estate properties disposed $ 270,279,000 $ — (1) Leased square feet of real estate property additions 130,000 284,000 Leased square feet of real estate property dispositions 551,000 — (1) During the year ended December 31, 2022, we disposed of one land parcel that formerly contained a property.
In addition, if there are alternative strategies for the future use of the asset, we assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset group.
We estimate future rental rates, future capital expenditures, future operating expenses, and market capitalization rates for residual values, among other things. In addition, if there are alternative strategies for the future use of the asset, we assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset group.
Material Cash Requirements In addition to the cash we need to conduct our normal business operations, we expect to require approximately $22,878,000 in cash over the next twelve months, of which $20,203,000 will be required for the payment of estimated interest on our outstanding debt (calculated based on our effective interest rates as of December 31, 2022) and $2,675,000 related to our various obligations as lessee.
In addition to the cash we need to conduct our normal business operations, we expect to require approximately $19,944,000 in cash over the next twelve months, of which $17,198,000 is related to estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2023) and $2,746,000 is related to our various obligations as lessee.
The method used to evaluate the value and performance of real estate under GAAP should be considered as a more relevant measure of operating performance and considered more prominent than the non-GAAP financial measures presented here. 37 Table of Contents Reconciliation of Net (Loss) Income to FFO, Core FFO and AFFO The following table presents a reconciliation of net (loss) income attributable to common stockholders, which is the most directly comparable GAAP financial measure, to FFO, Core FFO and AFFO for the years ended December 31, 2022 and 2021 (amounts in thousands): Year Ended December 31, 2022 2021 Net (loss) income attributable to common stockholders $ (7,978) $ 402,660 Adjustments: Depreciation and amortization 77,099 81,999 Gain on real estate disposition from continuing operations (460) (89) Gain on real estate dispositions from discontinued operations — (395,801) Impairment losses 47,424 27,837 FFO $ 116,085 $ 116,606 Adjustments: Severance arrangements 889 56 Write off of straight-line rent related to prior periods 2,434 70 Amortization of above (below) market lease intangibles, including ground leases 1,044 (434) Loss on extinguishment of debt 3,367 28,751 Core FFO $ 123,819 $ 145,049 Adjustments: Deferred rent 1,535 — Straight-line rental income (9,695) (15,665) Amortization of discount of deferred liability — 272 Amortization of deferred financing costs 1,679 3,425 Stock-based compensation 4,180 2,379 AFFO $ 121,518 $ 135,460
The method used to evaluate the value and performance of real estate under GAAP should be considered as a more relevant measure of operating performance and considered more prominent than the non-GAAP financial measures presented here. 37 Table of Contents Reconciliation of Net Income (Loss) to FFO, Core FFO and AFFO The following table presents a reconciliation of net income (loss) attributable to common stockholders, which is the most directly comparable GAAP financial measure, to FFO, Core FFO and AFFO for the years ended December 31, 2023 and 2022 (amounts in thousands): Year Ended December 31, 2023 2022 Net income (loss) attributable to common stockholders $ 24,042 $ (7,978) Adjustments: Depreciation and amortization of real estate assets 74,202 77,099 Gain on real estate dispositions (22) (460) Impairment losses 24,252 47,424 FFO $ 122,474 $ 116,085 Adjustments: Severance 1,401 889 Write-off of straight-line rent receivables related to prior periods 3,268 2,434 Accelerated stock-based compensation 318 402 Amortization of above (below) market lease intangibles, including ground leases 1,386 1,044 Loss on extinguishment of debt — 3,367 Core FFO $ 128,847 $ 124,221 Adjustments: Deferred rent 1,644 1,535 Straight-line rent adjustments (5,465) (9,695) Amortization of deferred financing costs 1,665 1,679 Stock-based compensation 5,966 3,778 AFFO $ 132,657 $ 121,518
As of December 31, 2022, the maximum commitments available under the 2024 Term Loan Agreement, were $300,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $600,000,000.
As of December 31, 2023, the maximum commitments available under our senior unsecured term loan with Truist Bank, as Administrative Agent for the lenders, or the 2024 Term Loan Agreement, were $250,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $550,000,000.
The following table shows the sources of distributions paid during the years ended December 31, 2022 and 2021 (amounts in thousands): Year Ended December 31, 2022 2021 Distributions paid in cash - common stockholders $ 65,310 $ 465,849 (1) Distributions reinvested (shares issued) 24,834 27,584 Total distributions $ 90,144 $ 493,433 Source of distributions: Cash flows provided by operations $ 65,310 72 % (2) $ 73,164 15 % (2) Offering proceeds from issuance of common stock pursuant to the DRIP 24,834 28 % (2) 27,584 5 % (2) Proceeds from real estate disposals — — % 392,685 80 % (2) Total sources $ 90,144 100 % $ 493,433 100 % (1) Includes a special cash distribution declared by the Board of $1.75 per share of Class A, Class I, Class T and Class T2 common stock.
The following table shows the sources of distributions paid during the years ended December 31, 2023 and 2022 (amounts in thousands): Year Ended December 31, 2023 2022 Distributions paid in cash - common stockholders $ 66,515 $ 65,310 Distributions reinvested (shares issued) 24,751 24,834 Total distributions $ 91,266 $ 90,144 Source of distributions: Cash flows provided by operations $ 66,515 73 % (1) $ 65,310 72 % (1) Offering proceeds from issuance of common stock pursuant to the DRIP 24,751 27 % (1) 24,834 28 % (1) Total sources $ 91,266 100 % $ 90,144 100 % (1) Percentages were calculated by dividing the respective source amount by the total sources of distributions.
During the year ended December 31, 2021, we repurchased 1,133,901 Class A shares, Class I shares and Class T shares of common stock (1,055,054 Class A shares, 11,836 Class I shares and 67,011 Class T shares), for an aggregate purchase price of approximately $9,528,000 (an average of $8.40 per share).
During the year ended December 31, 2023, we repurchased 1,513,997 Class A shares, Class I shares and Class T shares of common stock (1,182,006 Class A shares, 105,660 Class I shares and 226,331 Class T shares), for an aggregate purchase price of approximately $12,374,000 (an average of $8.17 per share).
The 2028 Term Loan Agreement may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000 and has a maturity date of January 31, 2028. The 2028 Term Loan Agreement is pari passu with our Revolving Credit Agreement and 2024 Term Loan Agreement.
As of December 31, 2023, the maximum commitments available under our senior unsecured term loan with Truist Bank, as Administrative Agent for the lenders, or the 2028 Term Loan Agreement, were $275,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000 and has a maturity date of January 31, 2028.
As of December 31, 2022, we had material obligations beyond 12 months in the amount of approximately $758,114,000, inclusive of $639,748,000 related to principal and estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2022) and $118,366,000 related to our various obligations as lessee. 32 Table of Contents One of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness.
As of December 31, 2023, we had material obligations beyond 12 months (or that we will meet the extension criteria on the maturity date) in the amount of approximately $676,064,000, inclusive of $560,444,000 related to principal and estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2023) and $115,620,000 related to our various obligations as lessee.
We continually monitor our tenants' ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. During the year ended December 31, 2022, certain tenants experienced a deterioration in their ability to pay rent in accordance with the contractual terms of their leases.
We continually monitor our tenants' ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. As of December 31, 2023, our real estate properties were 99.4% leased.
Real Estate Acquisitions and Dispositions in 2022 • We purchased seven healthcare properties, in five separate transactions, comprising approximately 244,000 rentable square feet for an aggregate purchase price of approximately $157,194,000.
Real Estate Acquisitions and Dispositions in 2023 • We purchased two healthcare properties, comprising approximately 130,000 rentable square feet for an aggregate purchase price of approximately $69,822,000. • We sold three healthcare properties for an aggregate sale price of $271,107,000 and generated net proceeds of $270,306,000.
(2) Percentages were calculated by dividing the respective source amount by the total sources of distributions. Total distributions declared but not paid on Class A shares, Class I shares and Class T shares as of December 31, 2022, were approximately $7,719,000 for common stockholders. These distributions were paid on January 6, 2023.
Total distributions declared but not paid on Class A shares, Class I shares and Class T shares as of December 31, 2023, were approximately $7,782,000 for common stockholders. These distributions were paid on January 8, 2024. Share Repurchase Program Our SRP allows for repurchases of shares of our common stock when certain criteria are met.
The following table shows the sources of distributions paid during the years ended December 31, 2022 and 2021 (amounts in thousands): Year Ended December 31, Character of Distributions (1) : 2022 2021 Ordinary dividends 40.94 % 27.91 % Capital gain distributions — % — % Nontaxable distributions 59.06 % 72.09 % Total 100.00 % 100.00 % Year Ended December 31, Character of Special Distribution (1) : 2022 2021 Ordinary dividends — % 12.39 % Capital gain distributions — % 86.66 % Nontaxable distributions — % 0.95 % Total — % 100.00 % (1) Attributable to Class A shares, Class I shares, Class T shares and Class T2 shares of common stock. 35 Table of Contents The amount of distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including our funds available for distribution, financial condition, lenders' restrictions and limitations, capital expenditure requirements, corporate law restrictions and the annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended.
The amount of distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including our funds available for distribution, financial condition, lenders' restrictions and limitations, capital expenditure requirements, corporate law restrictions and the annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended.
As of December 31, 2022, the 2024 Term Loan Agreement had an aggregate outstanding principal balance of $300,000,000. As of December 31, 2022, the maximum commitments available under the 2028 Term Loan Agreement, were $275,000,000, of which $205,000,000 was drawn at closing to pay down our Revolving Credit Agreement in its entirety.
The 2028 Term Loan Agreement is pari passu with our Revolving Credit Agreement and 2024 Term Loan Agreement. As of December 31, 2023, the 2028 Term Loan Agreement had an aggregate outstanding principal balance of $275,000,000.
We calculate AFFO by adjusting Core FFO for the following items included in the determination of GAAP net (loss) income: deferred rent, current period straight-line rent, discount amortization related to the deferred liability in connection with the Internalization Transaction, amortization of deferred financing costs and stock-based compensation.
These include severance, write-off of straight-line rent receivables related to prior periods, accelerated stock-based compensation, amortization of above- and below-market lease intangibles (including ground leases) and loss on extinguishment of debt. We calculate AFFO by further adjusting Core FFO for the following items: deferred rent, current period straight-line rent adjustments, amortization of deferred financing costs and stock-based compensation.
On July 12, 2022 and July 20, 2022, we drew $50,000,000 and $20,000,000, respectively, on the 2028 Term Loan Agreement. As of July 20, 2022, the 2028 Term Loan Agreement commitments were fully funded. As of December 31, 2022, the 2028 Term Loan Agreement had an aggregate outstanding principal balance of $275,000,000.
As of December 31, 2023, the 2024 Term Loan Agreement had an aggregate outstanding principal balance of $250,000,000.
As of December 31, 2021, we owned 125 real estate properties and two undeveloped land parcels.
We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities. As of December 31, 2023, we owned 131 real estate properties and two undeveloped land parcels.
The Unsecured Credit Facility has aggregate commitments available of $1,075,000,000, as of December 31, 2022.
We refer to the Revolving Credit Agreement, the 2024 Term Loan Agreement and the 2028 Term Loan Agreement, collectively, as the “Unsecured Credit Facility,” which has aggregate commitments available of $1,025,000,000, as of December 31, 2023.
Changes in interest and other expense, net, are summarized in the following table (amounts in thousands): Year Ended December 31, 2022 2021 $ Change % Change Interest and other expense, net: Interest on notes payable $ — $ 4,162 $ (4,162) (100.0) % Interest on credit facility 24,077 33,463 (9,386) (28.0) % Other income, net (305) (3,110) 2,805 (90.2) % Total interest and other expense, net $ 23,772 $ 34,515 $ (10,743) (31.1) % • Interest on notes payable decreased due to the repayment of all of our notes payable related to healthcare properties on July 22, 2021, with proceeds from the Data Center Sale. • Interest on credit facility decreased $6.7 million primarily due to a reduction in the weighted average outstanding principal balance on our credit facility of $212.0 million, which was paid in 2021 with the proceeds from the Data Center Sale and a decrease of $0.9 million due to a reduction in the weighted average interest rate as a result of entering into the Unsecured Credit Facility (as defined below).
Changes in interest expense and interest and other income are summarized in the following table (amounts in thousands): Year Ended December 31, 2023 2022 $ Change % Change Interest expense $ 23,110 $ 24,077 $ (967) (4.0) % Interest and other income (702) (305) (397) 130.2 % • Interest expense decreased primarily due to $3,367,000 in loss on extinguishment of debt and $1,400,000 in interest rate swap amortization recognized during the year ended December 31, 2022, partially offset by an increase of $3,054,000 related to changes in the weighted average interest rate on our credit facility that was subject to variable rates during the year and an increase of $856,000 due to an increase in the weighted average outstanding principal balance on our credit facility of $32,452,000. • Interest and other income increased primarily due to a $457,000 increase in dividend income from investments in money market funds, a $118,000 increase in interest income from cash deposits, and a $105,000 increase in interest income on a note receivable, partially offset by a decrease of $283,000 in settlement income from disposed properties.
In calculating the undiscounted net cash flows of an asset group, we use considerable judgement to estimate several inputs. We estimate future rental rates, future capital expenditures, future operating expenses, and market capitalization rates for residual values, among other things.
If we determine that an asset has indicators of impairment, we then determine whether the undiscounted cash flows associated with the asset group exceed the carrying amount of the asset group. In calculating the undiscounted net cash flows of an asset group, we use considerable judgment to estimate several inputs.
Removed
We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities. We formerly invested in data center properties. During 2021, our board of directors, or the Board, made a determination to sell our data center properties.
Added
GenesisCare Bankruptcy Filing As disclosed in the Current Report on Form 8-K that the Company filed with the SEC on June 5, 2023, GenesisCare, sponsor and owner of the tenant in 17 of our real estate properties, announced that it filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code.
Removed
On May 19, 2021, we and certain of our wholly-owned subsidiaries entered into the PSA for the sale of up to 29 data center properties owned by us.
Added
GenesisCare sought U.S. bankruptcy court approval to reject certain unexpired real property leases. GenesisCare's lease obligations with us were not included in any motions. GenesisCare continues to make its lease payments due to us in accordance with their contractual terms, although we are in ongoing negotiations with GenesisCare regarding certain adjustments to its lease.
Removed
The Board's determination to sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on our results and operations for the periods presented.
Added
Bankruptcy proceedings are subject to uncertainty and there can be no assurance how the bankruptcy court's or other parties' actions or decisions may impact GenesisCare. Due to GenesisCare filing for bankruptcy and its subsequent emergence from bankruptcy on February 16, 2024, we determined the collectability of amounts owed under the contractual terms of GenesisCare's lease were no longer reasonably assured.
Removed
On July 22, 2021, we completed the sale of our data center segment, comprised of approximately 3,298,000 rentable square feet, for an aggregate sale price of $1,320,000,000, and generated net proceeds of approximately $1,295,367,000. As of December 31, 2021 and subsequent, we have no assets or liabilities related to the data center segment.
Added
Year Ended December 31, 2023 2022 $ Change % Change Same store rental revenue $ 143,381 $ 145,167 $ (1,786) (1.2) % Same store tenant reimbursements 10,608 10,121 487 4.8 % Non-same store rental revenue 32,942 23,877 9,065 38.0 % Non-same store tenant reimbursements 2,128 817 1,311 160.5 % Other operating income 6 4 2 50.0 % Total rental revenue $ 189,065 $ 179,986 $ 9,079 5.0 % • Same store rental revenue decreased primarily due to a $1,861,000 decrease related to tenants who ceased paying all or a portion of their rent, an $834,000 increase in the write-off of straight-line rent receivables related to prior periods due to tenant uncertainty and an impairment of above-market lease intangible assets of $260,000, partially offset by a $913,000 increase in annual base rent escalations for leases indexed to CPI and a $256,000 increase from new and renewal leases. • Same store tenant reimbursements increased $487,000 primarily due to higher operating costs in the current year which are generally passed along to our tenants. • Non-same store rental revenue increased primarily due to lease termination income of $5,185,000 and a $6,406,000 increase attributable to properties acquired and properties placed in service since January 1, 2022, partially offset by a $2,427,000 decrease due to property dispositions and a $99,000 decrease due to deferment of rent on a property under renovation. • Non-same store tenant reimbursements increased $1,311,000 primarily due to properties acquired and placed in service since January 1, 2022. • There were no significant changes in other operating income. 31 Table of Contents Changes in our expenses are summarized in the following table (amounts in thousands): Year Ended December 31, 2023 2022 $ Change % Change Same store rental expenses $ 16,796 $ 16,007 $ 789 4.9 % Non-same store rental expenses 3,400 1,943 1,457 75.0 % General and administrative expenses 23,896 22,079 1,817 8.2 % Depreciation and amortization 74,293 77,199 (2,906) (3.8) % Impairment losses 24,252 47,424 (23,172) (48.9) % Total operating expenses $ 142,637 $ 164,652 $ (22,015) (13.4) % Gain on real estate dispositions $ 22 $ 460 $ (438) (95.2) % • Same store rental expenses, certain of which are subject to reimbursement by our tenants, increased $789,000 primarily due to higher operating costs in the current year. • Non-same store rental expenses, certain of which are subject to reimbursement by our tenants, increased primarily due to a $1,666,000 increase from properties acquired and properties placed in service since January 1, 2022, partially offset by a $209,000 decrease due to property dispositions. • General and administrative expenses increased primarily due to a $2,188,000 increase in stock-based compensation due to equity awards granted in 2023, and $512,000 additional separation pay primarily related to our former chief accounting officer and former chief administrative officer, partially offset by a $84,000 decrease in accelerated stock-based compensation related to former officers and directors, a decrease of $449,000 as a result of a reduction in personnel, and a $350,000 decrease in reporting costs. • Depreciation and amortization decreased primarily due to a $1,392,000 decrease from property dispositions, a $771,000 decrease attributable to fully amortized in-place leases and tenant improvements, a $1,038,000 decrease related to properties impaired and a $3,215,000 decrease in impairments of an in-place lease intangible assets, partially offset by a $3,330,000 increase attributable to properties acquired and properties placed in service since January 1, 2022, and a $180,000 increase due to capital expenditures placed in service. • Impairment losses were recorded in the aggregate amount of $24,252,000 during the year ended December 31, 2023, as a result of property sales and tenant related triggering events that occurred at certain properties.
Removed
The operations of the data center segment have been classified as income from discontinued operations on the consolidated statements of comprehensive income for the years ended December 31, 2021 and 2020. As of December 31, 2022, we owned 132 real estate properties and two undeveloped land parcels.
Added
Impairment losses were recorded in the aggregate amount of $47,424,000 during the year ended December 31, 2022, as a result of tenant related triggering events that occurred at certain properties. • Gains on real estate dispositions were $22,000 and $460,000 during the years ended December 31, 2023 and 2022, respectively.
Removed
As of December 31, 2022, we had accepted investors’ subscriptions for and issued approximately 157,508,000 shares of Class A, Class I, Class T and Class T2 common stock in our Offerings, resulting in receipt of gross proceeds of approximately $1,520,086,000, before share repurchases of approximately $135,701,000, selling commissions and dealer manager fees of approximately $96,734,000 and other offering costs of approximately $27,631,000.
Added
We cannot provide assurances, however, that actual expenditures will not exceed these estimates. The 2024 Term Loan (as defined below) has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee.
Removed
In addition, we placed one healthcare property into service. • We sold one land parcel that formerly contained a healthcare property for an aggregate sale price of $24,000,000 and generated net proceeds of $22,701,000.
Added
We currently meet these conditions and therefore may exercise our option to extend the maturity date if we so choose.
Removed
As of December 31, 2022, our real estate properties were 99.5% leased. 29 Table of Contents Results of Operations The results of operations discussed below reflect the operations of our healthcare portfolio since the data centers segment is presented as discontinued operations on the consolidated statements of comprehensive income for all years presented.
Added
As of December 31, 2023, we were in compliance with all such covenants and requirements on our Unsecured Credit Facility. As of December 31, 2023, the aggregate notional amount under our derivative instruments was $525,000,000.
Removed
Year Ended December 31, 2022 2021 $ Change % Change Same store rental revenue $ 155,323 $ 157,438 $ (2,115) (1.3) % Same store tenant reimbursements 9,436 8,848 588 6.6 % Non-same store rental revenue 13,727 5,649 8,078 143.0 % Non-same store tenant reimbursements 1,495 802 693 86.4 % Other operating income 5 101 (96) (95.0) % Total rental revenue $ 179,986 $ 172,838 $ 7,148 4.1 % • Same store rental revenue decreased primarily due to a $2.4 million write-off of previously recorded straight-line rent related to tenants, partially offset by base rental increases of $1.0 million for leases indexed to CPI. 30 Table of Contents • Non-same store rental revenue increased due to an increase of $8.7 million from the acquisition of properties and an increase of $1.4 million from the placement of development properties in service since January 1, 2021, partially offset by a decrease in non-same store rental revenue due to a decrease of $0.9 million related to the sale of properties since January 1, 2021, and a decrease of $1.1 million attributable to deferred rent from a property under renovation. • There were no significant changes in same store tenant reimbursements, non-same store tenant reimbursements and other operating income.
Added
Cash Flows Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Year Ended December 31, (in thousands) 2023 2022 Change Net cash provided by operating activities $ 128,924 $ 121,675 $ 7,249 Net cash provided by (used in) investing activities $ 197,307 $ (142,812) $ 340,119 Net cash (used in) provided by financing activities $ (137,129) $ 1,340 $ (138,469) Operating Activities • Net cash provided by operating activities increased primarily due to an increase in cash collected for rent resulting from acquiring and placing properties in service, annual rent increases, new leasing and renewal activity and the receipt of lease termination income, partially offset by a decrease related to property dispositions and tenants who ceased paying all or a portion of their rent and an increase in interest paid on our credit facility.
Removed
Changes in our expenses are summarized in the following table (amounts in thousands): Year Ended December 31, 2022 2021 $ Change % Change Same store rental expenses $ 15,627 $ 15,216 $ 411 2.7 % Non-same store rental expenses 2,323 2,496 (173) (6.9) % General and administrative expenses 22,079 21,388 691 3.2 % Depreciation and amortization 77,199 70,259 6,940 9.9 % Impairment losses 47,424 27,837 19,587 70.4 % Total expenses $ 164,652 $ 137,196 $ 27,456 20.0 % Gain on real estate dispositions $ 460 $ 89 $ 371 416.9 % • There were no significant changes in same store rental expenses. • Non-same store rental expenses decreased due to a decrease of $1.7 million related to the sale of properties since January 1, 2021, which were vacant prior to sale, thus requiring us to incur incrementally more expenses in 2021, partially offset by an increase of $1.6 million related to the acquisition of properties and placement of development properties in service. • General and administrative expenses increased primarily due to an increase in stock-based compensation of $1.5 million and an increase of $0.8 million in severance payments attributable to our former chief accounting officer, partially offset by a decrease of $1.3 million in transfer agent expenses attributable to changing our transfer agent in August 2021. • Depreciation and amortization increased primarily due to an increase of $4.3 million from the acquisition of properties, an increase of $0.7 million from the placement of development properties in service since January 1, 2021, and impairments of in-place lease intangibles in the amount of approximately $4.3 million, partially offset by a decrease of $2.4 million from the sale of properties. • Impairment losses were recorded in the aggregate amount of $47.4 million related to several properties during the year ended December 31, 2022.
Added
Investing Activities Significant investing activities included: • Investment of $69,822,000 to purchase two properties during the year ended December 31, 2023, compared to an investment of $157,194,000 to purchase seven properties during the year ended December 31, 2022. • Sale of three properties for net proceeds of $270,306,000 during the year ended December 31, 2023, compared to receiving $22,822,000 from the sale of a land parcel that formerly contained a property during the year ended December 31, 2022. 34 Table of Contents • Incurred capital expenditures, primarily for tenant improvements, of $3,177,000 during the year ended December 31, 2023, compared to incurring $8,440,000 during the year ended December 31, 2022.
Removed
Impairment losses were recorded in the aggregate amount of $27.8 million related to several properties during the year ended December 31, 2021. The impaired properties for the year ended December 31, 2021 have all been subsequently sold.
Added
See “Risk Factors – General Risk Factors – Distributions paid from sources other than our cash flows from operations, including from the proceeds of our Offerings, will result in us having fewer funds available for the acquisition of properties and real estate-related investments, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect a stockholder’s overall return” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of risks related to funding distribution payments from various sources.
Removed
In addition, interest on credit facility includes $3.4 million and $5.0 million in loss on extinguishment of debt for the years ended December 31, 2022 and 2021, respectively. 31 Table of Contents • Other income, net, primarily consisted of $0.2 million in lease termination settlement income from a former tenant at a disposed property for the year ended December 31, 2022.
Added
Further, the amount of distributions in excess of a U.S. stockholder’s tax basis in such shares will be taxable as a realized gain. 35 Table of Contents The following table shows the sources of distributions paid during the years ended December 31, 2023 and 2022 (amounts in thousands): Year Ended December 31, Character of Distributions (1) : 2023 2022 Ordinary dividends 61.41 % 40.94 % Capital gain distributions — % — % Nontaxable distributions 38.59 % 59.06 % Total 100.00 % 100.00 % (1) Attributable to Class A shares, Class I shares, Class T shares of common stock for the year ended December 31, 2023.
Removed
Other expense, net, primarily consisted of $1.1 million in interest income from notes receivable and $2.6 million in income from a transaction services agreement for the year ended December 31, 2021.
Added
Attributable to Class A shares, Class I shares, Class T shares, and Class T2 shares of common stock for the years ended December 31, 2022 and 2021.
Removed
We cannot provide assurances, however, that actual expenditures will not exceed these estimates. As of December 31, 2022, we had approximately $12,917,000 in cash and cash equivalents.
Added
We believe FFO provides a useful understanding of our performance to the investors and to our management, and when compared to year over year, FFO reflects the impact on our operations from trends in occupancy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−4 removed7 unchanged
Biggest changeAs of December 31, 2022, we had 12 interest rate swap agreements outstanding, which mature on various dates from April 2023 to January 2028, with an aggregate notional amount under the swap agreements of $485,000,000.
Biggest changeAs of December 31, 2023, our total principal debt outstanding of $525,000,000 was fixed through 11 interest rate swap agreements, which mature on various dates from December 2024 to January 2028. As of December 31, 2023, the interest rate swap agreements had an aggregate notional amount of $525,000,000 and an aggregate settlement asset value of $18,182,000.
Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We manage the market risk associated with interest rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We manage the market risk associated with 38 Table of Contents interest rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
We have obtained variable rate debt financing to fund certain property acquisitions and we are exposed to such changes in the one-month Term SOFR. Loans under the Unsecured Credit Facility may be made as Base Rate Loans or SOFR Loans, at our election, and all of our interest rate swap agreements are indexed to SOFR.
We have obtained variable rate debt financing and we are exposed to such changes in the one-month Term SOFR. Loans under the Unsecured Credit Facility may be made as Base Rate Loans or SOFR Loans, at our election, and all of our interest rate swap agreements are indexed to SOFR.
As of December 31, 2022, an increase of 50 basis points in the market rates of interest would have resulted in an increase to the settlement asset value of these interest rate swaps to a value of $36,261,000. These interest rate swap agreements were designated as cash flow hedging instruments.
The settlement value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads. As of December 31, 2023, an increase of 50 basis points in the market rates of interest would have resulted in an increase to the settlement asset value of these interest rate swaps to a value of $24,111,000.
Removed
Of the 12 interest rate swap agreements outstanding, three interest rate swap agreements with an aggregate notional amount of $150,000,000 have an effective date of May 1, 2023, and will replace two interest rate swaps with an aggregate notional amount of $150,000,000 that have a maturity date of April 27, 2023.
Added
These interest rate swap agreements were designated as cash flow hedging instruments. As of December 31, 2023, the weighted average interest rate on our total debt outstanding was 3.3%.
Removed
As of December 31, 2022, the aggregate settlement asset value was $29,182,000. The settlement value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads.
Removed
As of December 31, 2022, of the $583,000,000 total principal debt outstanding, $98,000,000 was subject to variable interest rates, indexed to Term SOFR, with an interest rate of 5.5% per annum.
Removed
As of December 31, 2022, an increase of 50 basis points in the market rates of interest would have resulted in an increase in interest expense of approximately $490,000 per year. 38 Table of Contents The following table summarizes our principal debt outstanding related to our credit facility as of December 31, 2022 (amounts in thousands): December 31, 2022 Variable rate revolving line of credit $ 8,000 Variable rate term loans fixed through interest rate swaps 485,000 Variable rate term loans 90,000 Total principal debt outstanding (1) $ 583,000 (1) As of December 31, 2022, the weighted average interest rate on our total debt outstanding was 3.4%.

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