Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
 
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number: 000-55201
HTI2A13.JPG
Healthcare Trust, Inc.
(Exact name of registrant as specified in its charter)
Maryland
  
38-3888962
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)
405 Park Ave., 3rd Floor, New York, NY       
  
10022
(Address of principal executive offices)
  
(Zip Code)
(212) 415-6500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definition of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x
(Do not check if a smaller reporting company)
Smaller reporting company o
 
 
Emerging growth company x
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
As of July 31, 2018 , the registrant had 91,374,181 shares of common stock outstanding.

HEALTHCARE TRUST, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Table of Contents

Part I — FINANCIAL INFORMATION



Item 1. Financial Statements.
HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
 
June 30,
2018
 
December 31, 2017
ASSETS
 
(Unaudited)
 
 
Real estate investments, at cost:
 
 
 
 
Land
 
$
206,438

 
$
201,427

Buildings, fixtures and improvements
 
1,981,982

 
1,955,940

Construction in progress
 
76,048

 
72,007

Acquired intangible assets
 
259,601

 
256,678

Total real estate investments, at cost
 
2,524,069

 
2,486,052

Less: accumulated depreciation and amortization
 
(351,631
)
 
(309,711
)
Total real estate investments, net
 
2,172,438

 
2,176,341

Cash and cash equivalents
 
71,021

 
94,177

Restricted cash
 
14,614

 
8,411

Assets held for sale
 
37,822

 
37,822

Derivative assets, at fair value
 
8,255

 
2,550

Straight-line rent receivable, net
 
18,063

 
15,327

Prepaid expenses and other assets (including $248 due from related parties as of June 30, 2018)
 
28,466

 
22,099

Deferred costs, net
 
14,127

 
15,134

Total assets
 
$
2,364,806

 
$
2,371,861

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
462,603

 
$
406,630

Credit facilities
 
519,022

 
534,869

Market lease intangible liabilities, net
 
17,900

 
18,829

Accounts payable and accrued expenses (including $649 and $1,637 due to related parties as of June 30, 2018 and December 31, 2017, respectively)
 
39,634

 
38,112

Deferred rent
 
7,544

 
6,201

Distributions payable
 
6,392

 
11,161

Total liabilities
 
1,053,095

 
1,015,802

 
 
 
 
 
Stockholders' Equity
 
 
 
 
Preferred stock, $0.01 par value, 50,000,000 authorized, none issued and outstanding as of June 30, 2018 and December 31, 2017
 
—

 
—

Common stock, $0.01 par value, 300,000,000 shares authorized, 91,395,825 and 91,002,766 shares of common stock issued and outstanding as of June 30, 2018 and December 31, 2017, respectively
 
914

 
910

Additional paid-in capital
 
2,019,874

 
2,009,197

Accumulated other comprehensive income
 
8,019

 
2,473

Accumulated deficit
 
(725,235
)
 
(665,026
)
Total stockholders' equity
 
1,303,572

 
1,347,554

Non-controlling interests
 
8,139

 
8,505

Total equity
 
1,311,711

 
1,356,059

Total liabilities and equity
 
$
2,364,806

 
$
2,371,861


The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents
HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)




 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
Rental income
 
$
25,541

 
$
24,081

 
$
50,827

 
$
48,103

Operating expense reimbursements
 
5,827

 
3,886

 
10,798

 
7,990

Resident services and fee income
 
59,589

 
47,799

 
118,770

 
94,288

Total revenues
 
90,957

 
75,766

 
180,395

 
150,381

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Property operating and maintenance
 
53,757

 
44,360

 
106,863

 
86,971

Impairment charges
 
—

 
—

 
733

 
35

Operating fees to related parties
 
5,763

 
5,637

 
11,490

 
10,938

Acquisition and transaction related
 
120

 
1,743

 
293

 
4,588

General and administrative
 
4,612

 
3,419

 
8,264

 
7,576

Depreciation and amortization
 
20,864

 
19,339

 
41,633

 
39,822

Total expenses
 
85,116

 
74,498

 
169,276

 
149,930

Operating gain
 
5,841

 
1,268

 
11,119

 
451

Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(12,208
)
 
(6,588
)
 
(23,365
)
 
(12,070
)
Interest and other income
 
2

 
2

 
5

 
3

Gain on sale of real estate investment
 
—

 
438

 
—

 
438

Gain (loss) on non-designated derivatives
 
(150
)
 
(43
)
 
28

 
(107
)
Total other expenses
 
(12,356
)
 
(6,191
)
 
(23,332
)
 
(11,736
)
Loss before income taxes
 
(6,515
)
 
(4,923
)
 
(12,213
)
 
(11,285
)
Income tax (expense) benefit
 
(466
)
 
202

 
(775
)
 
397

Net loss
 
(6,981
)
 
(4,721
)
 
(12,988
)
 
(10,888
)
Net loss attributable to non-controlling interests
 
31

 
5

 
47

 
33

Net loss attributable to stockholders
 
(6,950
)
 
(4,716
)
 
(12,941
)
 
(10,855
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Unrealized gain (loss) on designated derivative
 
1,582

 
(296
)
 
5,546

 
(296
)
Comprehensive loss attributable to stockholders
 
$
(5,368
)
 
$
(5,012
)
 
$
(7,395
)
 
$
(11,151
)
 
 
 
 
 
 
 
 
 
Basic and diluted weighted-average shares outstanding
 
90,978,411

 
89,335,489

 
90,881,883

 
89,486,742

Basic and diluted net loss per share
 
$
(0.08
)
 
$
(0.05
)
 
$
(0.14
)
 
$
(0.12
)
Distributions declared per share
 
$
0.21

 
$
0.36

 
$
0.52

 
$
0.78


The accompanying notes are an integral part of these unaudited consolidated financial statements.


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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Six Months Ended June 30, 2018
(In thousands, except share data)
(Unaudited)



 
Common Stock
 
 
 
Accumulated Other Comprehensive Income
 
 
 
 
 
 
 
 
 
Number of
Shares
 
Par Value
 
Additional
Paid-in
Capital
 
 
Accumulated Deficit
 
Total Stockholders' Equity
 
Non-controlling Interests
 
Total Equity
Balance, December 31, 2017
91,002,766

 
$
910

 
$
2,009,197

 
$
2,473

 
$
(665,026
)
 
$
1,347,554

 
$
8,505

 
$
1,356,059

Common stock issued through distribution reinvestment plan
997,022

 
10

 
21,084

 
—

 
—

 
21,094

 
—

 
21,094

Common stock repurchases
(603,963
)
 
(6
)
 
(11,046
)
 
—

 
—

 
(11,052
)
 
—

 
(11,052
)
Share-based compensation
—

 
—

 
639

 
—

 
—

 
639

 
—

 
639

Distributions declared
—

 
—

 
—

 
—

 
(47,268
)
 
(47,268
)
 
—

 
(47,268
)
Contributions from non-controlling interest holders
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Distributions to non-controlling interest holders
—

 
—

 
—

 
—

 
—

 
—

 
(319
)
 
(319
)
Other comprehensive income
—

 
—

 
—

 
5,546

 
—

 
5,546

 
—

 
5,546

Net loss
—

 
—

 
—

 
—

 
(12,941
)
 
(12,941
)
 
(47
)
 
(12,988
)
Balance, June 30, 2018
91,395,825

 
$
914

 
$
2,019,874

 
$
8,019

 
$
(725,235
)
 
$
1,303,572

 
$
8,139

 
$
1,311,711


The accompanying notes are an integral part of this unaudited consolidated financial statement.


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Table of Contents
HEALTHCARE TRUST, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
 
Six Months Ended June 30,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(12,988
)
 
$
(10,888
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
41,633

 
39,822

Amortization of deferred financing costs
 
4,364

 
2,636

Amortization of mortgage premiums and discounts, net
 
(133
)
 
(879
)
Amortization of market lease and other intangibles, net
 
163

 
195

Bad debt expense
 
4,255

 
7,220

Share-based compensation
 
639

 
27

Gain on sale of investment securities
 
—

 
—

Gain on sale of real estate investments, net
 
—

 
(438
)
(Gain) loss on non-designated derivatives
 
(28
)
 
107

Impairment charges
 
733

 
35

Changes in assets and liabilities:
 
 
 
 
Straight-line rent receivable
 
(4,351
)
 
(3,106
)
Prepaid expenses and other assets
 
(9,543
)
 
(4,451
)
Due from affiliate
 
(23
)
 
—

Accounts payable, accrued expenses and other liabilities
 
1,525

 
4,471

Deferred rent
 
1,343

 
1,861

Net cash provided by operating activities
 
27,589

 
36,612

Cash flows from investing activities:
 
 
 
 
Investments in real estate
 
(35,011
)
 
(18,432
)
Deposits paid for unconsummated acquisitions
 
—

 
(1,020
)
Deposits for real estate dispositions
 
—

 
325

Capital expenditures
 
(4,221
)
 
(3,313
)
Cash received in asset acquisition
 
—

 
859

Proceeds from sale of real estate
 
—

 
757

Net cash used in investing activities
 
(39,232
)
 
(20,824
)
Cash flows from financing activities:
 
 
 
 
Proceeds from credit facilities
 
64,153

 
128,116

Payments of credit facilities
 
(80,000
)
 
(187,000
)
Proceeds from mortgage notes payable
 
118,700

 
250,000

Payments on mortgage notes payable
 
(62,490
)
 
(1,170
)
Payments for derivative instruments
 
(131
)
 
(163
)
Payments of deferred financing costs
 
(3,228
)
 
(8,455
)
Common stock repurchases
 
(11,052
)
 
(27,851
)
Distributions paid
 
(30,943
)
 
(39,130
)
Distributions to non-controlling interest holders
 
(319
)
 
(346
)
Net cash (used in) provided by financing activities
 
(5,310
)
 
114,001

Net change in cash, cash equivalents and restricted cash
 
(16,953
)
 
129,789

Cash, cash equivalents and restricted cash, beginning of period
 
102,588

 
33,187

Cash, cash equivalents and restricted cash, end of period
 
$
85,635

 
$
162,976



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HEALTHCARE TRUST, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
 
Six Months Ended June 30,
 
 
2018
 
2017
Supplemental disclosures of cash flow information:
 
 
 
 
Cash paid for interest
 
$
19,853

 
$
10,999

Cash paid for income taxes
 
244

 
64

 
 
 
 
 
Non-cash investing and financing activities:
 
 
 
 
Common stock issued through distribution reinvestment plan
 
21,094

 
32,944

Proceeds from sale of real estate investments payable to non-controlling interest holder
 
—

 
31

Capital expenditures assumed in asset acquisition
 
—

 
772


The accompanying notes are an integral part of these unaudited consolidated financial statements.


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Table of Contents
HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)


Note 1 — Organization
Healthcare Trust, Inc. (including, as required by context, Healthcare Trust Operating Partnership, LP (the "OP") and its subsidiaries, the "Company") invests in healthcare real estate, focusing on seniors housing and medical office buildings ("MOB") located in the United States. As of June 30, 2018 , the Company owned 192 properties located in 30 states and comprised of 9.1 million rentable square feet.
The Company, which was incorporated on October 15, 2012, is a Maryland corporation that elected and qualified to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes beginning with its taxable year ended December 31, 2013. Substantially all of the Company's business is conducted through the OP.
The Company has no employees. Healthcare Trust Advisors, LLC (the "Advisor") has been retained by the Company to manage the Company's affairs on a day-to-day basis. The Company has retained Healthcare Trust Properties, LLC (the "Property Manager") to serve as the Company's property manager. The Advisor and Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"), the parent of the Company's sponsor, American Realty Capital VII, LLC (the "Sponsor"), as a result of which they are related parties, and each have received or will receive compensation, fees and expense reimbursements from the Company for services related to managing its business. The Advisor, Healthcare Trust Special Limited Partnership, LLC (the "Special Limited Partner") and Property Manager also have received or will receive compensation, fees and expense reimbursements related to the investment and management of the Company's assets.
Note 2 — Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2017 , which are included in the Company's Annual Report on Form 10-K filed with the SEC on March 20, 2018 . There have been no significant changes to the Company's significant accounting policies during the six months ended June 30, 2018 other than the updates described below.
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity ("VIE") for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the OP.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
Revenue Recognition
The Company's rental income is primarily related to rent received from tenants in MOBs and triple-net leased healthcare facilities. Rent from tenants in the Company's MOB and triple-net leased healthcare facilities operating segments (as discussed below) is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, GAAP requires the Company to record a receivable, and include in revenues on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation.

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.
Resident services and fee income primarily relates to rent from residents in the Company's Seniors Housing — Operating Properties ("SHOP") held using a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA") and to fees for ancillary services performed for SHOP residents. Rental income from residents in the Company's SHOP operating segment is recognized as earned. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the rent are short term in nature, primarily month-to-month. Fees for ancillary services are recorded in the period in which the services are performed.
The Company defers the revenue related to lease payments received from tenants and residents in advance of their due dates.
The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the allowance for uncollectible accounts on the consolidated balance sheets or records a direct write-off of the receivable in the consolidated statements of operations.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2018
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606 ), and has since issued several additional amendments thereto (collectively referred to herein as "ASC 606"). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company adopted this guidance effective January 1, 2018 under the modified retrospective approach and it did not have an impact on the Company's consolidated financial statements. See above for further information on the Company's Revenue Recognition Accounting Policies under ASC 606.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The revised guidance amends the recognition and measurement of financial instruments. The new guidance significantly revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The Company adopted this guidance effective January 1, 2018, using the modified retrospective transition method, and there was no impact to the Company's consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company adopted the new guidance on January 1, 2018 and it did not have an impact on its statement of cash flows.
In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Assets Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance related to partial sales of non-financial assets, eliminates rules specifically addressing the sales of real estate, clarifies the definition of in substance non-financial assets, removes the exception to the financial asset derecognition model and clarifies the accounting for contributions of non-financial assets to joint ventures. The Company adopted this guidance effective January 1, 2018 using the modified transition method and it did not have an impact on its financial statements. The Company expects that any future sales of real estate in which the Company retains a non-controlling interest in the property would result in the full gain amount being recognized at the time of the partial sale. Historically, the Company has not retained any interest in properties it has sold.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance that clarifies which changes to the terms or conditions of a share-based payment award

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award, and the classification of the award as either equity or liability, all do not change as a result of the modification. The Company adopted this guidance effective January 1, 2018 using the modified retrospective transition method and it did not have an impact on its consolidated financial statements. The Company expects that any future modifications to the Company's issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost.
Pending Adoption as of June 30, 2018
In February 2016, the FASB issued ASC 842, which originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, in July 2018 ("ASU 2018-11"), which allows lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. ASC 842 originally required a modified retrospective method of adoption, however, ASU 2018-11 indicates that companies may be permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The pronouncement allows some optional practical expedients.
From a lessor perspective the Company expects that the new standard will impact the presentation of lease and non-lease components of revenue such as rent, and operating expense reimbursements including common area maintenance, taxes, and insurance from leases for which the Company is a lessor. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern.
The Company is a lessee for 19 of its properties for which it has ground leases as of June 30, 2018 . For these leases, the Company will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.
The Company is continuing to evaluate any differences in the timing, measurement, or presentation of lessor revenues as well as the impact of the new lessee accounting model on the Company’s consolidated financial position, results of operations and disclosures.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815) : (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception guidance that changes the method to determine the classification of certain financial instruments with a down round feature as liabilities or equity instruments and clarify existing disclosure requirements for equity-classified instruments. A down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability, rather, an entity that presents earnings per share is required to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common stockholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Adoption should be applied retrospectively to outstanding financial instruments

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

with a down round feature with a cumulative-effect adjustment to the statement of financial position. The Company is currently evaluating the impact of this new guidance.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities . The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying the ASU as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that the Company adopts the update. The Company is currently assessing the potential impacts of this new standard.
In July 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company is currently evaluating the impact of this new guidance.
Note 3 — Real Estate Investments
The Company owned 192 properties as of June 30, 2018 . The Company invests in MOBs, seniors housing communities and other healthcare-related facilities primarily to expand and diversify its portfolio and revenue base.
During the six months ended June 30, 2018 , the Company, through wholly-owned subsidiaries of the OP, completed its acquisitions of five single tenant MOBs, two multi-tenant MOB, and acquired a parcel of land attached to an existing investment property for an aggregate contract purchase price of $30.9 million . Additionally, the Company incurred construction in progress costs during the period of $4.0 million . The following table presents the allocation of real estate assets acquired and liabilities assumed during the six months ended June 30, 2018 and 2017 as well as capitalized construction in progress during the six months ended June 30, 2018 and 2017 :
 
 
Six Months Ended June 30,
(In thousands)
 
2018
 
2017
Real estate investments, at cost:
 
 
 
 
Land
 
$
5,084

 
$
1,459

Buildings, fixtures and improvements
 
23,075

 
9,300

Construction in progress
 
4,041

 
5,966

Total tangible assets
 
32,200

 
16,725

Acquired intangibles:
 
 
 
 
In-place leases (1)
 
2,858

 
1,780

Market lease and other intangible assets (1)
 
59

 
—

Market lease liabilities (1)
 
(106
)
 
(13
)
Total intangible assets and liabilities
 
2,811

 
1,767

Cash paid for acquired real estate investments
 
$
35,011

 
$
18,432

Number of properties purchased
 
7

 
1

_______________
(1)  
Weighted-average remaining amortization periods for in-place leases, an above-market lease and a below-market lease liability acquired  were 7.7 years and 8.9 years during the  six months ended June 30, 2018 and 2017 , respectively.

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter as of June 30, 2018 . These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to performance thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.
(In thousands)
 
Future Minimum
Base Rent Payments
July 1, 2018 - December 31, 2018
 
$
45,955

2019
 
89,459

2020
 
84,592

2021
 
78,720

2022
 
71,738

Thereafter
 
320,825

Total
 
$
691,289

As of June 30, 2018 and 2017 , the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis. The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of June 30, 2018 and 2017 :
 
 
June 30,
State
 
2018
 
2017
Florida
 
16.8%
 
17.4%
Michigan
 
12.9%
 
15.9%
Georgia
 
10.2%
 
*
Pennsylvania
 
10.2%
 
10.8%
_______________
*
State's annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income for all portfolio properties as of the date specified.
Intangible Assets and Liabilities
Acquired intangible assets and liabilities consisted of the following as of the periods presented:
 
 
June 30, 2018
 
December 31, 2017
(In thousands)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
In-place leases
 
$
218,310

 
$
140,368

 
$
77,942

 
$
215,453

 
$
130,749

 
$
84,704

Market lease assets
 
30,701

 
8,961

 
21,740

 
30,636

 
7,853

 
22,783

Other intangible assets
 
10,590

 
971

 
9,619

 
10,589

 
838

 
9,751

Total acquired intangible assets
 
$
259,601

 
$
150,300

 
$
109,301

 
$
256,678

 
$
139,440

 
$
117,238

Intangible liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Market lease liabilities
 
$
26,062

 
$
8,162

 
$
17,900

 
$
25,956

 
$
7,127

 
$
18,829


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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases, for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
 
2018
 
2017
 
2018
 
2017
Amortization of in-place leases and other intangible assets (1)
 
$
4,853

 
$
4,029

 
$
9,750

 
$
9,565

Amortization and (accretion) of above- and below-market leases, net (2)
 
$
—

 
$
(12
)
 
$
—

 
$
(163
)
Amortization and (accretion) of above- and below-market ground leases, net (3)
 
$
37

 
$
43

 
$
74

 
$
86

_______________
(1)
Reflected within depreciation and amortization expense
(2)  
Reflected within rental income
(3)
Reflected within property operating and maintenance expense
The following table provides the projected amortization expense and adjustments to revenues for the next five years:
(In thousands)
 
July 1, 2018 - December 31, 2018
 
2019
 
2020
 
2021
 
2022
In-place lease assets
 
$
18,186

 
$
14,405

 
$
12,245

 
$
9,908

 
$
8,027

Other intangible assets
 
306

 
568

 
414

 
414

 
149

Total to be added to amortization expense
 
$
18,492

 
$
14,973

 
$
12,659

 
$
10,322

 
$
8,176

 
 
 
 
 
 
 
 
 
 
 
Above-market lease assets
 
$
(889
)
 
$
(1,603
)
 
$
(1,265
)
 
$
(912
)
 
$
(561
)
Below-market lease liabilities
 
934

 
1,661

 
1,504

 
1,354

 
1,318

Total to be added to rental income
 
$
45

 
$
58

 
$
239

 
$
442

 
$
757

 
 
 
 
 
 
 
 
 
 
 
Below-market ground lease assets
 
$
113

 
$
222

 
$
222

 
$
214

 
$
212

Above-market ground lease liabilities
 
(33
)
 
(65
)
 
(65
)
 
(65
)
 
(63
)
Total to be added to property operating and maintenance expense
 
$
80

 
$
157

 
$
157

 
$
149

 
$
149


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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Assets Held for Sale
When assets are identified by management as held for sale, the Company stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company's estimate of the net sales price of the assets.
The following table details the major classes of assets associated with the properties that have been classified as held for sale as of  June 30, 2018 and December 31, 2017:
(In thousands)
 
Amount
Real estate held for sale, at cost:
 
 
   Land
 
$
3,131

   Buildings, fixtures and improvements
 
38,596

Total real estate held for sale, at cost
 
41,727

Less accumulated depreciation and amortization
 
(3,870
)
Real estate assets held for sale, net
 
37,857

   Impairment charges related to properties reclassified as held for sale
 
(35
)
Assets held for sale
 
$
37,822

Impairment of Held for Use Real Estate Investments
As of June 30, 2018 , the Company owned held for use properties for which the Company had reconsidered the projected cash flows due to various performance indicators. As a result, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company primarily used an undiscounted cash flow approach to estimate the future cash flows expected to be generated. The Company made certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessment of terminal values. As these factors are difficult to predict and are subject to future events that may alter management's assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses for impairment may be realized in the future.
For some of these held for use properties, the Company used a broker opinion of value to estimate future cash flows expected to be generated. The Company made certain assumptions in this approach as well, mainly that the sale of these properties would close at this value and within a specified time in the future. There can be no guarantee that the sales of these properties would close under these terms or at all.
As a result of its consideration of impairment during the three months ended March 31, 2018, the Company determined that the carrying value of  one held for use property exceeded its estimated undiscounted cash flows and recognized an aggregate impairment charge of  $0.7 million , which is included on the consolidated statement of operations and comprehensive loss for the six months ended  June 30, 2018 . There were no impairments recorded in the three months ended June 30, 2018 . The estimated undiscounted cash flows of the remaining properties evaluated were greater than their carrying value.

The NuVista Tenant
The Company has tenants and former tenants at two of its properties in Florida (collectively, the "NuVista Tenants") that have been in default under their leases since July 2017 and collectively owe the Company $7.1 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of June 30, 2018 . The Company has the entire receivable balance and related income from the NuVista Tenants fully reserved as of June 30, 2018 . The Company incurred $3.8 million and $1.0 million of bad debt expense related to the NuVista Tenants during the six months ended June 30, 2018 and 2017 , respectively. The NuVista Tenants are related to Palm Health Partners, LLC ("Palm"), the developer of the Company's development property in Jupiter, Florida which is also currently in default to the Company (see Note 16 — Commitments and Contingencies for more information on the status of the relationship with Palm).
At one of the properties occupied by the NuVista Tenants, the Company has filed litigation to pursue eviction proceedings against the NuVista Tenant and appoint a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property.

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The other property transitioned to the SHOP operating segment as of January 1, 2018. In connection with this transition, the Company replaced the NuVista Tenant as a tenant with a taxable REIT subsidiary ("TRS"), and has engaged a third party to operate the property. This structure is permitted by the REIT Investment Diversification and Empowerment Act of 2007, under which a REIT may lease qualified healthcare properties on an arm's length basis to a TRS if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. This new operator is currently pursuing a Medicare license and will be unable to bill Medicare for services performed until one is granted. The Company has, therefore, accumulated $4.4 million of Medicare receivables as of June 30, 2018 . The Company currently expects that the replacement operator will be able to successfully bill and collect once the operator obtains this license. There can be no assurance, however, that the new operator will obtain this license.
Note 4 — Mortgage Notes Payable, Net
The following table reflects the Company's mortgage notes payable as of June 30, 2018 and December 31, 2017 :
 
 
 
 
Outstanding Loan Amount as of
 
Effective Interest Rate as of
 
 
 
 
Portfolio
 
Encumbered Properties (1)
 
June 30,
2018
 
December 31, 2017
 
June 30,
2018
 
December 31, 2017
 
Interest Rate
 
Maturity
 
 
 
 
(In thousands)
 
(In thousands)
 
 
 
 
 
 
 
 
Countryside Medical Arts - Safety Harbor, FL
 
1
 
$
5,732

 
$
5,773

 
5.93
%
 
4.98
%
 
Variable
 
Apr. 2019
St. Andrews Medical Park - Venice, FL
 
3
 
6,335

 
6,381

 
5.93
%
 
4.98
%
 
Variable
 
Apr. 2019
Palm Valley Medical Plaza - Goodyear, AZ
 
1
 
3,275

 
3,327

 
4.15
%
 
4.15
%
 
Fixed
 
Jun. 2023
Medical Center V - Peoria, AZ
 
1
 
3,022

 
3,066

 
4.75
%
 
4.75
%
 
Fixed
 
Sep. 2023
Courtyard Fountains - Gresham, OR
 
1
 
24,140

 
24,372

 
3.87
%
 
3.87
%
 
Fixed
 
Jan. 2020
Fox Ridge Bryant - Bryant, AR
 
1
 
7,496

 
7,565

 
3.98
%
 
3.98
%
 
Fixed
 
May 2047
Fox Ridge Chenal - Little Rock, AR
 
1
 
17,130

 
17,270

 
3.98
%
 
3.98
%
 
Fixed
 
May 2049
Fox Ridge North Little Rock - North Little Rock, AR
 
1
 
10,629

 
10,716

 
3.98
%
 
3.98
%
 
Fixed
 
May 2049
Philip Professional Center - Lawrenceville, GA
 
2
 
4,846

 
4,895

 
4.00
%
 
4.00
%
 
Fixed
 
Oct. 2019
Capital One MOB Loan
 
32
 
250,000

 
250,000

 
4.44
%
 
4.44
%
 
Fixed
(3)  
June 2022
Bridge Loan
 
16
 
20,270

 
82,000

 
4.54
%
 
4.13
%
 
Variable
 
Dec. 2019
Multi-Property CMBS Loan
 
21
 
118,700

 
—

 
4.60
%
 
—
%
 
Fixed
 
May. 2028
Gross mortgage notes payable
 
81
 
471,575

 
415,365

 
4.46
%
 
4.31
%
(2)  
 
 
 
Deferred financing costs, net of accumulated amortization
 
 
 
(7,729
)
 
(7,625
)
 
 
 
 
 
 
 
 
Mortgage premiums and (discounts), net
 
 
 
(1,243
)
 
(1,110
)
 
 
 
 
 
 
 
 
Mortgage notes payable, net
 
 
 
$
462,603

 
$
406,630

 
 
 
 
 
 
 
 
_______________
(1)  
Does not include real estate assets mortgaged to secure advances under the Fannie Mae Master Credit Facilities (as defined below) or eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility (as defined in Note 5 — Credit Facilities ). The equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the real estate assets comprising the borrowing base have been pledged for the benefit of the lenders thereunder ( see Note 5 — Credit Facilities for additional details).
(2)  
Calculated on a weighted average basis for all mortgages outstanding as of June 30, 2018 .
(3)  
Variable rate loan which is fixed as a result of entering into interest rate swap agreements ( see Note 7 — Derivatives and Hedging Activities for additional details).
As of June 30, 2018 , the Company had pledged $1,012.6 million in total real estate investments, at cost, as collateral for its $471.6 million of mortgage notes payable. This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable secured by these properties. The Company makes payments of principal and interest, or interest only, depending upon the specific requirements of each mortgage note, on a monthly basis.
Some of the Company's mortgage note agreements require compliance with certain property-level financial covenants, including debt service coverage ratios. As of June 30, 2018 , the Company was in compliance with these financial covenants.
Multi-Property CMBS Loan
On April 10, 2018, the Company, entered into a $118.7 million loan agreement (the “Multi-Property CMBS Loan”) with KeyBank National Association ("Key Bank").

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The Multi-Property CMBS Loan has a fixed interest rate of 4.541% , and a maturity date of May 1, 2028. The Multi-Property CMBS Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The Multi-Property CMBS Loan is secured by, among other things, mortgages on 21 medical office buildings in 12 states. The Multi-Property CMBS Loan permits KeyBank to securitize the entire Multi-Property CMBS Loan or any portion thereof.
At the closing of the Multi-Property CMBS Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $80.0 million of indebtedness under the Revolving Credit Facility, under which 14 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan, (ii) fund approximately $3.8 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The remaining $33.0 million net proceeds available to the Company may be used for general corporate purposes, including future acquisitions.
Bridge Loan
On December 28, 2017, 23 wholly owned subsidiaries of the OP entered into a loan agreement providing for an $82 million loan (the “Bridge Loan”) with Capital One, as administrative agent and lender.
On March 2, 2018, the Company used $64.2 million  of advances under a Fannie Mae Master Credit Facility with Capital One, National Association ("Capital One") to prepay a portion of the Bridge Loan ( see Note 5 — Credit Facilities for more information). Concurrent with this prepayment, the seven mortgaged properties that were identified for refinancing at the time the Bridge Loan was entered into, were added to the collateral pool securing the Fannie Mae Master Credit Facility with Capital One.
Future Principal Payments
The following table summarizes the scheduled aggregate principal payments on mortgage notes payable for the five years subsequent to June 30, 2018 and thereafter:
(In thousands)
 
Future Principal
Payments
July 1, 2018 - December 31, 2018
 
$
21,044

2019
 
18,078

2020
 
24,279

2021
 
892

2022
 
250,929

Thereafter
 
156,353

Total
 
$
471,575


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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Note 5 — Credit Facilities
The Company had the following credit facilities outstanding as of June 30, 2018 and December 31, 2017 :
 
 
 
 
Outstanding Facility
Amount as of
 
Effective Interest Rate
 
 
 
 
Credit Facility
 
Encumbered Properties (1)
 
June 30,
2018
 
December 31, 2017
 
June 30,
2018
 
December 31, 2017
 
Interest Rate
 
Maturity
 
 
 
 
(In thousands)
 
(In thousands)
 
 
 
 
 
 
 
 
Revolving Credit Facility
 
51
(2)  
$
159,700

 
$
239,700

 
4.05
%
 
3.33
%
 
Variable
 
Mar. 2019
Fannie Mae Master Credit Facilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital One Facility
 
12
(3)  
216,614

 
152,461

 
4.47
%
 
3.88
%
 
Variable
(6)  
Nov. 2026
KeyBank Facility
 
10
(4)  
142,708

 
142,708

 
4.53
%
 
3.89
%
 
Variable
(6)  
Nov. 2026
Total Fannie Mae Master Credit Facilities
 
 
 
359,322

 
295,169

 
 
 
 
 
 
 
 
Total Credit Facilities
 
73
 
$
519,022

 
$
534,869

 
4.36
%
(5)  
3.63
%
(5)  
 
 
 
_______________
(1)  
Encumbered as of June 30, 2018 .
(2)  
The equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility have been pledged for the benefit of the lenders thereunder.
(3)  
Secured by first-priority mortgages on 12 of the Company’s seniors housing properties located in Florida, Georgia, Iowa and Michigan as of June 30, 2018 .
(4)  
Secured by first-priority mortgages on 10 of the Company’s seniors housing properties located in Michigan, Missouri, Kansas, California, Florida, Georgia and Iowa as of June 30, 2018 .
(5)  
Calculated on a weighted average basis for all credit facilities outstanding as of June 30, 2018 and December 31, 2017 .
(6)  
Variable rate loan which is capped as a result of entering into interest rate cap agreements ( see Note 7 — Derivatives and Hedging Activities for additional details).
Revolving Credit Facility
On March 21, 2014, the Company entered into a senior secured revolving credit facility (as amended from time to time, the "Revolving Credit Facility"). The Revolving Credit Facility is secured by a pledged pool of the equity interests and related rights in the Company's wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base thereunder.
The Revolving Credit Facility allows for committed borrowings of up to $565.0 million . The Revolving Credit Facility also contains a sub-facility for letters of credit of up to $25.0 million and an "accordion" feature to allow the Company, under certain circumstances and at the discretion of the participating lenders, to increase the aggregate borrowings under the Revolving Credit Facility to a maximum of $750.0 million .
The Company has the option, to have the Revolving Credit Facility priced at either: (a) LIBOR, plus an applicable margin that ranges, depending on the Company's leverage, from 1.60% to 2.20% ; or (b) the Base Rate (as defined in the Revolving Credit Facility), plus an applicable margin that ranges, depending on the Company's leverage, from 0.35% to 0.95% . The Base Rate is defined in the Revolving Credit Facility as the greater of (i) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate,” (ii) 0.5% above the federal funds effective rate or (iii) the applicable one-month LIBOR plus 1.0% .
At the closing of the Multi-Property CMBS Loan ( see Note 4 — Mortgage Notes Payable, Net ), the net proceeds after accrued interest and closing costs were used primarily to repay approximately $80.0 million of indebtedness under the Revolving Credit Facility, under which 14 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan.
During May 2018, ten properties were added to the borrowing base of the Revolving Credit Facility.
As of June 30, 2018 , $159.7 million was outstanding under the Revolving Credit Facility and the unused borrowing capacity under the Revolving Credit Facility was  $22.8 million . Availability of borrowings is based on a pool of eligible otherwise unencumbered real estate assets comprising the borrowing base thereunder.
The Revolving Credit Facility requires the Company to meet certain financial covenants. As of  June 30, 2018 , the Company was in compliance with the financial covenants under the Revolving Credit Facility.

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Fannie Mae Master Credit Facilities
On October 31, 2016, the Company, through wholly-owned subsidiaries of the OP, entered into a master credit facility agreement (the “KeyBank Credit Agreement”) relating to a secured credit facility (the "KeyBank Facility") with KeyBank and a master credit facility agreement with Capital One (the “Capital One Credit Agreement” and, together with the KeyBank Credit Agreement, the “Fannie Mae Master Credit Agreements”) for a secured credit facility (the "Capital One Facility"; the Capital One Facility and the KeyBank Facility are referred to herein individually as a "Fannie Mae Master Credit Facility" and together as the "Fannie Mae Master Credit Facilities") with Capital One Multifamily Finance, LLC (an affiliate of Capital One). Advances made under the Fannie Mae Master Credit Agreements are assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.
Effective October 31, 2016, in conjunction with the execution of the Fannie Mae Master Credit Facilities, the OP entered into two interest rate cap agreements with an unrelated third party, which caps interest paid on amounts outstanding under the Fannie Mae Master Credit Facilities at a maximum of 3.5% ( see Note 7 — Derivatives and Hedging Activities for additional disclosure regarding the Company's derivatives).
The Company may request future advances under the Fannie Mae Master Credit Facilities by borrowing against the value of the initial mortgaged properties, as described below, or by adding eligible properties to the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. During the year ended December 31, 2017, the Company increased its advances under the Capital One Facility and the KeyBank Facility to $152.5 million and $142.7 million , respectively. On March 2, 2018, the Company, increased its advances under the Capital One Facility by  $64.2 million . The advance was secured by the addition of seven mortgaged properties subject to the Capital One Facility. All of the  $61.7 million  of the net proceeds, after closing costs, of the advance was used by the Company to prepay a portion of the Bridge Loan ( see Note 4 — Mortgage Notes Payable, Net ).
Note 6 — Fair Value of Financial Instruments
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 — Unobservable inputs that reflect the entity's own assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of  June 30, 2018 , the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company's derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments, are incorporated into the fair values to account for the Company's potential nonperformance risk and the performance risk of the counterparties.
The Company also had impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheet as of  June 30, 2018 . As of June 30, 2018 , the Company owned held for use properties for which the Company had reconsidered the projected cash flows due to various performance indicators. As a result, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company primarily used an undiscounted cash flow approach to estimate the future cash flows expected to be generated. As a result of this evaluation and its consideration of impairment, the Company determined that the carrying value of one held for use property exceeded its estimated undiscounted cash flows and recognized an impairment charge of  $0.7 million , which is included on the consolidated statement of operations and comprehensive loss for the six months ended June 30, 2018 . The Company made certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessment of terminal values, all of which are unobservable inputs. As a result, the impaired property that the Company evaluated using this approach is classified in Level 3 of the fair value hierarchy.
The following table presents information about the Company's assets and liabilities measured at fair value as of June 30, 2018 and December 31, 2017 , aggregated by the level in the fair value hierarchy within which those instruments fall.
(In thousands)
 
Basis of
Measurement
 
Quoted Prices in Active Markets
Level 1
 
Significant
Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 
Total
June 30, 2018
 
 
 
 
 
 
 
 
 
 
Derivative assets, at fair value
 
Recurring
 
$
—

 
$
8,255

 
$
—

 
$
8,255

Impaired assets held for sale
 
Non-recurring
 
—

 
1,323

 
—

 
1,323

Total
 
 
 
$
—

 
$
9,578

 
$
—

 
$
9,578

 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
Derivative assets, at fair value
 
Recurring
 
$
—

 
$
2,550

 
$
—

 
$
2,550

Impaired assets held for sale
 
Non-recurring
 
—

 
1,323

 
—

 
1,323

Total
 
 
 
$
—

 
$
3,873

 
$
—

 
$
3,873

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the  six months ended June 30, 2018 .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of short-term financial instruments such as cash and cash equivalents, restricted cash, straight-line rent receivable, net, prepaid expenses and other assets, deferred costs, net, accounts payable and accrued expenses, deferred rent and distributions payable approximate their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below:
 
 
 
 
June 30, 2018
 
December 31, 2017
(In thousands)
 
Level
 
Carrying
Amount (1)
 
Fair Value 
 
Carrying
Amount (1)
 
Fair Value 
Gross mortgage notes payable and mortgage premium and discounts, net
 
3
 
$
470,332

 
$
487,773

 
$
414,255

 
$
411,749

Revolving Credit Facility
 
3
 
$
159,700

 
$
159,700

 
$
239,700

 
$
239,700

Fannie Mae Master Credit Facilities
 
3
 
$
359,322

 
$
362,464

 
$
295,169

 
$
296,151

(1) Carrying value includes mortgage notes payable of $471.6 million and $415.4 million and mortgage premiums and (discounts), net of $(1.2) million and $(1.1) million as of June 30, 2018 and December 31, 2017, respectively.
The fair value of the mortgage notes payable is estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of borrowing arrangements. Advances under the Revolving Credit Facility and Fannie Mae Master Credit Facilities are considered to be reported at fair value, because their interest rates vary with changes in LIBOR and there has not been a significant change in credit risk of the Company or credit markets since origination.
Note 7 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. Additionally, in using interest rate derivatives, the Company aims to add stability to interest expense and to manage its exposure to interest rate movements. The Company does not intend to utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company, and its affiliates, may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2018 and December 31, 2017 :
(In thousands)
 
Balance Sheet Location
 
June 30,
2018
 
December 31, 2017
Derivatives designated as hedging instruments:
 
 
 
 
 
 
    Interest rate swaps
 
Derivative assets, at fair value
 
$
8,019

 
$
2,473

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
    Interest rate caps
 
Derivative assets, at fair value
 
$
236

 
$
77

Cash Flow Hedges of Interest Rate Risk
The Company currently has two interest rate swaps that are designated as cash flow hedges. The interest rate swaps are used as part of the Company's interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2018 and 2017, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2018 and 2017, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.
Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, from July 1, 2018 through June 30, 2019, the Company estimates that $1.3 million will be reclassified from other comprehensive income as a decrease to interest expense.
As of June 30, 2018 and December 31, 2017 , the Company had the following derivatives that were designated as cash flow hedges of interest rate risk:
 
 
June 30, 2018
 
December 31, 2017
Interest Rate Derivatives
 
Number of Instruments
 
Notional Amount
 
Number of Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate swap
 
2

 
$
250,000

 
2

 
$
250,000

The table below details the location in the financial statements of the loss recognized on interest rate derivatives designated as cash flow hedges for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
 
2018
 
2017
 
2018
 
2017
Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion)
 
$
1,610

 
$
(296
)
 
$
5,400

 
$
(296
)
Amount of gain (loss) reclassified from accumulated other comprehensive income into income as interest expense
 
$
28

 
$
—

 
$
(146
)
 
$
—

Non-Designated Derivatives
These derivatives are used to manage the Company's exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net income (loss) and was a loss of $0.2 million and a gain of $28,000 for the three and six months ended June 30, 2018 and a loss of $43,000 and $0.1 million for the three and six months ended June 30, 2017 .
The Company had the following outstanding interest rate derivatives that were not designated as hedges in qualified hedging relationships as of  June 30, 2018 and December 31, 2017 :
 
 
June 30, 2018
 
December 31, 2017
Interest Rate Derivatives
 
Number of Instruments
 
Notional Amount
 
Number of Instruments
 
Notional Amount
 
 
 
 
(In thousands)
 
 
 
(In thousands)
Interest rate caps
 
7

 
$
359,322

 
6

 
$
295,169

Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2018 and December 31, 2017 . The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

 
 
 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Consolidated Balance Sheet
 
 
(In thousands)
 
Gross Amounts of Recognized Assets
 
Gross Amounts of Recognized (Liabilities)
 
Gross Amounts Offset in the Consolidated Balance Sheet
 
Net Amounts of Assets presented in the Consolidated Balance Sheet
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount
June 30, 2018
 
$
8,255

 
$
—

 
$
—

 
$
8,255

 
$
—

 
$
—

 
$
8,255

December 31, 2017
 
$
2,550

 
$
—

 
$
—

 
$
2,550

 
$
—

 
$
—

 
$
2,550

Credit-risk-related Contingent Features
The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of June 30, 2018 , there were no derivatives with a fair value in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements. As of June 30, 2018 , the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
Note 8 — Common Stock
As of June 30, 2018 and December 31, 2017 , the Company had 91.4 million and 91.0 million shares of common stock outstanding, respectively, including unvested restricted shares and shares issued pursuant to the Company's distribution reinvestment plan ("DRIP"), net of share repurchases. As of June 30, 2018 and December 31, 2017 , the Company had received total net proceeds from its initial public offering (the "IPO") and DRIP, net of share repurchases, of $2.3 billion .
In April 2013, the Company's board of directors (the "Board") authorized, and the Company began paying distributions on a monthly basis at a rate equivalent to $1.70 per annum, per share of common stock, which began in May 2013. In March 2017, the Board authorized a decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent to $1.45 per annum per share of common stock. On February 20, 2018, the Board authorized a further decrease in the rate at which the Company pays monthly distributions to stockholders, effective as of March 1, 2018, to a rate equivalent to $0.85 per annum per share of common stock.
Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. Distribution payments are dependent on the availability of funds. The Board may further reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.
On March 29, 2018, the independent directors of the Board approved an updated estimate of per-share net asset value ("Estimated Per-Share NAV") equal to $20.25 as of December 31, 2017, which was published on April 4, 2018. The Company intends to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.
Share Repurchase Program
Under the Company's share repurchase program (the "SRP"), as amended from time to time stockholders are able to sell their shares to the Company in limited circumstances. The SRP permits investors to sell their shares back to the Company after they have held them for at least one year, subject to the significant conditions and limitations described below.
Beginning on April 7, 2016 (the "Original NAV Pricing Date"), the price per share that the Company will pay to repurchase its shares would have been prior to amendment and restatement of the SRP effective in July 2017 as described below, equal to its Estimated Per-Share NAV multiplied by a percentage equal to:
•
92.5% , if the person seeking repurchase has held his or her shares for a period greater than one year and less than two years;
•
95.0% , if the person seeking repurchase has held his or her shares for a period greater than two years and less than three years;

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

•
97.5% , if the person seeking repurchase has held his or her shares for a period greater than three years and less than four years; or
•
100.0% if the person seeking repurchase has held his or her shares for a period greater than four years.
In cases of requests for death and disability, the repurchase price is equal to Estimated Per-Share NAV at the time of repurchase.
Repurchases of shares of the Company's common stock, when requested, are at the sole discretion of the Board. Until the First SRP Amendment (as defined below), the Company limited the number of shares repurchased during any calendar year to 5% of the weighted average number of shares of common stock outstanding on December 31st of the previous calendar year. In addition, the Company was only authorized to repurchase shares in a given quarter up to the amount of proceeds received from its DRIP in that same quarter.
On January 26, 2016, the Board approved and amended the SRP (the "First SRP Amendment") to supersede and replace the existing SRP. Under the First SRP Amendment, repurchases of shares of the Company's common stock, when requested, are at the sole discretion of the Board and generally will be made semiannually (each six-month period ending June 30 or December 31, a “fiscal semester”). Repurchases for any fiscal semester will be limited to a maximum of 2.5% of the weighted average number of shares of common stock outstanding during the previous fiscal year (the "Prior Year Outstanding Shares"), with a maximum for any fiscal year of 5.0% of the Prior Year Outstanding Shares. In addition, the Company is only authorized to repurchase shares in a given fiscal semester up to the amount of proceeds received from its DRIP in that same fiscal semester. If an updated Estimated Per-Share NAV is published during any fiscal semester, any repurchase requests received during such fiscal semester will be paid at the applicable Estimated Per-Share NAV then in effect.
On June 14, 2017, the Board approved and adopted an amended and restated SRP that superseded and replaced the existing SRP, effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP.
On March 13, 2018, the Company announced a tender offer (the "Tender Offer") to purchase up to  2.0 million  shares of the Company’s common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. The Company suspended the SRP during the pendency of the Tender Offer. On June 29, 2018, the Company announced the Board unanimously determined to reactivate the SRP, effective June 30, 2018. In connection with reactivating the SRP, the Board approved all repurchase requests received during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. Accordingly,  155,904  shares were repurchased on July 31, 2018 for  $3.2 million  at an average price per share of  $20.25 , representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. No repurchase requests received during the SRP suspension were accepted.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

When a stockholder requests redemption and redemption is approved by the Board, the Company will reclassify such obligation from equity to a liability based on the settlement value of the obligation. Shares repurchased under the SRP have the status of authorized but unissued shares.
The following table reflects the number of shares repurchased cumulatively through June 30, 2018 :
 
 
Number of Shares Repurchased
 
Average Price per Share
Cumulative repurchases as of December 31, 2017 (1)
 
2,529,798

 
$
22.43

Six months ended June 30, 2018  (2)
 
373,967

 
$
21.45

Cumulative repurchases as of June 30, 2018
 
2,903,765

 
$
22.30

_______________
(1) Includes 1,554,768 shares repurchased during the year ended December 31, 2017 for approximately $33.6 million at a weighted average price per share of $21.61 . In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Board approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to September 30, 2017, which was equal to 267,723 shares repurchased for approximately $5.7 million at an average price per share of $21.47 . No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
(2) Includes 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45 . Does not include 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018.
Tender Offer
On March 13, 2018, the Company announced the Tender Offer to purchase up to  2.0 million  shares of the Company’s common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. The Company made the Tender Offer in response to an unsolicited offer to stockholders commenced on February 27, 2018. On April 4, 2018 and April 16, 2018, the Tender Offer was amended to reduce the number of shares the Company was offering to purchase to 230,000 shares and extend the expiration date to May 1, 2018. The Tender Offer expired in accordance with its terms on May 1, 2018. During May 2018, in accordance with the terms of the Tender Offer, the Company accepted for purchase 229,999 shares for a total cost of approximately $3.0 million .
Distribution Reinvestment Plan
Pursuant to the DRIP, stockholders may elect to reinvest distributions by purchasing shares of common stock in lieu of receiving cash. No dealer manager fees or selling commissions are paid with respect to shares purchased under the DRIP. The shares purchased pursuant to the DRIP have the same rights and are treated in the same manner as the shares issued pursuant to the IPO. The Board may designate that certain cash or other distributions be excluded from reinvestment pursuant to the DRIP. The Company has the right to amend any aspect of the DRIP or terminate the DRIP with ten days' notice to participants. Shares issued under the DRIP are recorded as equity in the accompanying consolidated balance sheet in the period distributions are declared. During the six months ended June 30, 2018 , the Company issued 1.0 million shares of common stock pursuant to the DRIP, generating aggregate proceeds of $21.1 million .
The Company offers shares pursuant to the DRIP at the then-current Estimated Per-Share NAV approved by the Board.
Note 9 — Related Party Transactions and Arrangements
As of June 30, 2018 and December 31, 2017 , the Special Limited Partner owned 8,888 shares of the Company's outstanding common stock. The Advisor and its affiliates may incur and pay costs and fees on behalf of the Company. As of June 30, 2018 and December 31, 2017 , the Advisor held 90 partnership units in the OP designated as "OP Units" ("OP Units").

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the IPO. American National Stock Transfer, LLC ("ANST"), a subsidiary of the parent company of the Former Dealer Manager, provided other general professional services through January 2016. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided the Company with services, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global’s principals (including Mr. Weil, a member of the Board). The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there any allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. On November 30, 2017, the Court issued an opinion partially granting the defendants’ motion. On December 7, 2017, the creditor trust moved for limited reargument of the court's dismissal of its breach of fiduciary duty claim, and on January 10, 2018, the defendants filed a supplemental motion to dismiss certain claims. On April 5, 2018, the court issued an opinion denying the creditor trust's motion for reconsideration while partially granting the defendants' supplemental motion to dismiss. The Advisor has informed the Company that it believes that the suit is without merit and intends to defend against it vigorously.
The limited partnership agreement of the OP provides for a special allocation, solely for tax purposes, of excess depreciation deductions of up to $10.0 million to the Advisor, a limited partner of the OP.  In connection with this special allocation, the Advisor has agreed to restore a deficit balance in its capital account in the event of a liquidation of the OP and has agreed to provide a guaranty or indemnity of indebtedness of the OP.
Fees Incurred in Connection with the Operations of the Company
On February 17, 2017, the members of a special committee of the Board unanimously approved certain amendments to the then-effective advisory agreement, as amended (the "Original A&R Advisory Agreement"), by and among the Company, the OP and the Advisor (the "Second A&R Advisory Agreement"). The Second A&R Advisory Agreement, which superseded the Original A&R Advisory Agreement, took effect on February 17, 2017. The initial term of the Second A&R Advisory Agreement is  ten years beginning on February 17, 2017, and is automatically renewable for another  ten -year term upon each  ten -year anniversary unless the Second A&R Advisory Agreement is terminated (i) with notice of an election not to renew at least 365 days prior to the applicable tenth anniversary, (ii) in accordance with a change of control or a transition to self-management (see the section titled "Termination Fees" included within this footnote), (iii) by 67% of the independent directors of the Board for cause, without penalty, with 45 days' notice or (iv) with 60 days prior written notice by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Second A&R Advisory Agreement or (b) any material breach of the Second A&R Advisory Agreement of any nature whatsoever by the Company.
Acquisition Fees
Under the Original A&R Advisory Agreement and until February 17, 2017, the Advisor was paid an acquisition fee equal to 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment. The Advisor was also reimbursed for services provided for which it incurred investment-related expenses, or insourced expenses. The amount reimbursed for insourced expenses was not permitted to exceed 0.5% of the contract purchase price of each acquired property or 0.5% of the amount advanced for a loan or other investment. Additionally, the Company reimbursed the Advisor for third party acquisition expenses. The aggregate amount of acquisition fees and financing coordination fees (as described below) could not exceed 1.5% of the contract purchase price and the amount advanced for a loan or other investment for all the assets acquired. As of June 30, 2018 , aggregate acquisition fees and financing fees did not exceed the  1.5%  threshold. In no event was the total of all acquisition fees, acquisition expenses and any financing coordination fees payable with respect to the Company's portfolio of investments or reinvestments permitted to exceed 4.5% of the contract purchase price of the Company's portfolio to be measured at the close of the acquisition phase or 4.5% of the amount advanced for all loans or other investments. As of  June 30, 2018 , the total of all cumulative acquisition fees, acquisition expenses and financing coordination fees did not exceed the  4.5%  threshold.
The Second A&R Advisory Agreement does not provide for an acquisition fee, however the Advisor may continue to be reimbursed for services provided for which it incurs investment-related expenses, or insourced expenses. The amount reimbursed for insourced expenses may not exceed 0.5% of the contract purchase price of each acquired property or 0.5% of the amount advanced for a loan or other investment. Additionally, the Company reimburses the Advisor for third party acquisition expenses.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Financing Coordination Fees
Under the Original A&R Advisory Agreement and until February 17, 2017, if the Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Advisor a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations.
The Second A&R Advisory Agreement does not provide for a financing coordination fee.
Asset Management Fees and Variable Management/Incentive Fees
Under an advisory agreement that was superseded by the Original A&R Advisory Agreement and until March 31, 2015 and the limited partnership agreement of the OP, for its asset management services, the Company issued the Advisor an asset management subordinated participation by causing the OP to issue (subject to periodic approval by the Board) to the Advisor partnership units of the OP designated as "Class B Units" ("Class B Units"). The Class B Units were intended to be profit interests and vest, and no longer are subject to forfeiture, at such time as: (x) the value of the OP's assets plus all distributions made equals or exceeds the total amount of capital contributed by investors plus a 6.0% cumulative, pre-tax, non-compounded annual return thereon (the "economic hurdle"); (y) any one of the following occurs: (1) a listing; (2) another liquidity event or (3) the termination of the advisory agreement by an affirmative vote of a majority of the Company's independent directors without cause; and (z) the Advisor is still providing advisory services to the Company (the "performance condition"). Unvested Class B Units will be forfeited immediately if: (a) the advisory agreement is terminated for any reason other than a termination without cause; or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company's independent directors without cause before the economic hurdle has been met.
Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the limited partnership agreement of the OP. The number of Class B Units issued in any quarter was equal to: (i) the excess of (A) the product of (y) the cost of assets multiplied by (z) 0.1875% over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter; divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which was initially equal to $22.50 (the IPO price minus the selling commissions and dealer manager fees). The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the performance condition to be probable. As of June 30, 2018 , the Company cannot determine the probability of achieving the performance condition. The Advisor receives cash distributions on each issued Class B Units equal to the distribution rate received on the Company's common stock. Such distributions on Class B Units are included in general and administrative expenses in the consolidated statement of operations and comprehensive loss until the performance condition is considered probable to occur. As of June 30, 2018 , the Board had approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement.
On May 12, 2015, the Company, the OP and the Advisor entered into an amendment (the “Amendment”) to the advisory agreement, which, among other things, provided that the Company would cease causing the OP to issue Class B Units to the Advisor with respect to any period ending after March 31, 2015. Effective April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees as compensation for services rendered in connection with the management of the Company’s assets. The asset management fee was payable on the first business day of each month in the amount of 0.0625% multiplied by the lesser of (a) cost of assets or (b) fair value of assets for the preceding monthly period. The asset management fee was payable to the Advisor or its assignees in cash, in shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor. For the purposes of the payment of any fees in shares (a) prior to the Original NAV Pricing Date, each share was valued at $22.50 , (b) after the Original NAV Pricing Date and prior to any listing on a national securities exchange, if it occurs, each share will be valued at the then-current Estimated Per-Share NAV and (c) at all other times, each share shall be valued by the Board in good faith at the fair market value.
Effective February 17, 2017, the Second A&R Advisory Agreement requires the Company to pay the Advisor a base management fee, which is payable on the first business day of each month. The fixed portion of the base management fee is equal to  $1.625 million  per month, while the variable portion of the base management fee is equal to one-twelfth of 1.25%  of the cumulative net proceeds of any equity (including convertible equity and certain convertible debt but excluding proceeds from the DRIP) raised subsequent to February 17, 2017 per month. The base management fee is payable to the Advisor or its assignees in cash, OP Units or shares, or a combination thereof, the form of payment to be determined at the discretion of the Advisor and the value of any OP Unit or share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

In addition, the Second A&R Advisory Agreement requires the Company to pay the Advisor a variable management/incentive fee quarterly in arrears equal to (1) the product of fully diluted shares of common stock outstanding multiplied by (2) (x)  15.0%  of the applicable prior quarter's Core Earnings (as defined below) per share in excess of  $0.375  per share plus (y)  10.0%  of the applicable prior quarter's Core Earnings per share in excess of  $0.47  per share. Core Earnings is defined as, for the applicable period, net income or loss, computed in accordance with GAAP, excluding non-cash equity compensation expense, the variable management/incentive fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains or losses or other non-cash items recorded in net income or loss for the applicable period, regardless of whether such items are included in other comprehensive income or loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairments of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent and any associated bad debt reserves, amortization of market lease intangibles, provision for loss loans, and other non-recurring revenue and expenses (in each case after discussions between the Advisor and the independent directors and approved by a majority of the independent directors). The variable management/incentive fee is payable to the Advisor or its assignees in cash or shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor and the value of any share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.
Property Management Fees
Unless the Company contracts with a third party, the Company pays the Property Manager a property management fee of 1.5% of gross revenues from the Company's stand-alone single-tenant net leased properties and 2.5% of gross revenues from all other types of properties, respectively. The Company also reimburses the Property Manager for property level expenses incurred by the Property Manager. If the Company contracts directly with third parties for such services, the Company will pay them customary market fees and will pay the Property Manager an oversight fee of up to 1.0% of the gross revenues of the property managed. In no event will the Company pay the Property Manager or any affiliate of the Property Manager both a property management fee and an oversight fee with respect to any particular property.
On February 17, 2017, the Company entered into the Amended and Restated Property Management and Leasing Agreement (the “A&R Property Management Agreement”) with the OP and the Property Manager. The A&R Property Management Agreement was entered into to reflect amendments to the original agreement between the parties and further amends the original agreement by extending the term of the agreement from one to two years, until February 17, 2019. The A&R Property Management Agreement will automatically renew for successive one -year terms unless any party provides written notice of its intention to terminate the A&R Property Management Agreement at least ninety days prior to the end of the term. The Property Manager may assign the A&R Property Management Agreement to any party with expertise in commercial real estate which has, together with its affiliates, over $100.0 million in assets under management.
On April 10, 2018, in connection with the Multi-Property CMBS Loan, the Company and the OP entered into an amendment to the A&R Property Management Agreement confirming, consistent with the intent of the parties, that the borrowers under the Multi-Property CMBS Loan and other subsidiaries of the OP that actually own or lease the Company’s properties are the direct obligors under the arrangements pursuant to which the Company’s properties are actually managed by either the Property Manager or a third party overseen by the Property Manager pursuant to the A&R Property Management Agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Professional Fees and Other Reimbursements
The Company reimburses the Advisor's costs of providing administrative services. Until June 2015, reimbursement of these expenses was subject to the limitation that the Company did not reimburse the Advisor for any amount by which the Company's operating expenses at the end of the four preceding fiscal quarters exceeded the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash expenses and excluding any gain from the sale of assets for that period (the "2%/25% Limitation"), unless the Company's independent directors determined that such excess was justified based on unusual and nonrecurring factors which they deemed sufficient, in which case the excess amount could be reimbursed to the Advisor in subsequent periods. This limitation ceased to exist after June 2015, when the Original A&R Advisory Agreement became effective. The Company reimburses the Advisor for personnel costs, excluding any compensation paid to individuals who also serve as the Company’s executive officers, or the executive officers of the Advisor, the Property Manager or their respective affiliates. This reimbursement includes reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. During the three and six months ended June 30, 2018 , the Company incurred $2.0 million and $3.9 million , respectively, of reimbursement expenses from the Advisor for providing administrative services. During the three and six months ended June 30, 2017 , the Company incurred $1.5 million and $2.8 million , respectively, of reimbursement expenses from the Advisor for providing administrative services.
The Advisor may elect to forgive and absorb certain fees. Because the Advisor may forgive or absorb certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay distributions to stockholders. The fees that are forgiven are not deferrals and, accordingly, will not be paid to the Advisor in the future. There were no such fees forgiven during the three and six months ended June 30, 2018 or 2017 . In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's property operating and general and administrative costs, which the Company will not repay. No such fees were absorbed during the three and six months ended June 30, 2018 or 2017 .
The Advisor elected to, without interest accrual, defer cash payment of $1.7 million in certain fees and reimbursements due to the Advisor as of December 31, 2017. As of December 31, 2017, a portion of these fees and reimbursements were already paid and the Company had recorded a $0.7 million receivable due from the Advisor. As of June 30, 2018 , there was no remaining receivable or payable due from the Advisor. The $1.7 million in deferred fees and reimbursements were repaid during April 2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The following table details amounts incurred, forgiven and payable in connection with the Company's operations-related services described above as of and for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
Payable (Receivable) as of
 
 
 
2018
 
2017
 
2018
 
2017
 
June 30,
 
December 31,
 
(In thousands)
 
Incurred  (1)
 
Incurred  (1)
 
Incurred  (1)
 
Incurred  (1)
 
2018
 
2017
 
One-time fees and reimbursements:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition cost reimbursements
 
$
50

 
$
22

 
$
110

 
$
22

 
$
53

 
$
36

 
Due to(from) HT III related to Asset Purchase  (2)
 
—

 
—

 
—

 
—

 
(248
)
 
196

 
Ongoing fees and reimbursements:
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset management fees
 
4,875

 
4,875

 
9,750

 
9,439

 
—

 
—

 
Property management fees
 
888

 
762

 
1,740

 
1,499

 
85

 
66

 
Professional fees and other reimbursements
 
2,162

 
1,592

 
4,208

 
3,034

 
511

(4)  
1,339

(4)  
Distributions on Class B Units (3)
 
76

 
130

 
186

 
280

 
—

 
—

 
Total related party operation fees and reimbursements
 
$
8,051

 
$
7,381

 
$
15,994

 
$
14,274

 
$
401

 
$
1,637

 
_______________
(1)  
There were no fees or reimbursements forgiven during the three and six months ended June 30, 2018 or 2017.
(2)
On December 22, 2017, the Company purchased substantially all the assets of American Realty Capital Healthcare Trust III, Inc. ("HT III"). Certain proration estimates were included within the closing. The purchase agreement calls for a final purchase price adjustment. The Company had a $248,000 net receivable and $196,000 net payable related to the Asset Purchase (as defined below) included on its consolidated balance sheet as of June 30, 2018 and December 31, 2017, respectively. Please see below for additional information related to the asset purchase.
(3)
Prior to April 1, 2015, the Company caused the OP to issue (subject to periodic approval by the Board) to the Advisor restricted performance based Class B Units for asset management services. As of December 31, 2017, the Board had approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement. Effective April 1, 2015, the Company began paying an asset management fee to the Advisor or its assignees in cash, in shares, or a combination of both and no longer issues any Class B Units.
(4)  
Balance includes costs which were incurred and accrued due to ANST and a subsidiary of RCAP which were related parties of the Company. See above for further details on the status of the ANST and RCAP relationship.
Fees and Participations Incurred in Connection with a Listing or the Liquidation of the Company's Real Estate Assets
Fees Incurred in Connection with a Listing
If the common stock of the Company is listed on a national exchange, the Special Limited Partner will be entitled to receive a subordinated incentive listing distribution from the OP equal to 15.0% of the amount by which the market value of all issued and outstanding shares of common stock plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax non-compounded annual return to investors. The Special Limited Partner will not be entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distribution was incurred during the three and six months ended June 30, 2018 or 2017 . Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in net sales proceeds and the subordinated incentive listing distribution.
Annual Subordinated Performance Fees and Brokerage Commissions
Under the Original A&R Advisory Agreement and until February 17, 2017, the Advisor was entitled to an annual subordinated performance fee calculated on the basis of the Company's total return to stockholders, payable annually in arrears, such that for any year in which the Company's total return on stockholders' capital exceeded 6.0% per annum, the Advisor was entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee would have been payable only upon the sale of assets, distributions or another event which resulted in the return on stockholders' capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three and six months ended June 30, 2018 or 2017 .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Under the Original A&R Advisory Agreement and until February 17, 2017, the Advisor was entitled to a brokerage commission on the sale of property, not to exceed the lesser of (a) 2.0% of the contract sale price of the property and (b) 50.0% of the total brokerage commission paid if a third party broker was also involved; provided, however, that in no event could the real estate commissions paid to the Advisor, its affiliates and unaffiliated third parties exceed the lesser of (a) 6.0% of the contract sales price and (b) a reasonable, customary and competitive real estate commission. The brokerage commission payable to the Advisor was subject to approval by a majority of the independent directors upon a finding that the Advisor provided a substantial amount of services in connection with the sale. No such fees were incurred during the three and six months ended June 30, 2018 or 2017 .
The Second A&R Advisory Agreement does not provide for the annual subordinated performance fee and brokerage commissions payable to the Advisor, (all as defined in the Original A&R Advisory Agreement) effective February 17, 2017 and no such fees or commissions were incurred prior thereto.
Subordinated Participation in Real Estate Sales
The Special Limited Partner is entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0% of remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax non-compounded annual return on the capital contributed by investors. The Special Limited Partner is not entitled to the subordinated participation in net sale proceeds unless the Company's investors have received their capital contributions, plus a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such participation in net sales proceeds became due and payable during the three and six months ended June 30, 2018 or 2017 . Neither the Special Limited Partner nor any of its affiliates can earn both the subordinated participation in net sales proceeds and the subordinated incentive listing distribution described above.
Termination Fees
Under the operating partnership agreement of the OP, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner is entitled to receive distributions from the OP equal to 15.0% of the amount by which the sum of the Company's market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to an annual 6.0% cumulative, pre-tax, non-compounded annual return to investors. The Special Limited Partner is able to elect to defer its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.
Under the Second A&R Advisory Agreement, upon the termination or non-renewal of the agreement, the Advisor will be entitled to receive from the Company all amounts due to the Advisor, including any change in control fee and transition fee (both described below), as well as the then-present fair market value of the Advisor's interest in the Company. All fees will be due within 30 days after the effective date of the termination of the Second A&R Advisory Agreement.
Upon a termination by either party in connection with a change of control (as defined in the Second A&R Advisory Agreement), the Company would pay the Advisor a change of control fee equal to the product of four (4) and the "Subject Fees."
Upon a termination by the Company in connection with transition to self-management, the Company would pay the Advisor a transition fee equal to (i) $15.0 million plus (ii) the product of four multiplied by the Subject Fees, provided that the transition fee shall not exceed an amount equal (i) 4.5 multiplied by (ii) the Subject Fees.
The Subject Fees are equal to (i) the product of four (4) multiplied by the actual base management fee plus (ii) the product of four (4) multiplied by the actual variable management/incentive fee, in each of clauses (i) and (ii), payable for the fiscal quarter immediately prior to the fiscal quarter in which the change of control or the transition to self-management is consummated, as applicable, plus (iii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised in respect to the fiscal quarter immediately prior to the fiscal quarter in which the change of control or the transition to self-management is consummated, as applicable.
The right to termination of the Second A&R Advisory Agreement in connection with a change of control or transition to self-management is subject to a lockout period that requires the notice of any termination in connection with a change of control or transition to self-management to be delivered after February 14, 2019.
American Realty Capital Healthcare Trust III, Inc. Asset Purchase
On December 22, 2017, the Company, the OP and its subsidiary, ARHC TRS Holdco II, LLC, purchased all of the membership interests in indirect subsidiaries of HT III that own the 19 properties comprising substantially all of HT III’s assets (the “Asset Purchase”), pursuant to a purchase agreement (the “Purchase Agreement”), dated as of June 16, 2017. HT III is sponsored and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

advised by an affiliate of the Company’s advisor. As of June 30, 2018 and December 31, 2017 the Company had a $0.2 million net receivable and $0.2 million net payable, respectively, to HT III included on its consolidated balance sheet.
At the closing of the Asset Purchase, the Company paid HT III $108.4 million , representing the purchase price under the Purchase Agreement of $120.0 million , less (i) $0.7 million reflecting prorations and closing adjustments in accordance with the Purchase Agreement, (ii) $4.9 million reflecting the outstanding principal amount of the loan secured by HT III’s Philip Center property assumed by the Company at the closing in accordance with the Purchase Agreement, and (iii) $6.0 million deposited by the Company into an escrow account in accordance with the Purchase Agreement. This escrow amount, less any amounts paid or reserved for pending or unsatisfied indemnification claims that the Company may make pursuant to the Purchase Agreement, will be released to HT III in installments over a period of 14 months following the closing. In June 2018, one third of this escrow amount, representing $2.0 million , was released in accordance with the Purchase Agreement.
Note 10 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company and asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that the Advisor and its affiliates are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Note 11 — Share-Based Compensation
Restricted Share Plan
The Company has adopted an employee and director incentive restricted share plan (as amended from time to time, the "RSP"), which provides the Company with the ability to grant awards of restricted shares of common stock ("restricted shares") to the Company's directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. The total number of shares of common stock that may be subject to awards granted under the RSP may not exceed 5.0% of the Company's outstanding shares of common stock on a fully diluted basis at any time and in any event will not exceed 3.4 million shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).
Prior to August 2017, the RSP provided for an automatic grant of 1,333 restricted shares to each of the independent directors, without any further approval by the Board or the stockholders, on the date of his or her initial election to the Board and thereafter on the date of each annual stockholder meeting. The restricted shares granted as annual automatic awards prior to August 2017 were subject to vesting over a five -year period following the date of grant.
In August 2017, the Board amended the RSP to provide that the number of restricted shares comprising the automatic annual award to each of the independent directors would be equal to the quotient of $30,000 divided by the then-current Estimated Per-Share NAV and subsequently amended and restated the RSP to eliminate the automatic annual awards and to make other revisions related to the implementation of a new independent director equity compensation program. As part of this new independent director equity compensation program, the Board approved a one-time grant of restricted share awards to the independent directors as follows: (i) 300,000 restricted shares to the chairman, with one-seventh of the shares vesting annually in equal increments over a seven -year period with initial vesting on August 4, 2018; and (ii) 25,000 restricted shares to each of the three other independent directors, with one-fifth of the shares vesting annually in equal increments over a five -year period with initial vesting on August 4, 2018. In connection with these one-time grants, the restricted shares granted as automatic annual awards in connection with the Company’s 2017 annual meeting of stockholders on July 21, 2017 were forfeited. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares.
The following table reflects restricted share award activity for the period presented:
 
 
Number of Shares of Common Stock
 
Weighted Average Issue Price
Unvested, December 31, 2017
 
382,510

 
$
21.47

Granted
 
—

 
—

Vested
 
(800
)
 
22.50

Forfeitures
 
—

 
—

Unvested, June 30, 2018
 
381,710

 
21.47

As of June 30, 2018 , the Company had $7.1 million of unrecognized compensation cost related to unvested restricted share awards granted under the RSP. That cost is expected to be recognized over a weighted-average period of 5.7 years.
Compensation expense related to restricted shares was approximately $320,000 and $639,000 during the three and six months ended June 30, 2018 , respectively. Compensation expense related to restricted shares was approximately $13,000 and $27,000 during the three and six months ended June 30, 2017 , respectively. Compensation expense related to restricted shares is recorded as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss.
Other Share-Based Compensation
The Company may issue common stock in lieu of cash to pay fees earned by the Company's directors at the respective director's election. There are no restrictions on shares issued in lieu of cash compensation since these payments in lieu of cash relate to fees earned for services performed. No such shares were issued during the three and six months ended June 30, 2018 or 2017 .
Note 12 — Accumulated Other Comprehensive Income
The following table illustrates the changes in accumulated other comprehensive income as of and for the period presented:
(In thousands)
 
Unrealized Gain on Designated Derivative
Balance, December 31, 2017
 
$
2,473

Other comprehensive income, before reclassifications
 
5,400

Amount of loss reclassified from accumulated other comprehensive income
 
146

Balance, June 30, 2018
 
$
8,019

Note 13 — Non-controlling Interests
Non-Controlling Interests in the Operating Partnership
The Company is the sole general partner and holds substantially all of the OP Units. As of June 30, 2018 and December 31, 2017 , the Advisor held 90 OP Units, which represents a nominal percentage of the aggregate ownership in the OP.
In November 2014, the Company partially funded the purchase of a MOB from an unaffiliated third party by causing the OP to issue 405,908 OP Units, with a value of $10.1 million , or $25.00 per unit, to the unaffiliated third party.
A holder of OP Units has the right to distributions. After holding the OP Units for a period of one year, a holder of OP Units has the right to redeem OP Units for, at the option of the OP, the cash value of a corresponding number of shares of the Company's common stock or a corresponding number of shares of the Company's common stock. The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets. During the three and six months ended June 30, 2018 , OP Unit non-controlling interest holders were paid distributions of $0.2 million and $0.3 million , respectively. During the three and six months ended June 30, 2017 , OP Unit non-controlling interest holders were paid distributions of $0.2 million and $0.3 million , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Non-Controlling Interests in Property Owning Subsidiaries
The Company also has investment arrangements with other unaffiliated third parties whereby such investors receive an ownership interest in certain of the Company's property-owning subsidiaries and are entitled to receive a proportionate share of the net operating cash flow derived from the subsidiaries' property. Upon disposition of a property subject to non-controlling interest, the investor will receive a proportionate share of the net proceeds from the sale of the property. The investor has no recourse to any other assets of the Company. Due to the nature of the Company's involvement with these arrangements and the significance of its investment in relation to the investment of the third party, the Company has determined that it controls each entity in these arrangements and therefore the entities related to these arrangements are consolidated within the Company's financial statements. A non-controlling interest is recorded for the investor's ownership interest in the properties.
During the three and six months ended June 30, 2018 , approximately $87 thousand , representing a share of proceeds from the Multi-Property CMBS Loan were paid to non-controlling interest holders in property owning subsidiaries. During the three and six months ended June 30, 2017 , approximately $52 thousand distributions were paid to non-controlling interest holders in property owning subsidiaries.
The following table summarizes the activity related to investment arrangements with the unaffiliated third parties:
 
 
 
 
 
 
 
 
 
 
Distributions  (2)  
 
 
 
 
Third Party Net Investment Amount
 
Non-Controlling Ownership Percentage
 
Net Real Estate Assets Subject to Investment Arrangement  (1)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Property Name
(Dollar amounts in thousands)
 
Investment Date
 
As of June 30, 2018
 
As of June 30, 2018
 
As of June 30, 2018
 
As of December 31, 2017
 
2018
 
2017
 
2018
 
2017
Plaza Del Rio Medical Office Campus Portfolio
 
May 2015
 
$
326

 
4.1
%
 
$
11,811

 
$
10,784

 
$
87

 
$
52

 
$
87

 
$
52

UnityPoint Clinic Portfolio (2)
 
December 2017
 
$
481

 
5.0
%
 
$
9,440

 
$
9,639

 
$
—

 
$
—

 
$
—

 
$
—

______________
(1) One property within the Plaza Del Rio Medical Office Campus Portfolio was mortgaged as part of the Multi-Property CMBS Loan. See Note 4 - Mortgage Notes Payable for additional information.
(2) Assumed as part of the HT III Asset Purchase. See Note 9 - Related Party Transactions and Arrangements for further information on the
Asset Purchase.
Note 14 — Net Loss Per Share
The following is a summary of the basic and diluted net loss per share computation for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Net loss attributable to stockholders (in thousands)
 
$
(6,950
)
 
$
(4,716
)
 
$
(12,941
)
 
$
(10,855
)
Basic and diluted weighted-average shares outstanding
 
90,978,411

 
89,335,489

 
90,881,883

 
89,486,742

Basic and diluted net loss per share
 
$
(0.08
)
 
$
(0.05
)
 
$
(0.14
)
 
$
(0.12
)

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Diluted net loss per share assumes the conversion of all common stock equivalents into an equivalent number of shares of common stock, unless the effect is antidilutive. The Company considers unvested restricted shares, OP Units and Class B Units to be common share equivalents. The Company had the following common stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as their effect would have been antidilutive for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
2018
 
2017
Unvested restricted shares (1)
 
378,089

 
9,534

 
382,326

 
9,659

OP Units (2)
 
405,998

 
405,998

 
405,998

 
405,998

Class B Units (3)
 
359,250

 
359,250

 
359,250

 
359,250

Total weighted average antidilutive common stock equivalents
 
1,143,337

 
774,782

 
1,147,574

 
774,907

_______________
(1)  
Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented. There were 381,710 and 9,121 unvested restricted shares outstanding as of June 30, 2018 and 2017 , respectively.
(2)  
Weighted average number of antidilutive OP Units outstanding for the periods presented. There were  405,998 OP Units outstanding as of  June 30, 2018 and 2017 , respectively.
(3)  
Weighted average number of antidilutive Class B Units outstanding for the periods presented. There were  359,250 Class B Units outstanding as of June 30, 2018 and 2017 , respectively.
Note 15 — Segment Reporting
During the six months ended June 30, 2018 and 2017 , the Company operated in three reportable business segments for management and internal financial reporting purposes: MOBs, triple-net leased healthcare facilities, and SHOPs.
The Company evaluates performance and makes resource allocations based on its three business segments. The medical office building segment primarily consists of MOBs leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses. The triple-net leased healthcare facilities segment primarily consists of investments in seniors housing communities, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses. The SHOP segment consists of direct investments in seniors housing communities, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party managers. There were no intersegment sales or transfers during the periods presented.
On June 8, 2017, the Company's taxable REIT subsidiary, through 12 separately executed membership interest or stock transfer agreements, acquired 12 operating entities that leased 12 healthcare facilities included in the Company's triple-net leased healthcare facilities segment. Concurrently with the acquisition of the 12 operating entities, the Company transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in the Company's SHOP operating segment. The segment reporting results of these 12 operating entities is included in the Company's triple-net leased healthcare facilities segment through June 8, 2017. Subsequent to June 8, 2017, these operating entities are operated under the RIDEA structure and are included in the Company's SHOP segment.
On January 1, 2018, the Company transitioned six properties in its triple-net leased healthcare facilities segment to operating properties under a structure permitted by the RIDEA structure. The properties consist of two assisted living facilities located in

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Burlington and Cudahy, Wisconsin, two assisted living facilities located in Dixon and Rockford, Illinois, an assisted living facility located in Richmond, Kentucky and a skilled nursing facility located in Lutz, Florida. The prior tenants of the six properties transferred the operations of the properties to newly-formed subsidiaries of the Company and third-party managers engaged by those Company subsidiaries pursuant to market operations transfer agreements. The Company’s subsidiaries simultaneously entered into new management agreements with the third-party managers, who will operate and manage the facilities on behalf of the Company's subsidiaries.
The Company evaluates the performance of the combined properties in each segment based on net operating income ("NOI"). NOI is defined as total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. The Company believes that in order to facilitate a clear understanding of the Company's operating results, NOI should be examined in conjunction with net income (loss) as presented in the Company's consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of the Company's performance or to cash flows as a measure of the Company's liquidity or ability to make distributions.
The following tables reconcile the segment activity to consolidated net loss for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2018
(In thousands)
 
Medical Office Buildings
 
Triple-Net Leased Healthcare Facilities
 
Seniors Housing — Operating Properties
 
Consolidated
 
Medical Office Buildings
 
Triple-Net Leased Healthcare Facilities
 
Seniors Housing — Operating Properties
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
19,616

 
$
5,921

 
$
4

 
$
25,541

 
$
38,971

 
$
11,849

 
$
7

 
$
50,827

Operating expense reimbursements
 
5,591

 
236

 
—

 
5,827

 
10,225

 
573

 
—

 
10,798

Resident services and fee income
 
—

 
—

 
59,589

 
59,589

 
—

 
—

 
118,770

 
118,770

Total revenues
 
25,207

 
6,157

 
59,593

 
90,957

 
49,196

 
12,422

 
118,777

 
180,395

Property operating and maintenance
 
8,126

 
2,017

 
43,614

 
53,757

 
15,344

 
4,443

 
87,076

 
106,863

NOI
 
$
17,081

 
$
4,140

 
$
15,979

 
37,200

 
$
33,852

 
$
7,979

 
$
31,701

 
73,532

Impairment charges
 
 
 
 
 
 
 
—

 
 
 
 
 
 
 
(733
)
Operating fees to related parties
 
 
 
 
 
 
 
(5,763
)
 
 
 
 
 
 
 
(11,490
)
Acquisition and transaction related
 
 
 
 
 
 
 
(120
)
 
 
 
 
 
 
 
(293
)
General and administrative
 
 
 
 
 
 
 
(4,612
)
 
 
 
 
 
 
 
(8,264
)
Depreciation and amortization
 
 
 
 
 
 
 
(20,864
)
 
 
 
 
 
 
 
(41,633
)
Interest expense
 
 
 
 
 
 
 
(12,208
)
 
 
 
 
 
 
 
(23,365
)
Interest and other income
 
 
 
 
 
 
 
2

 
 
 
 
 
 
 
5

Gain (loss) on non-designated derivatives
 
 
 
 
 
 
 
(150
)
 
 
 
 
 
 
 
28

Income tax benefit
 
 
 
 
 
 
 
(466
)
 
 
 
 
 
 
 
(775
)
Net loss attributable to non-controlling interests
 
 
 
 
 
 
 
31

 
 
 
 
 
 
 
47

Net loss attributable to stockholders
 
 
 
 
 
 
 
$
(6,950
)
 
 
 
 
 
 
 
$
(12,941
)

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2017
(In thousands)
 
Medical Office Buildings
 
Triple-Net Leased Healthcare Facilities
 
Seniors Housing — Operating Properties
 
Consolidated
 
Medical Office Buildings
 
Triple-Net Leased Healthcare Facilities
 
Seniors Housing — Operating Properties
 
Consolidated
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
16,648

 
$
7,430

 
$
3

 
$
24,081

 
$
32,996

 
$
15,101

 
$
6

 
$
48,103

Operating expense reimbursements
 
3,789

 
97

 
—

 
3,886

 
7,574

 
416

 
—

 
7,990

Resident services and fee income
 
—

 
—

 
47,799

 
47,799

 
—

 
—

 
94,288

 
94,288

Total revenues
 
20,437

 
7,527

 
47,802

 
75,766

 
40,570

 
15,517

 
94,294

 
150,381

Property operating and maintenance
 
6,146

 
4,514

 
33,700

 
44,360

 
11,881

 
9,280

 
65,810

 
86,971

NOI
 
$
14,291

 
$
3,013

 
$
14,102

 
31,406

 
$
28,689

 
$
6,237

 
$
28,484

 
63,410

Impairment charges
 
 
 
 
 
 
 
—

 
 
 
 
 
 
 
(35
)
Operating fees to related parties
 
 
 
 
 
 
 
(5,637
)
 
 
 
 
 
 
 
(10,938
)
Acquisition and transaction related
 
 
 
 
 
 
 
(1,743
)
 
 
 
 
 
 
 
(4,588
)
General and administrative
 
 
 
 
 
 
 
(3,419
)
 
 
 
 
 
 
 
(7,576
)
Depreciation and amortization
 
 
 
 
 
 
 
(19,339
)
 
 
 
 
 
 
 
(39,822
)
Interest expense
 
 
 
 
 
 
 
(6,588
)
 
 
 
 
 
 
 
(12,070
)
Interest and other income
 
 
 
 
 
 
 
2

 
 
 
 
 
 
 
3

Gain on sale of real estate investment
 
 
 
 
 
 
 
438

 
 
 
 
 
 
 
438

Loss on non-designated derivative instruments
 
 
 
 
 
 
 
(43
)
 
 
 
 
 
 
 
(107
)
Income tax (expense) benefit
 
 
 
 
 
 
 
202

 
 
 
 
 
 
 
397

Net loss attributable to non-controlling interests
 
 
 
 
 
 
 
5

 
 
 
 
 
 
 
33

Net loss attributable to stockholders
 
 
 
 
 
 
 
$
(4,716
)
 
 
 
 
 
 
 
$
(10,855
)

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

The following table reconciles the segment activity to consolidated total assets as of the periods presented:
(In thousands)
 
June 30, 2018
 
December 31, 2017
ASSETS
 
 
 
 
Investments in real estate, net:
 
 
 
 
Medical office buildings
 
$
909,886

 
$
897,264

Triple-net leased healthcare facilities
 
248,141

 
294,727

Construction in progress
 
86,048

 
82,007

Seniors housing — operating properties
 
928,363

 
902,343

Total investments in real estate, net
 
2,172,438

 
2,176,341

Cash and cash equivalents
 
71,021

 
94,177

Restricted cash
 
14,614

 
8,411

Assets held for sale
 
37,822

 
37,822

Derivative assets, at fair value
 
8,255

 
2,550

Straight-line rent receivable, net
 
18,063

 
15,327

Prepaid expenses and other assets
 
28,466

 
22,099

Deferred costs, net
 
14,127

 
15,134

Total assets
 
$
2,364,806

 
$
2,371,861

The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
 
2018
 
2017
 
2018
 
2017
Medical office buildings
 
$
1,703

 
$
1,041

 
$
2,226

 
$
1,594

Triple-net leased healthcare facilities
 
30

 
—

 
68

 
—

Seniors housing — operating properties
 
1,313

 
1,903

 
1,927

 
2,491

Total capital expenditures
 
$
3,046

 
$
2,944

 
$
4,221

 
$
4,085

Note 16 — Commitments and Contingencies
The Company has entered into operating and capital lease agreements related to certain acquisitions under leasehold interests arrangements. The following table reflects the minimum base cash rental payments due from the Company over the next five years and thereafter under these arrangements, including the present value of the net minimum payment due under capital leases. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items.
 
 
Future Minimum Base Rent Payments
(In thousands)
 
Operating Leases
 
Capital Leases
July 1, 2018 - December 31, 2018
 
$
440

 
$
39

2019
 
780

 
80

2020
 
781

 
82

2021
 
774

 
84

2022
 
790

 
86

Thereafter
 
35,104

 
7,678

Total minimum lease payments
 
$
38,669

 
8,049

Less: amounts representing interest
 
 
 
(3,224
)
Total present value of minimum lease payments
 
 
 
$
4,825

Total rental expense from operating leases was $0.2 million during the three months ended June 30, 2018 and 2017 , respectively, and $0.4 million for the six months ended June 30, 2018 and 2017 , respectively. Interest expense related to capital leases was approximately $21,000 during the three months ended June 30, 2018 and 2017 , respectively, and $42,000 during the six months ended June 30, 2018 and 2017 , respectively.
Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of June 30, 2018 , the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

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HEALTHCARE TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)

Development Project Funding
In August 2015, the Company entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $82.0 million . As of June 30, 2018 , the Company had funded $86.0 million , including $10.0 million for the land and $76.0 million for construction in progress. As a result, the Company believes that it has satisfied its funding commitments for the construction. As of June 30, 2018 , the Company had funded $4.0 million in excess of its $72.0 million funding commitment for the construction. The Company has and may continue to, at its election, provide additional funding to ensure completion of the construction. To the extent the Company funds additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing the Company for any amounts funded. Entities related to Palm are, however, in default to the Company under leases at other properties in the Company's portfolio (see Note 3 — Real Estate Investments for more information). There can be no assurance that Palm will reimburse the Company for construction overruns funded.
Palm is responsible for completing the development and obtaining a final certificate of occupancy for the facility (the "CO"). However, Palm is in default of the development agreement and has provided notice that it will cease providing services under the development agreement, which may result in additional delays in obtaining the CO. Until the CO is obtained, the Company will not receive income from the property. There is no assurance as to when and if Palm will comply with its obligations. The Company is currently working to obtain the CO.
Concurrent with the acquisition, the Company entered into a loan agreement and lease agreement with an affiliate of Palm. The loan agreement is intended to provide working capital to the tenant during the initial operating period of the facility and allows for borrowings of up to $2.7 million from the Company on a non-revolving basis. Any outstanding principal balances under the loan will bear interest at 7.0% per year, payable on the first day of each fiscal quarter. As of June 30, 2018 and December 31, 2017 , there were no amounts outstanding under the loan agreement as operations at the facility have not yet started.
Note 17 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except the following disclosures:
Purchase and Sale Agreements
On July 26, 2018, the Company entered into a purchase and sale agreement for the sale of six MOB properties located in New York with an aggregate contract sale price of approximately $68.0 million .
On July 30, 2018, the Company entered into a purchase and sale agreement for the sale of one SHOP property located in Idaho with a sale price of approximately $7.5 million .
Approval of Share Repurchases
On July 31, 2018, the Company repurchased 155,904  shares pursuant to the SRP for  $3.2 million  at an average price per share of  $20.25 , representing 100%  of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. See  Note 8  — Common Stock  for more information.

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Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Healthcare Trust, Inc. and the notes thereto. As used herein, the terms the "Company," "we," "our" and "us" refer to Healthcare Trust, Inc., a Maryland corporation, including, as required by context, Healthcare Trust Operating Partnership, LP (our "OP"), a Delaware limited partnership, and its subsidiaries. The Company is externally managed by Healthcare Trust Advisors, LLC (our "Advisor"), a Delaware limited liability company. Capitalized terms used herein, but not otherwise defined, have the meaning ascribed to those terms in "Part I — Financial Information" included in the notes to the consolidated financial statements and contained herein.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
•
Certain of our executive officers and directors are also officers, managers, employees or holders of a direct or indirect controlling interest in our Advisor and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global"), the parent of our sponsor. As a result, certain of our executive officers and directors, our Advisor and its affiliates face conflicts of interest, including significant conflicts created by our Advisor's compensation arrangements with us and other investment programs advised by affiliates of AR Global and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions that adversely affect us.
•
Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliates of AR Global, our Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.
•
Although we intend to seek a listing of our shares of common stock on a national stock exchange when we believe market conditions are favorable to do so, there is no assurance that our shares of common stock will be listed. No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid.
•
We focus on acquiring and owning a diversified portfolio of healthcare-related assets located in the United States and are subject to risks inherent in concentrating investments in the healthcare industry.
•
If our Advisor loses or is unable to obtain qualified personnel, our ability to continue to achieve our investment strategies could be delayed or hindered.
•
The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of tenants to make lease payments to us.
•
We are depending on our Advisor to select investments and conduct our operations. Adverse changes in the financial condition of our Advisor and its affiliates or our relationship with our Advisor could adversely affect us.
•
We are obligated to pay fees, which may be substantial, to our Advisor and its affiliates.
•
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants.
•
We may not be able to achieve our rental rate objectives on new and renewal leases and our expenses could be greater, which may impact our results of operations.
•
Increases in interest rates could increase the amount of our debt payments and limit our ability to pay distributions.
•
We have not generated, and in the future may not generate, operating cash flows sufficient to fund all of the distributions we pay to our stockholders, and, as such, we may be forced to fund distributions from other sources, including borrowings, which may not be available on favorable terms, or at all.

39
Table of Contents

•
There can be no assurance we will continue to pay distributions at our current level.
•
Any distributions, especially those not covered by our cash flows from operations, may reduce the amount of capital available for other purposes included investment in properties and other permitted investments and may negatively impact the value of our stockholders' investment.
•
We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in the credit markets of the United States from time to time.
•
We are subject to risks associated with changes in general economic, business and political conditions including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of United States or international lending, capital and financing markets.
•
We may fail to continue to qualify to be treated as a real estate investment trust for U.S. federal income tax purposes ("REIT"), which would result in higher taxes, may adversely affect our operations and would reduce the value of an investment in our common stock and the cash available for distributions.
•
The offering price and repurchase price for our shares under our distribution reinvestment plan (the "DRIP") and our share repurchase program (as amended, the "SRP") may not, among other things, accurately reflect the value of our assets and may not represent what a stockholder may receive on a sale of the shares, what they may receive upon a liquidation of our assets and distribution of the net proceeds or what a third party may pay to acquire the Company.
Overview
We invest in healthcare real estate, focusing on seniors housing and medical office buildings ("MOB"), located in the United States. As of June 30, 2018 , we owned 192 properties located in 30 states and comprised of 9.1 million rentable square feet.
We were incorporated on October 15, 2012 as a Maryland corporation that elected and qualified to be taxed as a REIT beginning with our taxable year ended December 31, 2013. Substantially all of our business is conducted through our OP.
On March 29, 2018, our board of directors (the "Board") approved a new estimate of per share net asset value ("Estimated Per-Share NAV") equal to $20.25 as of December 31, 2017 . Our previous Estimated Per-Share NAV was equal to $21.45 as of December 31, 2016. We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually.
We have no employees. The Advisor has been retained by us to manage our affairs on a day-to-day basis. We have retained Healthcare Trust Properties, LLC (the "Property Manager") to serve as our property manager. The Advisor and Property Manager are under common control with AR Global, the parent of our sponsor, as a result of which they are related parties, and each have received or will receive compensation, fees and expense reimbursements for services related to managing our business. The Advisor, Healthcare Trust Special Limited Partnership, LLC and the Property Manager also have received or will receive compensation, fees and expense reimbursements from us related to the investment and management of our assets.
On December 22, 2017, we purchased all of the membership interests in indirect subsidiaries of American Realty Capital Healthcare Trust III, Inc. (“HT III”) that own the 19 properties that comprised substantially all of HT III’s assets (the “Asset Purchase”), pursuant to a purchase agreement (the “Purchase Agreement”), dated as of June 16, 2017. HT III is sponsored and advised by an affiliate of our Advisor.
Significant Accounting Estimates and Critical Accounting Policies
Our Annual Report on Form 10-K for the year ended December 31, 2017 contains a discussion of our significant accounting estimates and critical accounting policies. There have been no significant changes in our significant accounting estimates and critical accounting policies since December 31, 2017 . See also Note 2  — Summary of Significant Accounting Policies to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

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Table of Contents

Properties
The following table presents certain additional information about the properties we owned as of June 30, 2018 :
Portfolio
 
Number
of Properties
 
Rentable
Square Feet
 
Percentage
    Leased (1)
 
Weighted Average Remaining
Lease Term in Years (2)
 
Gross Asset Value (4)
 
 
 
 
 
 
 
 
 
 
(In thousands)
Medical Office Buildings
 
106
 
3,744,496

 
89.6%
 
4.2
 
$
1,032,853

Triple-Net Leased Healthcare Facilities (3) :
 

 


 
 
 
 
 
 
Seniors Housing — Triple-Net Leased
 
4
 
102,753

 
100.0%
 
12.5
 
55,000

Hospitals
 
4
 
428,620

 
88.8%
 
4.9
 
87,214

Post-Acute / Skilled Nursing
 
17
 
721,844

 
100.0%
 
10.3
 
177,389

Total Triple-Net Leased Healthcare Facilities
 
25
 
1,253,217

 
96.2%
 
9.2
 
319,603

Seniors Housing — Operating Properties
 
58
 
4,152,207

 
87.7%
 
N/A
 
1,101,822

Land
 
2
 
N/A

 
N/A
 
N/A
 
3,665

Construction in Progress
 
1
 
N/A

 
N/A
 
N/A
 
86,048

Total Portfolio
 
192
 
9,149,920

 

 
 
 
$
2,543,991

_______________
(1)  
Inclusive of leases signed but not yet commenced as of June 30, 2018 .
(2)  
Based on annualized rental income calculated on a straight-line basis.
(3)  
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms and do not vary based on the underlying operating performance of the properties.
(4)  
Gross Asset Value represents the total real estate investments, at cost, assets held for sale at carrying value, net of gross market lease intangible liabilities.
N/A
Not applicable.

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Table of Contents

Results of Operations
As of June 30, 2018 , we operated in three reportable business segments for management and internal financial reporting purposes: MOBs, triple-net leased healthcare facilities, and Seniors Housing — Operating Properties ("SHOPs"). In our MOB operating segment, we own, manage and lease, through the Property Manager or third party property managers, single and multi-tenant MOBs where tenants are required to pay their pro rata share of property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. In our triple-net leased healthcare facilities operating segment, we own, manage and lease seniors housing communities, hospitals, post-acute care and skilled nursing facilities throughout the United States under long-term triple-net leases, which tenants are generally directly responsible for all operating costs of the respective properties. In our SHOP operating segment, we invest in seniors housing communities under a structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 ("RIDEA"). Under RIDEA, a REIT may lease qualified healthcare properties on an arm's length basis to a taxable REIT subsidiary ("TRS") if the property is operated on behalf of such subsidiary by an entity who qualifies as an eligible independent contractor. As of June 30, 2018 , we had 17 eligible independent contractors operating 58 SHOP properties. All of our properties across all three business segments are located throughout the United States.
Net operating income ("NOI") is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to total revenues less property operating and maintenance expense. NOI excludes all other financial statement amounts included in net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See “ Non-GAAP Financial Measures ” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosures regarding NOI and a reconciliation to our net loss attributable to stockholders, as computed in accordance with GAAP.
As of June 30, 2018 , we owned 192 properties. There were 162 properties (our "Same Store" properties) owned for the entire three and six months ended June 30, 2018 and 2017, including two vacant land parcels and one property under development. During the period from January 1, 2017 through June 30, 2018 , we acquired 30 properties (our "Acquisitions") and disposed of one property (our "Disposition").
As described in more detail below, our Same Store properties include 12 properties and six properties that were transitioned from our triple-net leased healthcare facilities segment to our SHOP segment during the year ended December 31, 2017 and the six months ended June 30, 2018 , respectively. For purposes of the segment reporting below, these properties were treated as "Acquisitions" in the SHOP segment and "Dispositions" in the triple-net leased healthcare facilities segment.
The following table presents a roll-forward of our properties owned from January 1, 2017 to June 30, 2018 :
 
Number of Properties
Number of properties, January 1, 2017
163

Acquisition activity during the year ended December 31, 2017
23

Disposition activity during the year ended December 31, 2017
(1
)
Number of properties, December 31, 2017
185

Acquisition activity during the six months ended June 30, 2018
7

Number of properties, June 30, 2018
192

 
 
Number of Same Store Properties (1)
162

_______________
(1) Includes the 2018 acquisition of a land parcel adjacent to an existing property which is not considered an Acquisition.
On June 8, 2017, our TRS acquired 12 operating entities that leased 12 healthcare facilities included in our triple-net leased healthcare facilities segment due to declining performance under the triple-net leased structure. Concurrently with the acquisition of the 12 operating entities, we transitioned the management of the healthcare facilities to a third-party management company that manages other healthcare facilities in our SHOP segment. As a part of the transition, our subsidiary property companies executed leases with the acquired operating entities and the acquired operating entities executed management agreements with the management company under the RIDEA structure. As a part of the transition of operations, we now control the operating entities that hold the operating licenses for these healthcare facilities. The results of operations of these properties are included in the Dispositions under our triple-net leased healthcare facilities segment through June 7, 2017 and results of operations since June 8, 2017 are included in Acquisitions under our SHOP segment.
On January 1, 2018, we transitioned six properties in our triple-net leased healthcare facilities segment to operating properties under a structure permitted by the RIDEA structure due to declining performance under the triple-net leased structure. The properties consist of two assisted living facilities located in Burlington and Cudahy, Wisconsin, two assisted living facilities located in Dixon

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and Rockford, Illinois, an assisted living facility located in Richmond, Kentucky and a skilled nursing facility located in Lutz, Florida. The prior tenants of the six properties transferred the operations of the properties to our newly-formed subsidiaries and third-party managers engaged by those subsidiaries pursuant to market operations transfer agreements. Our subsidiaries simultaneously entered into new management agreements with the third-party managers, who will operate and manage the facilities on behalf of our subsidiaries.
We may in the future, through similar transactions, transition other triple-net leased facilities to third-party managed facilities under a structure permitted by RIDEA, in connection with which they would also transition from our triple-net leased healthcare facilities segment to our SHOP operating segment.
Comparison of the Three Months Ended June 30, 2018 to the Three Months Ended 2017
Information based on Same Store, Acquisitions and Dispositions allows us to evaluate the performance of our portfolio based on a consistent population of properties. Net loss attributable to stockholders was $7.0 million and $4.7 million for the three months ended June 30, 2018 and 2017 , respectively. The following table shows our results of operations for the three months ended June 30, 2018 and 2017 and the period to period change by line item of the consolidated statements of operations:
 
 
Three Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
Rental income
 
$
25,541

 
$
24,081

 
$
1,460

 
6.1
 %
Operating expense reimbursements
 
5,827

 
3,886

 
1,941

 
49.9
 %
Resident services and fee income
 
59,589

 
47,799

 
11,790

 
24.7
 %
Total revenues
 
90,957

 
75,766

 
15,191

 
20.0
 %
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Property operating and maintenance
 
53,757

 
44,360

 
9,397

 
21.2
 %
Impairment charges
 
—

 
—

 
—

 
NM

Operating fees to related parties
 
5,763

 
5,637

 
126

 
2.2
 %
Acquisition and transaction related
 
120

 
1,743

 
(1,623
)
 
NM

General and administrative
 
4,612

 
3,419

 
1,193

 
34.9
 %
Depreciation and amortization
 
20,864

 
19,339

 
1,525

 
7.9
 %
Total expenses
 
85,116

 
74,498

 
10,618

 
14.3
 %
Operating gain
 
5,841

 
1,268

 
4,573

 
NM

Other income (expense):
 
 
 
 
 


 


Interest expense
 
(12,208
)
 
(6,588
)
 
(5,620
)

(85.3
)%
Interest and other income
 
2

 
2

 
—

 
NM

Gain on sale of real estate investment
 
—

 
438

 
(438
)
 
NM

Gain (loss) on non-designated derivatives
 
(150
)
 
(43
)
 
(107
)
 
NM

Total other expenses
 
(12,356
)
 
(6,191
)
 
(6,165
)
 
(99.6
)%
Loss before income taxes
 
(6,515
)
 
(4,923
)
 
(1,592
)
 
(32.3
)%
Income tax (expense) benefit
 
(466
)
 
202

 
(668
)
 
NM

Net loss
 
(6,981
)
 
(4,721
)
 
(2,260
)
 
(47.9
)%
Net loss attributable to non-controlling interests
 
31

 
5

 
26

 
520.0
 %
Net loss attributable to stockholders
 
$
(6,950
)
 
$
(4,716
)
 
$
(2,234
)
 
(47.4
)%
_______________
NM — Not Meaningful

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Segment Results — Medical Office Buildings
The following table presents the revenue and property operating and maintenance expense and the period to period change within our MOB segment for the three months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Acquisitions (2)
 
Dispositions (3)
 
Segment Total (4)
 
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
16,340

 
$
16,410

 
$
(70
)
 
(0.4
)%
 
$
3,276

 
$
226

 
$
3,050

 
NM
 
$
—

 
$
12

 
$
(12
)
 
NM
 
$
19,616

 
$
16,648

 
$
2,968

 
17.8
%
Operating expense reimbursements
 
4,675

 
3,769

 
906

 
24.0
 %
 
915

 
20

 
895

 
NM
 
—

 
 
 
—

 
NM
 
5,590

 
3,789

 
1,801

 
47.5
%
Total revenues
 
21,015

 
20,179

 
836

 
4.1
 %
 
4,191

 
246

 
3,945

 
NM
 
—

 
12

 
(12
)
 
NM
 
25,206

 
20,437

 
4,769

 
23.3
%
Property operating and maintenance
 
6,960

 
6,081

 
418

 
6.9
 %
 
1,166

 
50

 
1,116

 
NM
 
—

 
15

 
(15
)
 
NM
 
8,126

 
6,146

 
1,980

 
32.2
%
NOI
 
$
14,055

 
$
14,098

 
$
(43
)
 
(0.3
)%
 
$
3,025

 
$
196

 
$
2,829

 
NM
 
$
—

 
$
(3
)
 
$
3

 
NM
 
$
17,080

 
$
14,291

 
$
2,789

 
19.5
%
_______________
(1)  
Our MOB segment included 79 Same Store properties.
(2)  
Our MOB segment included 27 Acquisition properties.
(3)  
Our MOB segment included one Disposition property.
(4)  
Our MOB segment included 106 properties as of June 30, 2018 .
NM — Not Meaningful
Rental income is primarily related to contractual rent received from tenants in our MOBs. Generally, operating expense reimbursements increase in proportion with the increase in property operating and maintenance expenses in our MOB segment. Pursuant to many of our lease agreements in our MOBs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent. Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, bad debt expense and unaffiliated third party property management fees.
All of our Acquisitions during 2018 were MOB properties. During the quarter ended June 30, 2018 , MOB Acquisitions contributed $2.8 million of NOI which represented the increase in the MOB segment NOI.
During the quarter ended June 30, 2018 , our Same Store property operating and maintenance expenses increased $0.4 million due to increased property tax expectations and higher building operating and maintenance costs. Property operating expense reimbursements increased $0.9 million due to the increased property operating and maintenance expenses that are reimbursable by our tenants. Reimbursement of property operating and maintenance expenses in our Same Store properties increased 5.2% from 62.0% during the three months ended June 30, 2017 , to 67.2% during the three months ended June 30, 2018 due to increased expenses which are reimbursable under leases.

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Segment Results — Triple-Net Leased Healthcare Facilities
The following table presents the revenue and property operating and maintenance expense and the period to period change within our triple net leased healthcare facilities segment for the three months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Dispositions (2)
 
Segment Total
 
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
5,921

 
$
6,236

 
(315
)
 
(5.1
)%
 
$
—

 
$
1,194

 
$
(1,194
)
 
NM
 
$
5,921

 
$
7,430

 
$
(1,509
)
 
(20.3
)%
Operating expense reimbursements
 
236

 
97

 
139

 
143.3
 %
 
—

 
—

 
—

 
NM
 
236

 
97

 
139

 
143.3
 %
Total revenues
 
6,157

 
6,333

 
(176
)
 
(2.8
)%
 
—

 
1,194

 
(1,194
)
 
NM
 
6,157

 
7,527

 
(1,370
)
 
(18.2
)%
Property operating and maintenance
 
2,017

 
3,603

 
(1,586
)
 
(44.0
)%
 
—

 
911

 
(911
)
 
NM
 
2,017

 
4,514

 
(2,497
)
 
(55.3
)%
NOI
 
$
4,140

 
$
2,730

 
$
1,410

 
51.6
 %
 
$
—

 
$
283

 
$
(283
)
 
NM
 
$
4,140

 
$
3,013

 
$
1,127

 
37.4
 %
_______________
(1)  
Our triple-net leased healthcare facilities segment included 26 Same Store properties.
(2)  
Includes 18 properties that are deemed Dispositions as they were transitioned to our SHOP operating segment.
NM — Not Meaningful
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (which may be subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms. Rental income is related to contractual rent received from tenants that does not vary based on the underlying operating performance of the properties. During the three months ended June 30, 2018 , rental income in our triple-net leased healthcare facilities segment decreased $1.5 million compared to the three months ended June 30, 2017 . $1.2 million of this decrease resulted from the 18 Dispositions which were transitioned to the SHOP segment due to tenants' failure or inability to meet their contractual lease obligations.
Operating expense reimbursements in our triple-net leased healthcare facilities segment generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment. However, pursuant to many of our lease agreements in this segment tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Property operating and maintenance expense should typically include minimal activity in our triple-net leased healthcare facilities segment except for real estate taxes, insurance, and bad debt expense. Real estate taxes are typically paid directly by the tenants; however, they may be paid by us and reimbursed by the tenants.
Property operating and maintenance expenses of $2.0 million during the three months ended June 30, 2018 primarily relates to $1.6 million of bad debt expense recorded on two properties in Illinois, two properties in Wisconsin, and one property in Florida, which is described below in more detail. Property operating and maintenance expense during the three months ended June 30, 2017 primarily related to real estate taxes that were not reimbursed and bad debt expense in our triple-net leased facilities located in Texas, Illinois and Wisconsin.
In January 2018, we entered into an agreement with a tenant at two properties in Illinois and two properties in Wisconsin in which we agreed to forbear from exercising legal remedies, including staying a lawsuit against the tenant, as long as the tenant pays the amounts due for rent and property taxes on an updated payment schedule (the "Forbearance Agreement"). The tenant is currently in default of the Forbearance Agreement and owes us $2.0 million of rent, property taxes, late fees, and interest receivable thereunder. During the three months ended June 30, 2018 we incurred a $0.3 million bad debt expense related to these receivables that is recorded in property operating and maintenance expense.
We have tenants and former tenants at two of our properties in Wellington and Lutz, Florida (collectively, the "NuVista Tenants") that have been in default under their leases since July 2017 and collectively owe us $7.1 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of June 30, 2018 . We have the entire receivable balance and related income from the NuVista Tenants fully reserved as of June 30, 2018 . During the three months ended June 30, 2018 , we incurred a $1.2 million bad debt expense related to these receivables that is recorded in property operating and maintenance expense.
At the Wellington, Florida property, we have filed litigation to pursue eviction proceedings against the NuVista Tenant there and appoint a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property. The Lutz, Florida property transitioned to the SHOP operating segment as of January 1, 2018. In connection with this transition, we replaced the NuVista Tenant as a tenant with a TRS and have engaged a third party to operate the property. This new operator is currently pursuing a Medicare license and will be unable to bill Medicare for services performed until one is granted. We have, therefore, accumulated $4.4 million of Medicare receivables as of June 30, 2018. We currently expect that the replacement operator will be able to successfully bill and collect once the operator obtains this license. The NuVista

45
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Tenants are related to Palm Health Partners, LLC ("Palm"), the developer of our development property in Jupiter, Florida which is also currently in default to us. See “-Palm and the NuVista Tenants” for further details.

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Segment Results — Seniors Housing - Operating Properties
The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the three months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Acquisitions (2)
 
Segment Total (3)
 
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Three Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resident services and fee income
 
$
46,106

 
$
46,276

 
$
(170
)
 
(0.4
)%
 
$
13,483

 
$
1,523

 
$
11,960

 
NM
 
$
59,589

 
$
47,799

 
$
11,790

 
24.7
%
Rental income
 
4

 
3

 
1

 
NM

 
—

 
—

 
—

 
NM
 
4

 
3

 
1

 
NM

Total revenues
 
46,110

 
46,279

 
(169
)
 
(0.4
)%
 
13,483

 
1,523

 
11,960

 
NM
 
59,593

 
47,802

 
11,791

 
24.7
%
Property operating and maintenance
 
32,371

 
31,988

 
383

 
1.2
 %
 
11,243

 
1,712

 
9,531

 
NM
 
43,614

 
33,700

 
9,914

 
29.4
%
NOI
 
$
13,739

 
$
14,291

 
$
(552
)
 
(3.9
)%
 
$
2,240

 
$
(189
)
 
$
2,429

 
NM
 
$
15,979

 
$
14,102

 
$
1,877

 
13.3
%
_______________
(1)  
Our SHOP segment included 57 Same Store properties.
(2)  
Our SHOP segment included three properties acquired from third parties, as well as 18 properties that are deemed Acquisitions as they were transitioned from our triple-net leased healthcare facilities operating segment.
(3)  
Our SHOP segment included of 58 properties as of June 30, 2018 , including two operating properties and two land parcels.
NM — Not Meaningful
Resident services and fee income is generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expense relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators and costs associated with maintaining the physical site.
During the three months ended June 30, 2018 , resident services and fee income and rental income increased by $11.8 million in our SHOP segment as compared to the three months ended June 30, 2017 . Acquisitions, primarily comprising our 18 triple-net leased healthcare facilities that transitioned to our SHOP operating segment, contributed to an increase of $12.0 million , partially offset by a $0.2 million decrease in revenues in our Same Store properties (see Segment Results — Triple-Net Leased Healthcare Facilities for further details on the properties which were transitioned to our SHOP operating segment).The decrease in Same Store resident services and fee income during the three months ended June 30, 2018 was primarily due to lower occupancies in specific markets in Florida, Georgia and Kansas City due to additional competition. The increase in Same Store property operating and maintenance expense is due to increased wages and building operational expenses.
Other Results of Operations
Operating Fees to Related Parties
Operating fees to related parties increased $0.1 million to $5.8 million for the three months ended June 30, 2018 from $5.6 million for the three months ended June 30, 2017 .
Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. Effective February 17, 2017, we pay a base management fee equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity raised subsequent to February 17, 2017. During the period preceding the February 17, 2017 amendment, our asset management fee was based on a percentage of the lesser of (a) cost of assets and (b) fair value of assets. Asset management fees remained unchanged at $4.9 million for the three months ended June 30, 2018 and 2017 .
Property management fees increased $0.1 million to $0.9 million for the three months ended June 30, 2018 from $0.8 million for the three months ended June 30, 2017 . Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
See Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements which provides detail on our fees and expense reimbursements.
Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses generally change in direct correlation with the number and contract purchase price of properties acquired or sold during the period and the level of activity surrounding any contemplated transaction or strategic process. Acquisition and transaction related expenses were $0.1 million for the three months ended June 30, 2018 compared to $1.7 million for the three months ended June 30, 2017 , primarily related to costs associated with the negotiation and execution of the purchase agreement related to the Asset Purchase.

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General and Administrative Expenses
General and administrative expenses increased $1.2 million to $4.6 million for the three months ended June 30, 2018 compared to $3.4 million for the three months ended June 30, 2017 , which includes $2.2 million and $1.7 million incurred in expense reimbursements and distributions on partnership units of the OP designated as "Class B Units" ("Class B Units") to related parties, respectively. General and administrative expenses primarily relate to professional fees for audit, transfer agent and legal services as well as certain expenses reimbursed to related parties.
Depreciation and Amortization Expenses
Depreciation and amortization expense increased $1.5 million to $20.9 million for the three months ended June 30, 2018 from $19.3 million for the three months ended June 30, 2017 . Our acquisitions contributed approximately $2.5 million to the increase. Same Store depreciation and amortization decreased $0.1 million primarily due to several intangible assets becoming fully amortized.
Interest Expense
Interest expense increased $5.6 million to $12.2 million for the three months ended June 30, 2018 from $6.6 million for the three months ended June 30, 2017 . The increase in interest expense is related to higher overall outstanding debt including new borrowings under our master credit facilities related to Fannie Mae's Multifamily MBS program (the "Fannie Mae Master Credit Facilities"). This increase in outstanding debt under the Fannie Mae Master Credit Facilities was partially offset by paydowns of our multi-property mortgage loan with Capital One, National Association (the "Bridge Loan") entered into in December 2017.
Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives.
Interest and Other Income
Interest and other income remained unchanged at approximately $2,000 for the three months ended June 30, 2018 and 2017 . Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.
Gain (Loss) on Non-Designated Derivatives
Gain (loss) on non-designated derivative instruments for the three months ended June 30, 2018 and 2017 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our Fannie Mae Master Credit Facilities, which have floating interest rates.
Income Tax (Expense) Benefit
Income tax (expense) benefit of approximately $(0.5) million and $0.2 million for the three months ended June 30, 2018 and 2017 primarily related to deferred tax assets generated by temporary differences and current period net operating income associated with our TRS. These deferred tax assets are partially offset by other income tax expenses incurred during the same period. Income taxes generally relate to our SHOPs, which are leased by our TRS.
Net Loss Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests was approximately $31,000 and $5,000 for the three months ended June 30, 2018 and 2017 , respectively, which represents the portion or our net income that is related to limited partner interests in the OP ("OP Units") and non-controlling interest holders.

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Table of Contents

Comparison of the Six Months Ended June 30, 2018 to the Six Months Ended 2017
Information based on Same Store, Acquisitions and Dispositions allows us to evaluate the performance of our portfolio based on a consistent population of properties. Net loss attributable to stockholders was $12.9 million and $10.9 million for the six months ended June 30, 2018 and 2017 , respectively. The following table shows our results of operations for the six months ended June 30, 2018 and 2017 and the period to period change by line item of the consolidated statements of operations:
 
 
Six Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
Rental income
 
$
50,827

 
$
48,103

 
$
2,724

 
5.7
 %
Operating expense reimbursements
 
10,798

 
7,990

 
2,808

 
35.1
 %
Resident services and fee income
 
118,770

 
94,288

 
24,482

 
26.0
 %
Total revenues
 
180,395

 
150,381

 
30,014

 
20.0
 %
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
Property operating and maintenance
 
106,863

 
86,971

 
19,892

 
22.9
 %
Impairment charges
 
733

 
35

 
698

 
1,994.3
 %
Operating fees to related parties
 
11,490

 
10,938

 
552

 
5.0
 %
Acquisition and transaction related
 
293

 
4,588

 
(4,295
)
 
(93.6
)%
General and administrative
 
8,264

 
7,576

 
688

 
9.1
 %
Depreciation and amortization
 
41,633

 
39,822

 
1,811

 
4.5
 %
Total expenses
 
169,276

 
149,930

 
19,346

 
12.9
 %
Operating gain
 
11,119

 
451

 
10,668

 
2,365.4
 %
Other income (expense):
 
 
 
 
 
 
 
 
Interest expense
 
(23,365
)
 
(12,070
)
 
(11,295
)
 
(93.6
)%
Interest and other income
 
5

 
3

 
2

 
66.7
 %
Gain on sale of real estate investment
 
—

 
438

 
(438
)
 
(100.0
)%
Gain (loss) on non-designated derivatives
 
28

 
(107
)
 
135

 
126.2
 %
Total other expenses
 
(23,332
)
 
(11,736
)
 
(11,596
)
 
(98.8
)%
Loss before income taxes
 
(12,213
)
 
(11,285
)
 
(928
)
 
(8.2
)%
Income tax (expense) benefit
 
(775
)
 
397

 
(1,172
)
 
(295.2
)%
Net loss
 
(12,988
)
 
(10,888
)
 
(2,100
)
 
(19.3
)%
Net loss attributable to non-controlling interests
 
47

 
33

 
14

 
42.4
 %
Net loss attributable to stockholders
 
$
(12,941
)
 
$
(10,855
)
 
$
(2,086
)
 
(19.2
)%
_______________
NM — Not Meaningful



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Segment Results — Medical Office Buildings
The following table presents the revenue and property operating and maintenance expense and the period to period change within our MOB segment for the six months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Acquisitions (2)
 
Dispositions (3)
 
Segment Total
 
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
32,865

 
$
32,734

 
$
131

 
0.4
 %
 
$
6,106

 
$
226

 
$
5,880

 
NM
 
$
—

 
$
36

 
$
(36
)
 
NM
 
$
38,971

 
$
32,996

 
$
5,975

 
18.1
%
Operating expense reimbursements
 
8,591

 
7,552

 
1,039

 
13.8
 %
 
1,634

 
20

 
1,614

 
NM
 
—

 
2

 
(2
)
 
NM
 
10,225

 
7,574

 
2,651

 
35.0
%
Total revenues
 
41,456

 
40,286

 
1,170

 
2.9
 %
 
7,740

 
246

 
7,494

 
NM
 
—

 
38

 
(38
)
 
NM
 
49,196

 
40,570

 
8,626

 
21.3
%
Property operating and maintenance
 
13,095

 
11,795

 
1,300

 
11.0
 %
 
2,249

 
50

 
2,199

 
NM
 
—

 
36

 
(36
)
 
NM
 
15,344

 
11,881

 
3,463

 
29.1
%
NOI
 
$
28,361

 
$
28,491

 
$
(130
)
 
(0.5
)%
 
$
5,491

 
$
196

 
$
5,295

 
NM
 
$
—

 
$
2

 
$
(2
)
 
NM
 
$
33,852

 
$
28,689

 
$
5,163

 
18.0
%
_______________
(1)
Our MOB segment included 79 Same Store properties.
(2)
Our MOB segment included 27 Acquisition properties.
(3)
Our MOB segment included one Disposition property.
NM — Not Meaningful
Rental income is primarily related to contractual rent received from tenants in our MOBs. Generally, operating expense reimbursements increase in proportion with the increase in property operating and maintenance expenses in our MOB segment. Pursuant to many of our lease agreements in our MOBs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent. Property operating and maintenance relates to the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, bad debt expense and unaffiliated third party property management fees.
All of our Acquisitions during 2018 were MOBs. During the six months ended June 30, 2018, MOB Acquisitions contributed $5.5 million of NOI which represented the increase in the MOB segment NOI.
During the six months ended June 30, 2018 , our Same Store property operating and maintenance expenses increased $1.3 million due to increased property tax expectations and higher building operating and maintenance costs. Property operating expense reimbursements increased $1.0 million due to the increased property operating and maintenance expenses that are reimbursable by our tenants. Reimbursement of property operating and maintenance expenses in our Same Store properties increased 1.6% from 64.0% during the six months ended June 30, 2017 , to 65.6% during the three months ended June 30, 2018 due to increased expenses which are reimbursable under leases.



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Segment Results — Triple - Net Leased Healthcare Facilities
The following table presents the revenue and property operating and maintenance expense and the period to period change within our triple net leased healthcare facilities segment for the six months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Dispositions (2)
 
Segment Total
 
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
11,849

 
$
12,484

 
$
(635
)
 
(5.1
)%
 
$
—

 
$
2,617

 
$
(2,617
)
 
(100.0
)%
 
$
11,849

 
$
15,101

 
$
(3,252
)
 
(21.5
)%
Operating expense reimbursements
 
573

 
416

 
157

 
NM

 
—

 
—

 
—

 
NM

 
573

 
416

 
157

 
NM

Total revenues
 
12,422

 
12,900

 
(478
)
 
(3.7
)%
 
—

 
2,617

 
(2,617
)
 
(100.0
)%
 
12,422

 
15,517

 
(3,095
)
 
(19.9
)%
Property operating and maintenance
 
4,443

 
6,589

 
(2,146
)
 
(32.6
)%
 
—

 
2,691

 
(2,691
)
 
NM

 
4,443

 
9,280

 
(4,837
)
 
(52.1
)%
NOI
 
$
7,979

 
$
6,311

 
$
1,668

 
26.4
 %
 
$
—

 
$
(74
)
 
$
74

 
(100.0
)%
 
$
7,979

 
$
6,237

 
$
1,742

 
27.9
 %
_______________
(1)
Our triple-net leased healthcare facilities segment included 26 Same Store properties.
(2)
Includes 18 properties that are deemed Dispositions as they were transitioned to our SHOP operating segment.
NM — Not Meaningful
Revenues for our triple-net leased healthcare facilities generally consist of fixed rental amounts (which may be subject to annual contractual escalations) received from our tenants in accordance with the applicable lease terms. Rental income is related to contractual rent received from tenants that does not vary based on the underlying operating performance of the properties. During the six months ended June 30, 2018 , rental income in our triple-net leased healthcare facilities segment decreased $3.3 million compared to the six months ended June 30, 2017 . $2.6 million of this decrease resulted from the 18 Dispositions which were transitioned to the SHOP segment due to tenants' failure or inability to meet their contractual lease obligations.
Operating expense reimbursements in our triple-net leased healthcare facilities segment generally include reimbursement for property operating expenses that we pay on behalf of tenants in this segment. However, pursuant to many of our lease agreements in this segment, tenants are generally directly responsible for all operating costs of the respective properties in addition to base rent. Property operating and maintenance expense should typically include minimal activity in our triple-net leased healthcare facilities segment except for real estate taxes, insurance, and bad debt expense. Real estate taxes are typically paid directly by the tenants; however, they may be paid by us and reimbursed by the tenants.
Property operating and maintenance expenses of $4.4 million during the six months ended June 30, 2018 primarily relates to $4.1 million of bad debt expense recorded on two properties in Illinois, two properties in Wisconsin, and one property in Florida, which is described below in more detail. Property operating and maintenance expense during the six months ended June 30, 2017 primarily related to real estate taxes that were not reimbursed and bad debt expense in our triple-net leased facilities located in Texas, Illinois and Wisconsin.
In January 2018, we entered into the Forbearance Agreement. The tenant is currently in default of the Forbearance Agreement and owes us $2.0 million of rent, property taxes, late fees, and interest receivable thereunder. During the six months ended June 30, 2018 we incurred a $0.3 million bad debt expense related to these receivables that is recorded in property operating and maintenance expense.
The NuVista Tenants at two of our properties in Wellington and Lutz, Florida have been in default under their leases since July 2017 and collectively owe us $7.1 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of June 30, 2018 . We have the entire receivable balance and related income from the NuVista Tenants fully reserved as of June 30, 2018 . During the six months ended June 30, 2018 we incurred a $3.8 million bad debt expense related to these receivables that is recorded in property operating and maintenance expense.
At the Wellington, Florida property, we have filed litigation to pursue eviction proceedings against the NuVista Tenant there and appoint a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property. The Lutz, Florida property transitioned to the SHOP operating segment as of January 1, 2018. In connection with this transition, we replaced the NuVista Tenant as a tenant with a TRS and have engaged a third party to operate the property. This new operator is currently pursuing a Medicare license and will be unable to bill Medicare for services performed until one is granted. We have, therefore, accumulated $4.4 million of Medicare receivables as of June 30, 2018 . We currently expect that the replacement operator will be able to successfully bill and collect once the operator obtains this license. The NuVista Tenants are related to Palm, the developer of our development property in Jupiter, Florida which is also currently in default to us. See “-Palm and the NuVista Tenants” for further details.

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In October 2016, we terminated the lease for six triple-net healthcare facilities located in Illinois early in which a receiver was appointed by a court to manage and conserve these properties in November 2016. According to the receivership order, the court ordered receiver was only obligated to pay rental payments in the event that they produce excess cash flow from operations. During the six months ended June 30, 2018 we incurred a $0.9 million net benefit from winding down operations of the court ordered receiver which was terminated on November 1, 2017. A new tenant was installed at the properties effective November 1, 2017.


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Segment Results — Seniors Housing Operating Properties
The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the six months ended June 30, 2018 and 2017 :
 
 
Same Store (1)
 
Acquisitions (2)
 
Segment Total
 
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Six Months Ended June 30,
 
Increase (Decrease)
(Dollars in thousands)
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resident services and fee income
 
$
92,435

 
$
92,765

 
$
(330
)
 
(0.4
)%
 
$
26,335

 
$
1,523

 
$
24,812

 
NM
 
$
118,770

 
$
94,288

 
$
24,482

 
26.0
%
Rental income
 
6

 
6

 
—

 
NM

 
1

 
—

 
1

 
NM
 
7

 
6

 
1

 
NM

Total revenues
 
92,441

 
92,771

 
(330
)
 
(0.4
)%
 
26,336

 
1,523

 
24,813

 
NM
 
118,777

 
94,294

 
24,483

 
26.0
%
Property operating and maintenance
 
64,700

 
64,097

 
603

 
0.9
 %
 
22,376

 
1,713

 
20,663

 
NM
 
87,076

 
65,810

 
21,266

 
32.3
%
NOI
 
$
27,741

 
$
28,674

 
$
(933
)
 
(3.3
)%
 
$
3,960

 
$
(190
)
 
$
4,150

 
NM
 
$
31,701

 
$
28,484

 
$
3,217

 
11.3
%
_______________
(1)
Our SHOP segment included 57 Same Store properties.
(2)
Our SHOP segment included three Acquisitions properties acquired from third parties, as well as 18 properties that are deemed Acquisitions as they were transitioned from our triple-net leased healthcare facilities operating segment.
NM — Not Meaningful
Resident services and fee income is generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third party operators and costs associated with maintaining the physical site.
During the six months ended June 30, 2018 , resident services and fee income and rental income increased by $24.5 million in our SHOP segment as compared to the six months ended June 30, 2017 . Acquisitions, primarily comprising of our six triple-net leased healthcare facilities that transitioned to our SHOP operating segment on January 1, 2018 and 12 triple-net leased healthcare facilities that transitioned to our SHOP operating segment on June 8, 2017 contributed to an increase of $24.8 million , partially offset by a decrease of $0.3 million in revenues in our Same Store properties (see Segment Results — Triple-Net Leased Healthcare Facilities for further details on the properties which were transitioned to our SHOP operating segment). The decrease in Same Store resident services and fee income during the six months ended June 30, 2018 was primarily due to lower occupancies in specific markets in Florida, Georgia and Kansas City due to additional competition. The increase in Same Store property operating and maintenance is due to increased wages and building operational expenses.
Other Results of Operations
Impairment Charges
We recorded  $0.7 million  and approximately $35,000 of impairment charges for the six months ended June 30, 2018 and 2017 , respectively.
Operating Fees to Related Parties
Operating fees to related parties increased $0.6 million to $11.5 million for the six months ended June 30, 2018 from $10.9 million for the six months ended June 30, 2017 .
Our Advisor and Property Manager are paid for asset management and property management services for managing our properties on a day-to-day basis. Effective February 17, 2017, we pay a base management fee equal to $1.6 million per month, while the variable portion of the base management fee is equal, per month, to one twelfth per month of 1.25% of the cumulative net proceeds of any equity raised subsequent to February 17, 2017. During the period preceding the February 17, 2017 amendment, our asset management fee was based on a percentage of the lesser of (a) cost of assets and (b) fair value of assets. Asset management fees increased $0.3 million to $9.8 million for the six months ended June 30, 2018 from $9.4 million for the six months ended June 30, 2017 .
Property management fees increased $0.2 million to $1.7 million during the six months ended June 30, 2018 from $1.5 million for the six months ended June 30, 2017 . Property management fees increase or decrease in direct correlation with gross revenues of the properties managed.
See Note 9 - Related Party Transactions and Arrangements to our consolidated financial statements which provides detail on our fees and expense reimbursements.

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Acquisition and Transaction Related Expenses
Acquisition and transaction related expenses of $0.3 million for the six months ended June 30, 2018 primarily related to costs associated with acquisitions. Acquisition and transaction related expenses of approximately $4.6 million for the six months ended June 30, 2017  primarily related to costs associated with the negotiation and execution of the Purchase Agreement. Acquisition and transaction related expenses generally increase in direct correlation with the number and contract purchase price of properties acquired or sold during the period and the level of activity surrounding any contemplated transaction or strategic process.
General and Administrative Expenses
General and administrative expenses increased $0.7 million to $8.3 million for the six months ended June 30, 2018 from $7.6 million for the six months ended June 30, 2017 , including $4.4 million and $3.3 million incurred from related parties during the six months ended June 30, 2018 and 2017 , respectively. Expenses incurred primarily relate to professional fees for audit, transfer agent and legal services as well as certain expenses reimbursed to related parties and distributions on Class B Units.
Depreciation and Amortization Expenses
Depreciation and amortization expense increased $1.8 million to $41.6 million for the six months ended June 30, 2018 from $39.8 million for the six months ended June 30, 2017 . Our acquisitions contributed $4.8 million to the increase. Same Store depreciation and amortization decreased $3.0 million primarily due to several intangible assets becoming fully amortized.
Interest Expense
Interest expense increased $11.3 million to $23.4 million for the six months ended June 30, 2018 from $12.1 million for the six months ended June 30, 2017 . The increase in interest expense is related to higher overall outstanding debt including new borrowings under the Fannie Mae Master Credit Facilities and a $250.0 million secured loan with KeyBank (the "MOB Loan"). This increase in outstanding debt under the Fannie Mae Master Credit Facilities was offset by paydowns of the Bridge Loan entered into in December 2017.
Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives.
Interest and Other Income
Interest and other income increased to approximately $5,000 for the six months ended June 30, 2018 from approximately $3,000 for the six months ended June 30, 2017 . Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.
Gain on Sale of Real Estate Investment
Gain on sale of investment property for the six months ended June 30, 2017 pertained to the sale of a real estate investment, which resulted in a gain of $0.4 million during the period.
Gain (Loss) on Non-Designated Derivatives
Loss on non-designated derivative instruments for the six months ended June 30, 2018 and 2017 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with the Fannie Mae Master Credit Facilities, which have floating interest rates.
Income Tax (Expense) Benefit
Income tax expense of $0.8 million and benefit of $0.4 million for the six months ended June 30, 2018 and 2017 , respectively, related to deferred tax assets generated by current period net operating losses associated with our TRS. These deferred tax assets are partially offset by other income tax expenses incurred during the same period. Income taxes generally relate to our SHOPs, which are leased by our TRS.
Net Loss Attributable to Non-Controlling Interests
Net loss attributable to non-controlling interests was approximately $47,000 and approximately $33,000 for the six months ended June 30, 2018 and 2017 , which represents the portion of our net income that is related to OP Unit and non-controlling interest holders.

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Table of Contents

Cash Flows from Operating Activities
During the six months ended June 30, 2018 , net cash provided by operating activities was $27.6 million . The level of cash flows provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses. Cash inflows include non-cash items of $38.6 million (net loss of $13.0 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, bad debt expense, share based compensation, gain on non-designated derivatives and impairment charges), an increase in accounts payable and accrued expenses of $1.5 million related to higher accrued real estate taxes, property operating expenses and professional and legal fees, and an increase of $1.3 million in deferred rent. These cash inflows were partially offset by a net increase in prepaid and other assets of $9.5 million and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $4.4 million .
During the six months ended June 30, 2017 , net cash provided by operating activities was $36.6 million . Cash inflows related to a net loss adjusted for non-cash items of $37.8 million (net loss of $10.9 million adjusted for non-cash items including depreciation and amortization of tangible and identifiable intangible real estate assets, deferred financing costs and mortgage premiums and discounts, share based compensation, bad debt expense, gain on real estate investment, loss on non-designated derivatives and impairment charges of $48.7 million), an increase in accounts payable and accrued expenses of $4.5 million primarily related to tenant security deposits received from our triple-net leased healthcare facilities and MOBs, higher accrued real estate taxes, property operating expenses and professional and legal fees, as well as an increase of $1.9 million in deferred rent. These cash inflows were partially offset by a net increase in prepaid and other assets of $4.5 million due to rent, other receivables and prepaid insurance and a net increase in unbilled receivables recorded in accordance with straight-line basis accounting of $3.1 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the six months ended June 30, 2018 was $39.2 million . The cash used in investing activities included $35.0 million for the acquisition of five MOBs during the period and to fund the ongoing development property in Jupiter, Florida, as well as $4.2 million in capital expenditures.
Net cash used in investing activities during the six months ended June 30, 2017 was $20.8 million. The cash used in investing activities included $18.4 million for the acquisition of a MOB during the period and to fund the ongoing development of a skilled nursing facility in Jupiter, Florida. Also, $3.3 million of capital expenditures contributed to the cash used in investing activities, along with deposits for real estate acquisitions of $1.0 million. These outflows were partially offset by the proceeds received from our property sale during the six months ended June 30, 2017 of $0.8 million, cash received in the asset acquisition and transfer of operations of 12 SHOPs of $0.9 million and deposits received for unconsummated dispositions of a vacant land parcel and eight triple-net leased healthcare facilities of $0.3 million.
Cash Flows from Financing Activities
Net cash used in financing activities of $5.3 million during the six months ended June 30, 2018 related to mortgage principal repayments of $62.5 million , distributions to stockholders of $30.9 million , common stock repurchases of $11.1 million , payments of our senior secured revolving credit facility (the "Revolving Credit Facility") of $80.0 million , deferred financing costs of $3.2 million , and distributions to non-controlling interest holders of $0.3 million . These cash outflows were partially offset by proceeds from our Fannie Mae Master Credit Facilities of $64.2 million and the $118.7 million multi-property mortgage loan incurred in April 2018 (the "Multi-Property CMBS Loan").
Net cash provided by financing activities of $114.0 million during the six months ended June 30, 2017 related to proceeds from the MOB Loan of $250.0 million and proceeds from our Fannie Mae Master Credit Facilities of $128.1 million, partially offset by repayments of the Revolving Credit Facility of $187.0 million, common stock repurchases of $27.9 million, distributions to stockholders of $39.1 million, payments of deferred financing costs of $8.5 million, mortgage principal repayments of $1.2 million, distributions to noncontrolling interest holders of $0.3 million and payments for non-designated derivative instruments of $0.2 million.
Liquidity and Capital Resources
As of June 30, 2018 , we had $71.0 million of cash and cash equivalents. Following an amendment to the Revolving Credit Facility in October 2017, we are subject to a covenant that the aggregate amount of all our unrestricted cash and cash equivalents must be equal to at least $30.0 million at all times. Our principal demands for cash will be for funding our ongoing development project, acquisitions and capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), share repurchases and distributions to our stockholders.

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Table of Contents

We expect to fund our future short-term operating liquidity requirements, including distributions, through a combination of current cash on hand, proceeds from the DRIP, net cash provided by our property operations and proceeds from the Revolving Credit Facility, the Fannie Credit Facilities and other secured financings. Other potential future sources of capital include proceeds from secured and unsecured financings from banks or other lenders, proceeds from public and private offerings, proceeds from the sale of properties and undistributed funds from operations, if any.
Tender Offer
On March 13, 2018, the Company announced a tender offer (the "Tender Offer") to purchase up to  2.0 million  shares of our common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. We made the Tender Offer in response to an unsolicited offer to stockholders commenced on February 27, 2018. On April 4, 2018 and April 16, 2018 the Tender offer was amended to reduce the number of shares we were offering to purchase to 230,000 shares and extend the expiration date to May 1, 2018. The Tender Offer expired in accordance with its terms on May 1, 2018. In accordance with the terms of the Tender Offer, we accepted for purchase 229,999 shares for a total cost of approximately $3.0 million, which was funded with available cash.
Financings
As of June 30, 2018 , our total debt leverage ratio (total debt divided by total assets, net) was approximately 41.9% and we had total borrowings of $990.6 million , at a weighted average interest rate of 4.40% . As of December 31, 2017 we had total borrowings of $950.2 million, at a weighted average interest rate of 3.93%. We expect to increase our leverage over time and utilize proceeds from our Revolving Credit Facility and our Fannie Mae Master Credit Facilities as well as other new and current secured financings to complete future property acquisitions. Such actions may require us to pledge some or all of our unencumbered properties as security for that debt. The gross carrying value of unencumbered assets as of June 30, 2018 was $410.9 million . We may borrow if we need funds to satisfy the REIT tax qualifications requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP, determined without regard to the deduction for dividends paid and excluding net capital gain). We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.
Mortgage Notes Payable
As of June 30, 2018 , we had $471.6 million in mortgage notes payable outstanding, including the Bridge Loan with Capital One as administrative agent and lender. See Note 4 - Mortgages Payable for additional information. Future scheduled principal payments on our mortgage notes payable for the remainder of 2018 and the year ended December 31, 2019 are $21.0 million and $18.1 million , respectively.
On December 28, 2017, we entered into the Bridge Loan with Capital One as administrative agent and lender. See Note 4 — Mortgage Notes Payable for additional information.
On April 10, 2018, we entered into the Multi-Property CMBS Loan with KeyBank. The Multi-Property CMBS Loan has a fixed interest rate of 4.541% and a maturity date of May 1, 2028. The Multi-Property CMBS Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The Multi-Property CMBS Loan is secured by, among other things, mortgages on 20 medical office buildings in 12 states. KeyBank is permitted to securitize the Multi-Property CMBS Loan or any portion thereof.
At the closing of the Multi-Property CMBS Loan, the net proceeds after accrued interest and closing costs were used to (i) repay approximately $80.0 million of indebtedness under the Revolving Credit Facility, under which 14 of the properties were included as part of the borrowing base prior to the Multi-Property CMBS Loan, and (ii) fund approximately $3.8 million in deposits required to be made at closing into reserve accounts required under the loan agreement. The approximately $33 million in remaining net proceeds available to us may be used for general corporate purposes.
Revolving Credit Facility
As of June 30, 2018 , $159.7 million was outstanding under the Revolving Credit Facility and the unused borrowing capacity under the Revolving Credit Facility was $22.8 million . Availability of borrowings is based on a pool of eligible otherwise unencumbered real estate assets comprising the borrowing base thereunder. The equity interests and related rights in the Company’s wholly owned subsidiaries that directly own or lease the eligible unencumbered real estate assets comprising the borrowing base of the Revolving Credit Facility are pledged for the benefit of the lenders thereunder. During May 2018. ten properties were added to the borrowing base of the Revolving Credit Facility. The Revolving Credit Facility also contains a subfacility for letters of credit of up to $25.0 million . The Revolving Credit Facility matures on March 21, 2019. We plan on refinancing the Revolving Credit Facility prior to its maturity.
The Revolving Credit Facility requires us to meet certain financial covenants on a quarterly basis. The Advisor has elected to, without any interest accrual, defer cash payment of $1.7 million in certain fees and reimbursements due to the Advisor as of December 31, 2017. The Advisor’s deferral enabled us to comply with such covenants as of December 31, 2017. These deferred fees and reimbursements are due to the Advisor upon demand within two business days' written notice and no later than June 30,

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2018. These 2017 Advisor fee deferral amounts were fully paid in April 2018. As of June 30, 2018, we were in compliance with the financial covenants under the Revolving Credit Facility. There can be no assurance that the Advisor will agree to defer future fees or reimbursements, including deferrals required to meet financial covenants per the Revolving Credit Facility.
Fannie Mae Master Credit Facilities
As of June 30, 2018, $359.3 million was outstanding under the Fannie Mae Master Credit Facilities. We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool or by borrowing-up against the increased value of the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests. Future advances based on the increased value of the collateral pool may only occur during the first five years of the term and not more than one annually for each of the Fannie Mae Master Credit Facilities. The Fannie Mae Master Credit Facilities mature on November 1, 2026.
On March 2, 2018, we incurred approximately $64.2 million in aggregate additional indebtedness under the Fannie Mae Master Credit Facilities. All of the $61.7 million of the net proceeds, after closing costs, of this advance were used to prepay a portion of mortgage notes payable.
Acquisitions
On March 5, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a multi-tenant, triple-net leased MOB for a contract purchase price of $6.7 million. The property is located in Houston, TX and comprises approximately 24,000 square feet. We accounted for the purchase as an asset acquisition.
On March 29, 2018, we, thro ugh a wholly-owned subsidiary of our OP, completed an acquisition of four single-tenant, triple-net leased MOBs for a contracted purchase price of $10.1 million. Three of the properties are located in Tampa, FL and one in Wesley Chapel, FL and comprise approximately 33,000 square feet. We accounted for the purchase as an asset acquisition.
On April 17, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $6.0 million. The property is located in Milwaukee, WI and comprises approximately 24,000 square feet. We accounted for the purchase as an asset acquisition.
On May 11, 2018, we, through a wholly-owned subsidiary of our OP, completed an acquisition of a single-tenant, triple-net leased MOB for a contracted purchase price of $7.5 million. The property is located in Tallahassee, FL and comprises approximately 22,000 square feet. We accounted for the purchase as an asset acquisition.
All 2018 acquisitions were funded with cash on hand.
Dispositions
On July 26, 2018, the Company entered into a purchase and sale agreement for the sale of six MOB properties located in New York with an aggregate contract sale price of approximately $68.0 million. Three of these properties are pledged to the borrowing base of the Revolving Line of Credit. One of these properties is encumbered under the Multi-Property CMBS Loan.
On July 30, 2018, the Company entered into a purchase and sale agreement for the sale of one SHOP property located in Idaho with a contract sale price of approximately $7.5 million. This property is pledged to the borrowing base of the Revolving Line of Credit.
These dispositions are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.
Assets Held for Sale
In January 2017, we entered into a purchase and sale agreement to sell eight of our skilled nursing facility properties in Missouri (the "Missouri SNF Properties") to affiliates of the tenant-operators of the facilities for $42.0 million. Pursuant to their rights under the initial purchase and sale agreement, the contract purchasers had seven options to adjourn the closing date for the sale through December 31, 2018, with each adjournment conditioned on the purchasers' deposit of additional earnest money.
In December 2017, we entered into an amendment to the purchase and sale agreement in which we agreed to reduce the contract purchase price from $42.0 million to $40.0 million and finance $7.5 million of the reduced contract purchase price. In addition, the closing date was amended to occur on or before the sixtieth day following the date on which all of the tenants have received a permanent license to operate the Missouri SNF Properties, but in no event later than September 30, 2018. During 2017, the tenant operators have been engaged in litigation with the state regulator over a potential revocation of their licenses to operate the Missouri SNF Properties and have not yet received permanent licenses to operate. The tenants’ failure to obtain permanent licenses could adversely affect the purchaser’s ability to obtain financing to consummate the purchase of the Missouri SNF Properties. If the purchasers fail to close by the September 30, 2018 outside closing date, our sole remedy under the purchase and sale agreement will be to terminate the purchase and sale agreement and receive the earnest money in the amount of $1.4 million.

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Further, if the tenants fail to obtain permanent licenses, they may not be able to fulfill their rental obligations under their leases with us.
Palm and the NuVista Tenants
In August 2015, we entered into an asset purchase agreement and development agreement to acquire land and construction in progress, and subsequently fund the remaining construction, of a development property in Jupiter, Florida for $82.0 million . As of June 30, 2018 , we had funded $86.0 million , including $10.0 million for the land and $76.0 million for construction in progress. As a result, we believe that we have satisfied our funding commitments for the construction. As of June 30, 2018 , we had funded $4.0 million in excess of its $72.0 million funding commitment for the construction. We have and may continue, at our election, to provide additional funding to ensure completion of the construction. To the extent we fund additional monies for the completion of the development, Palm, the developer of the facility, is responsible for reimbursing us for any amounts funded. As described in more detail below, entities related to Palm are, however, in default to us under leases at other properties in our portfolio and there can be no assurance that Palm will reimburse us for construction overruns so funded.
Palm is responsible for completing the development and obtaining a final certificate of occupancy for the facility (the "CO"). However, Palm is in default of the development agreement and has provided notice that it will cease providing services under the development agreement, which may result in additional delays in obtaining the CO. Until the CO is obtained we will not receive income from the property. There is no assurance as to when and if Palm will comply with its obligations. We are currently working to obtain the CO.
The NuVista Tenants are related to Palm and have been in default under their leases at two of our properties, Wellington and Lutz, Florida since July 2017 and collectively owe us $7.1 million of rent, property taxes, late fees, and interest receivable with respect to these properties as of June 30, 2018 . We have the entire receivable balance and related income from the NuVista Tenants fully reserved as of June 30, 2018. We have incurred $3.8 million and $1.0 million of bad debt expense related to the NuVista Tenants during the six months ended June 30, 2018 and 2017 , respectively.
At the Wellington, Florida property, we have filed litigation to pursue eviction proceedings against the NuVista Tenant there and appoint a court ordered receiver in order to replace the NuVista Tenant with a new tenant and operator at the property. There can be no assurance the outcome of these proceedings will be favorable to us. The Lutz, Florida property transitioned to the SHOP operating segment as of January 1, 2018. In connection with this transition, we replaced the NuVista Tenant as a tenant with a TRS and have engaged a third party to operate the property. This new operator is currently pursuing a Medicare license and will be unable to bill Medicare for services performed until one is granted. We have, therefore, accumulated $4.4 million of Medicare receivables as of June 30, 2018 . We currently expect that the replacement operator will be able to successfully bill and collect once the operator obtains this license. There can be no assurance, however, that the new operator will obtain this license and that we will be able to generate income from this property.
Share Repurchase Program
Our Board has adopted the SRP, which enables our stockholders to sell their shares to us under limited circumstances. At the time a stockholder requests a repurchase, we may, subject to certain conditions, repurchase the shares presented for repurchase for cash. There are limits on the number of shares we may repurchase under this program during any calendar year. We are only authorized to repurchase shares using the proceeds secured from our DRIP in any given period, although the Board has the power, in its sole discretion, to determine the number of shares repurchased during any period as well as the amount of funds to be used for that purpose.
On June 14, 2017, we announced that the Board approved and adopted an amended and restated SRP that superseded and replaced the existing SRP, effective as of July 14, 2017. Under the amended and restated SRP, subject to certain conditions, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of our common stock or received their shares from us (directly or indirectly) through one or more non-cash transactions would be considered for repurchase. Other terms and provisions of the amended and restated SRP remained consistent with the existing SRP.
We suspended the SRP during the pendency of the Tender Offer which commenced on March 13, 2018. On June 29, 2018, we announced that the Board unanimously determined to reactivate the SRP, effective June 30, 2018. In connection with reactivating the SRP, the Board approved all repurchase requests received during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. Accordingly,  155,904  shares were repurchased on July 31, 2018 for  $3.2 million  at an average price per share of  $20.25 , representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018. No repurchase requests received during the SRP suspension were accepted.

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The following table reflects the number of shares repurchased cumulatively through June 30, 2018 :
 
 
Number of Shares Repurchased
 
Average Price per Share
Cumulative repurchases as of December 31, 2017 (1)
 
2,529,798

 
$
22.43

Six months ended June 30, 2018  (2)
 
373,967

 
$
21.45

Cumulative repurchases as of June 30, 2018
 
2,903,765

 
$
22.30

_______________
(1) Includes 1,554,768 shares repurchased during the year ended December 31, 2017 for approximately $33.6 million at a weighted average price per share of $21.61 . In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Board approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to September 30, 2017, which was equal to 267,723 shares repurchased for approximately $5.7 million at an average price per share of $21.47 . No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
(2) Includes 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45 . Does not include 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018.
Non-GAAP Financial Measures
This section includes non-GAAP financial measures including Funds from Operations ("FFO"), Modified Funds from Operations ("MFFO") and Net Operating Income ("NOI"). A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net income, are provided below:

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Funds from Operations and Modified Funds from Operations
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings, improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may be less informative.
Because of these factors, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT's operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards set forth in the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, but excluding gains or losses from sales of property and real estate related impairments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures, if any, are calculated to reflect FFO on the same basis.
We believe that the use of FFO provides a more complete understanding of our performance to investors and to management, and reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT's definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations, have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses, as items that are expensed under GAAP across all industries. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings.
Because of these factors, the Investment Program Association ("IPA"), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REIT, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, both before and after we have deployed all of our offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. MFFO is not equivalent to our net income or loss as determined under GAAP.
We define MFFO, a non-GAAP measure, consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the "Practice Guideline") issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition fees and expenses, amortization of above and below market and other intangible lease assets and liabilities, amounts relating to straight-line rent adjustments (in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the lease and rental payments), contingent purchase price consideration, accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and adjustments for unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. We also exclude other non-operating items in calculating MFFO, such as transaction-related fees and expenses (which include costs associated with a strategic review we conducted during the year ended December 31, 2016) and capitalized interest.
We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

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Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of our performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.
Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.
The tables below reflect the items deducted from or added to net loss attributable to stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests.
 
 
Three Months Ended
 
Year To Date
(In thousands)
 
March 31,
2018
 
June 30,
2018
 
June 30,
2018
Net loss attributable to stockholders (in accordance with GAAP)
 
$
(5,991
)
 
$
(6,950
)
 
$
(12,941
)
Depreciation and amortization (1)
 
20,458

 
20,591

 
41,049

Impairment charges
 
733

 
—

 
733

Gain on sale of real estate investment
 
—

 
—

 
—

Adjustments for non-controlling interests (2)
 
(103
)
 
(108
)
 
(211
)
FFO attributable to stockholders
 
15,097

 
13,533

 
28,630

Acquisition and transaction related
 
173

 
120

 
293

Amortization of market lease and other intangibles, net
 
86

 
77

 
163

Straight-line rent adjustments, net of related bad debt expense of $1,468, $147 and $1,615, respectively
 
(628
)
 
(2,027
)
 
(2,655
)
Amortization of mortgage premiums and discounts, net
 
(69
)
 
(64
)
 
(133
)
(Gain) Loss on non-designated derivatives
 
(178
)
 
150

 
(28
)
Capitalized construction interest costs
 
(670
)
 
(785
)
 
(1,455
)
Adjustments for non-controlling interests (2)
 
6

 
13

 
19

MFFO attributable to stockholders
 
$
13,817

 
$
11,017

 
$
24,834

_______________
(1)  
Net of non-real estate depreciation and amortization.
(2)  
Represents the portion of the adjustments allocable to non-controlling interest.

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Three Months Ended
 
Year To Date
(In thousands)
 
March 31, 2017
 
June 30, 2017
 
June 30, 2017
Net loss attributable to stockholders (in accordance with GAAP)
 
$
(6,139
)
 
$
(4,716
)
 
$
(10,855
)
Depreciation and amortization (1)
 
20,240

 
19,068

 
39,308

Impairment charges
 
35

 
—

 
35

Gain on sale of real estate investment
 
—

 
(438
)
 
(438
)
Adjustments for non-controlling interests (2)
 
(99
)
 
(77
)
 
(176
)
FFO attributable to stockholders
 
14,037

 
13,837

 
27,874

Acquisition and transaction-related
 
2,845

 
1,743

 
4,588

Amortization of market lease and other lease intangibles, net
 
119

 
76

 
195

Straight-line rent adjustments, net of related bad debt expense of $334, $1,286 and $1,620, respectively
 
(1,052
)
 
(367
)
 
(1,419
)
Amortization of mortgage premiums and discounts, net
 
(440
)
 
(439
)
 
(879
)
Loss on non-designated derivative instruments
 
64

 
43

 
107

Capitalized construction interest costs
 
(418
)
 
(484
)
 
(902
)
Adjustments for non-controlling interests (2)
 
(5
)
 
(4
)
 
(9
)
MFFO attributable to stockholders
 
$
15,150

 
$
14,405

 
$
29,555

_______________
(1)  
Net of non-real estate depreciation and amortization.
(2)  
Represents the portion of the adjustments allocable to non-controlling interests.
Net Operating Income
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss).
We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss).
NOI excludes certain components from net income (loss) in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.
The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Acquisitions NOI for the three months ended March 31, 2018 :
(In thousands)
 
Same Store
 
Acquisitions
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
13,968

 
$
665

 
$
—

 
$
(20,624
)
 
$
(5,991
)
Impairment charges
 
733

 
—

 
—

 
—

 
733

Operating fees to related parties
 
—

 
—

 
—

 
5,727

 
5,727

Acquisition and transaction related
 
1

 
61

 
—

 
111

 
173

General and administrative
 
—

 
—

 
—

 
3,652

 
3,652

Depreciation and amortization
 
17,241

 
3,395

 
—

 
133

 
20,769

Interest expense
 
205

 
61

 
—

 
10,891

 
11,157

Interest and other income
 
(3
)
 
—

 
—

 
—

 
(3
)
Gain on sale of real estate investments
 
—

 
—

 
—

 
—

 
—

Loss on non-designated derivative instruments
 
—

 
—

 
—

 
(178
)
 
(178
)
Income tax benefit (expense)
 
—

 
—

 
 
 
309

 
309

Net income (loss) attributable to non-controlling interests
 
1

 
4

 
—

 
(21
)
 
(16
)
NOI
 
$
32,146

 
$
4,186

 
$
—

 
$
—

 
$
36,332


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The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the three months ended March 31, 2017 :
(In thousands)
 
Same Store
 
Acquisitions
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
7,835

 
$
—

 
$
2

 
$
(13,976
)
 
$
(6,139
)
Impairment charges
 
—

 
—

 
—

 
35

 
35

Operating fees to related parties
 
—

 
—

 
—

 
5,301

 
5,301

Acquisition and transaction related
 
2,801

 
—

 
—

 
44

 
2,845

General and administrative
 
1

 
—

 
—

 
4,156

 
4,157

Depreciation and amortization
 
20,350

 
—

 
—

 
133

 
20,483

Interest expense
 
1,255

 
—

 
—

 
4,227

 
5,482

Interest and other income
 
(1
)
 
—

 
—

 
—

 
(1
)
Loss on non-designated derivative instruments
 
—

 
—

 
—

 
64

 
64

Income tax benefit (expense)
 
(242
)
 
—

 
 
 
47

 
(195
)
Net income (loss) attributable to non-controlling interests
 
3

 
—

 
—

 
(31
)
 
(28
)
NOI
 
$
32,002

 
$
—

 
$
2

 
$
—

 
$
32,004


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The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the three months ended June 30, 2018 :
(In thousands)
 
Same Store
 
Acquisitions
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
15,265

 
$
923

 
$
—

 
$
(23,138
)
 
$
(6,950
)
Impairment charges
 
—

 
—

 
—

 
—

 
—

Operating fees to related parties
 
—

 
—

 
—

 
5,763

 
5,763

Acquisition and transaction related
 
—

 
51

 
—

 
69

 
120

General and administrative
 
6

 
—

 
—

 
4,606

 
4,612

Depreciation and amortization
 
18,167

 
2,614

 
—

 
83

 
20,864

Interest expense
 
108

 
61

 
—

 
12,039

 
12,208

Interest and other income
 
(1
)
 
—

 
—

 
(1
)
 
(2
)
Gain on sale of real estate investments
 
—

 
—

 
—

 
—

 
—

Loss on non-designated derivative instruments
 
—

 
—

 
—

 
150

 
150

Income tax benefit
 
—

 
—

 
 
 
466

 
466

Net income (loss) attributable to non-controlling interests
 
2

 
4

 
—

 
(37
)
 
(31
)
NOI
 
$
33,547

 
$
3,653

 
$
—

 
$
—

 
$
37,200

The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the three months ended June 30, 2017 :
(In thousands)
 
Same Store
 
Acquisition
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
11,874

 
$
(185
)
 
$
6

 
$
(16,411
)
 
$
(4,716
)
Impairment charges
 
—

 
—

 
—

 
—

 
—

Operating fees to related parties
 
—

 
—

 
—

 
5,637

 
5,637

Acquisition and transaction related
 
—

 
—

 
—

 
1,743

 
1,743

General and administrative
 
—

 
—

 
—

 
3,419

 
3,419

Depreciation and amortization
 
18,322

 
191

 
694

 
132

 
19,339

Gain on sale of real estate investment
 
—

 
—

 
(438
)
 
—

 
(438
)
Interest expense
 
1,172

 
—

 
—

 
5,416

 
6,588

Interest and other income
 
(2
)
 
—

 
—

 
—

 
(2
)
Loss on non-designated derivative instruments
 
—

 
—

 
—

 
43

 
43

Income tax benefit (expense)
 
(242
)
 
 
 
 
 
40

 
(202
)
Net income (loss) attributable to non-controlling interests
 
(4
)
 
—

 
18

 
(19
)
 
(5
)
NOI
 
$
31,120

 
$
6

 
$
280

 
$
—

 
$
31,406




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The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the six months ended June 30, 2018 :
(In thousands)
 
Same Store
 
Acquisitions
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
29,309

 
$
1,512

 
$
—

 
$
(43,748
)
 
$
(12,927
)
Impairment charges
 
733

 
—

 
—

 
—

 
733

Operating fees to related parties
 
—

 
—

 
—

 
11,490

 
11,490

Acquisition and transaction related
 
1

 
112

 
—

 
180

 
293

General and administrative
 
6

 
—

 
—

 
8,244

 
8,250

Depreciation and amortization
 
36,441

 
4,976

 
—

 
216

 
41,633

Interest expense
 
313

 
123

 
—

 
22,929

 
23,365

Interest and other income
 
(4
)
 
—

 
—

 
(1
)
 
(5
)
Gain on sale of real estate investments
 
—

 
—

 
—

 
—

 
—

Loss on non-designated derivative instruments
 
—

 
—

 
—

 
(28
)
 
(28
)
Income tax benefit
 
—

 
—

 
 
 
775

 
775

Net income (loss) attributable to non-controlling interests
 
2

 
8

 
—

 
(57
)
 
(47
)
NOI
 
$
66,801

 
$
6,731

 
$
—

 
$
—

 
$
73,532

The following table reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of Same Store and Dispositions NOI for the six months ended June 30, 2017 :
(In thousands)
 
Same Store
 
Acquisition
 
Dispositions
 
Non-Property Specific
 
Total
Net income (loss) attributable to stockholders (in accordance with GAAP)
 
$
21,574

 
$
(185
)
 
$
(1,891
)
 
$
(30,353
)
 
$
(10,855
)
Impairment charges
 
35

 
—

 
—

 
—

 
35

Operating fees to related parties
 
—

 
—

 
—

 
10,938

 
10,938

Acquisition and transaction related
 
2,801

 
—

 
—

 
1,787

 
4,588

General and administrative
 
—

 
—

 
—

 
7,576

 
7,576

Depreciation and amortization
 
37,126

 
191

 
2,240

 
265

 
39,822

Interest expense
 
2,427

 
—

 
—

 
9,643

 
12,070

Interest and other income
 
(3
)
 
—

 
—

 
—

 
(3
)
Gain on sale of real estate investment
 
—

 
—

 
(438
)
 
—

 
(438
)
Loss on non-designated derivative instruments
 
—

 
—

 
—

 
107

 
107

Income tax benefit (expense)
 
(484
)
 
 
 
 
 
87

 
(397
)
Net income (loss) attributable to non-controlling interests
 
(1
)
 
—

 
18

 
(50
)
 
(33
)
NOI
 
$
63,475

 
$
6

 
$
(71
)
 
$
—

 
$
63,410

Refer to Note 15 — Segment Reporting for a reconciliation of NOI to net loss attributable to stockholders by reportable segment.

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Distributions
In May 2013, we began paying distributions on a monthly basis at a rate equivalent to $1.70 per annum, per share of common stock. In March 2017, the Board authorized a decrease in the rate at which we pay monthly distributions to stockholders, effective as of April 1, 2017, to a rate equivalent to $1.45 per annum, per share of common stock. On February 20, 2018, the Board authorized a further decrease in the rate at which we pay monthly distributions to stockholders, effective as of March 1, 2018, to a rate equivalent to $0.85 per annum per share of common stock. Distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.
The amount of distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including funds available for distribution, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"). Distribution payments are dependent on the availability of funds. The Board may further reduce the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured.
During the six months ended June 30, 2018 , distributions paid to common stockholders and OP Unit holders totaled $52.3 million , including $21.1 million which was reinvested into additional shares of common stock through our DRIP. For the six months ended June 30, 2018 , cash flows provided by operations were $27.6 million .
The following table shows the sources for the payment of distributions to common stockholders, including distributions on unvested restricted shares and OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statement of operations and comprehensive loss, for the periods indicated:
 
 
Three Months Ended
Six Months Ended
 
 
March 31, 2018
 
June 30, 2018
 
June 30, 2018
(In thousands)
 
 
 
Percentage of Distributions
 
 
 
Percentage of Distributions
 
 
 
Percentage of Distributions
Distributions:
 
 
 
 
 
 
 
 
 
 
 
 
Distributions to stockholders not reinvested in common stock issued under the DRIP
 
$
19,126

 
 
 
$
11,816

 
 
 
$
30,942

 
 
Distributions reinvested in common stock issued under the DRIP
 
13,355

 
 
 
7,739

 
 
 
21,094

 
 
Distributions on OP Units
 
145

 
 
 
87

 
 
 
232

 
 
Total distributions  (1)
 
$
32,626

 
 
 
$
19,642

 
 
 
$
52,268

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Source of distribution coverage:
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows provided by operations
 
$
16,918

 
51.9
%
 
$
10,671

 
54.3
%
 
$
27,589

 
52.8
%
Proceeds received from common stock issued under the DRIP (2)
 
13,355

 
40.9
%
 
7,739

 
39.4
%
 
21,094

 
40.4
%
Available cash on hand (3)
 
2,353

 
7.2
%
 
1,232

 
6.3
%
 
3,585

 
6.8
%
Total source of distribution coverage
 
$
32,626

 
100.0
%
 
$
19,642

 
100.0
%
 
$
52,268

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows provided by operations (in accordance with GAAP)
 
$
16,918

 
 
 
$
10,671

 
 
 
$
27,589

 
 
Net loss attributable to stockholders (in accordance with GAAP)
 
$
(5,991
)
 
 
 
$
(6,950
)
 
 
 
$
(12,941
)
 
 
_______________
(1)  
Excludes distributions related to Class B Units and distributions to non-controlling interest holders other than those paid on our OP Units.
(2)  
Net of share repurchases during the period.
(3)  
Includes proceeds received from credit facilities and mortgage notes payable.
For the six months ended June 30, 2018 , cash flows provided by operations were $27.6 million . As shown in the table above, we funded distributions with cash flows provided by operations as well as proceeds received from common stock issued under our DRIP and financings. To the extent we pay distributions in excess of cash flows provided by operations, our stockholders' investment may be adversely impacted. Distributions paid from sources other than our cash flows from operations will result in us having fewer funds available for other needs such as property acquisitions and other real estate-related investments.

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We have historically not generated sufficient cash flow from operations to fund distributions. The amount of cash available for distributions is affected by many factors, such as rental income from acquired properties and our operating expense levels, as well as many other variables. Our interest expense in future periods will vary based on our level of future borrowings, the cost of borrowings and the opportunity to acquire real estate assets which meet our investment objectives. To the extent interest expense increases, we will have less cash available for distribution. Actual cash available for distributions may vary substantially from estimates. We cannot give any assurance that future acquisitions of real properties, if any, will increase our cash available for distributions to stockholders. Our actual results may differ significantly from the assumptions used by the Board in establishing a distribution rate to stockholders.
If we do not generate sufficient cash flows from our operations to fund distributions, we may have to further reduce or suspend distributions. We have funded a portion of our distributions from, among other things, DRIP proceeds, borrowings and proceeds from the sale of real estate investments. A decrease in the level of stockholder participation in our DRIP could have an adverse impact on our ability to continue to use DRIP proceeds. Borrowings required to fund distributions may not be available at favorable rates, or at all, and could restrict the amount we can borrow for investments and other purposes. Likewise, the proceeds from any property sale may not be available to fund distributions. Distributions paid from sources other than our cash flows from operations also reduce the funds available for other needs such as property acquisitions, capital expenditures and other real estate-related investments.
We may not have sufficient cash from operations to make a distribution required to maintain our REIT status, which may materially adversely affect an investment in our common stock. Moreover, the Board may change our distribution policy, in its sole discretion, at any time.
Further, paying distributions from sources other than operating cash flow is not sustainable particularly where limited by the terms of instruments governing borrowings. For example, our Revolving Credit Facility imposes limitations on our ability to pay distributions to stockholders and repurchase shares of common stock. Distributions to stockholders are limited, with certain exceptions, to a percentage of Modified FFO (as defined in the Revolving Credit Facility (which is different from MFFO as discussed in this Quarterly Report on Form 10-Q) during the applicable period as follows: (i) for the six months ending March 31, 2018, 130% of Modified FFO; (ii) for the nine months ending June 30, 2018, 120% of Modified FFO; (iii) for the 12 months ending September 30, 2018, 115% of Modified FFO; and (iv) for the 12 months ending December 31, 2018 and for each period of four fiscal quarters ending after that period, 110% of Modified FFO. This covenant was amended twice during 2017 to permit us to pay a certain level of distributions, but there is no assurance that our lenders will agree to future amendments if needed, or if Modified FFO is not sufficient.

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Loan Obligations
The payment terms of our mortgage notes payable generally require principal and interest amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Revolving Credit Facility require interest only amounts payable monthly with all unpaid principal and interest due at maturity. The payment terms of our Fannie Mae Master Credit Facilities require interest only payments through November 2021 and principal and interest payments thereafter. Our loan agreements require us to comply with specific reporting covenants. As of June 30, 2018 , we were in compliance with the financial and reporting covenants under our loan agreements.
Contractual Obligations
On April 10, 2018, we entered into the Multi-Property CMBS Loan. See Liquidity and Capital Resources for further discussion on material financing transactions.
There were no other material changes in the Company's contractual obligations at  June 30, 2018 , as compared to those reported in the Company's Annual Report on Form 10-K for the year ended  December 31, 2017 .
Election as a REIT  
We elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2013. Commencing with such taxable year, we were organized and operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner but no assurance can be given that we will operate in a manner so as to remain qualified for taxation as a REIT. In order to continue to qualify for taxation as a REIT, we must, among other things, distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as federal income and excise taxes on our undistributed income.
Inflation
We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. In addition, we may be required to pay costs for maintenance and operation of properties, which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
Related-Party Transactions and Agreements
Please see Note 9 — Related Party Transactions and Arrangements to our unaudited consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in our exposure to market risk during the  six months ended June 30, 2018 . For a discussion of our exposure to market risk, refer to Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," contained in our Annual Report on Form 10-K for the fiscal year ended  December 31, 2017 .

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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the six months ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Item 1A. Risk Factors.
There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended  December 31, 2017 .
Item 2. Unregistered Sales of Equity Securities.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the six months ended June 30, 2018 .
Issuer Purchases of Equity Securities
The following table reflects the number of shares repurchased cumulatively through June 30, 2018 :
 
 
Number of Shares Repurchased
 
Average Price per Share
Cumulative repurchases as of December 31, 2017 (1)
 
2,529,798

 
$
22.43

Six months ended June 30, 2018  (2)
 
373,967

 
$
21.45

Cumulative repurchases as of June 30, 2018
 
2,903,765

 
$
22.30

_______________
(1) Includes 1,554,768 shares repurchased during the year ended December 31, 2017 for approximately $33.6 million at a weighted average price per share of $21.61 . In July 2017, following the effectiveness of the amendment and restatement of the SRP, the Board approved 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2017 to September 30, 2017, which was equal to 267,723 shares repurchased for approximately $5.7 million at an average price per share of $21.47 . No repurchases have been or will be made with respect to requests received during 2017 that are not valid requests in accordance with the amended and restated SRP.
(2) Includes 373,967 shares repurchased during January 2018 with respect to requests received following the death or qualifying disability of stockholders during the six months ended December 31, 2017 for approximately $8.0 million at a weighted average price per share of $21.45 . Does not include 155,904 shares that were repurchased for $3.2 million at an average price per share of $20.25 on July 31, 2018, representing 100% of the repurchase requests made following the death or qualifying disability of stockholders during the period from January 1, 2018 through the suspension of the SRP on March 13, 2018.
On March 13, 2018, we announced the Tender Offer to purchase up to  2.0 million  shares of our common stock for cash at a purchase price equal to $13.15 per share with the proration period and withdrawal rights expiring on April 12, 2018. We made the Tender Offer in response to an unsolicited offer to stockholders commenced on February 27, 2018. On April 4, 2018 and April 16, 2018 the Tender Offer was amended to reduce the number of shares we were offering to purchase to 230,000 shares and extend the expiration date to May 1, 2018. The Tender Offer expired in accordance with its terms on May 1, 2018. In accordance with the terms of the Tender Offer, we accepted for purchase 229,999 shares for a total cost of approximately $3.0 million .
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
On August 3, 2018, we entered into new indemnification agreements (the “Indemnification Agreements”) with our directors, executive officers, the Advisor and AR Global. We also expect to enter into similar indemnification agreements with our future directors and officers.
The Indemnification Agreements replace and supersede previous indemnification agreements between us, on the one hand, and each of our directors, executive officers, the Advisor and AR Global, on the other hand. The new form of Indemnification Agreement permits us to indemnify the indemnitees to the maximum extent permitted by Maryland law and removes certain limitations previously required by the Statement of Policy Regarding Real Estate Investment Trusts promulgated by the North American Securities Administrators Association, Inc., or the NASAA Guidelines, that are no longer applicable to us.
The foregoing summary description of the material terms of the Indemnification Agreements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the form of Indemnification Agreement, which is attached hereto as Exhibit 10.7 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

70

Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HEALTHCARE TRUST, INC.
 
By:
/s/ W. Todd Jensen
 
 
W. Todd Jensen
 
 
Chief Executive Officer and President
(Principal Executive Officer)
 
 
 
 
By:
/s/ Katie P. Kurtz
 
 
Katie P. Kurtz
 
 
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal Accounting Officer)

Dated: August 3, 2018

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EXHIBITS INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (and are numbered in accordance with Item 601 of Regulation S-K):
Exhibit No.
  
Description
10.1   (1)
 
Loan Agreement, dated as of April 10, 2018, by and among the borrowers party thereto, and KeyBank National Association, as lender.
10.2   (1)
 
Promissory Note A -1, dated as of April 10, 2018, by the borrowers party thereto in favor of KeyBank National Association, as lender.
10.3   (1)
 
Promissory Note A-2, dated as of April 10, 2018, by the borrowers party thereto in favor of KeyBank National Association, as lender.
10.4   (1)
 
Guarantee Agreement, dated as of April 10, 2018, by Healthcare Trust Operating Partnership, L.P. in favor of KeyBank National Association, as lender.
10.5   (1)
 
Environmental Indemnity Agreement, dated as of April 10, 2018, by the borrowers party thereto and Healthcare Trust Operating Partnership, L.P. in favor of KeyBank National Association, as indemnitee.
10.6   (1)
 
First Amendment to Amended and Restated Property Management and Leasing Agreement, dated as of April 10, 2018, by and among Healthcare Trust, Inc., Healthcare Trust Operating Partnership, L.P., and Healthcare Trust Properties, LLC.
10.7  *
 
Form of Indemnification Agreement
31.1  *
 
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2  *
 
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32  *
 
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 *
 
XBRL (eXtensible Business Reporting Language). The following materials from Healthcare Trust, Inc.'s Report on Form 10-Q for the three months ended June 30, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
____________________
*
Filed herewith.
(1) Filed as an exhibit to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 16, 2018.


73


EXHIBIT 10.7


INDEMNIFICATION AGREEMENT
 
THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the _____ day of _________, 2018, by and between Healthcare Trust, Inc., a Maryland corporation (the “Company”), and __________ (“Indemnitee”).
 
WHEREAS, at the request of the Company, Indemnitee currently serves as a director, officer or service provider of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service either now or in the future; and
 
WHEREAS, as an inducement to Indemnitee to serve or continue to serve in such capacity, the Company has agreed to indemnify Indemnitee and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and
 
[WHEREAS, Indemnitee has certain rights to indemnification and advancement of expenses pursuant to an existing indemnification agreement, dated as of [___], by and between the Company and the Indemnitee (the “Prior Agreement”); and]

WHEREAS, the parties by this Agreement desire to [supersede and replace the rights of the Indemnitee to indemnification and advancement of expenses pursuant to the Prior Agreement in its entirety as of the Effective Date and] set forth the entirety of their agreement regarding indemnification and advance of expenses in this Agreement;
 
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
 
Section 1. Definitions . For purposes of this Agreement:
 
(a) “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.
  
(b) “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company. As a clarification and without limiting the circumstances in which Indemnitee may be serving at the




request of the Company, service by Indemnitee shall be deemed to be at the request of the Company: (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise (1) of which a majority of the voting power or equity interest is or was owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as deemed fiduciary thereof.
 
(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.
 
(d) “Effective Date” means the date set forth in the first paragraph of this Agreement.
 
(e) “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, arbitration and mediation costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium for, security for and other costs relating to any cost bond supersedeas bond or other appeal bond or its equivalent.
 
(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
 
(g) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, claim, demand or discovery request or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee [or if it would have been covered by the Prior Agreement] . If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.
 
Section 2. Services by Indemnitee . Indemnitee will serve in the capacity or capacities set forth in the first WHEREAS clause above. However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company. This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.
 
Section 3. General . The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by the Maryland General Corporation Law (the “MGCL”), including, without limitation, Section 2-418 of the MGCL. However, should Maryland law as it exists on the Effective Date or as it may change in the future be deemed to provide less rights than those set forth in this Agreement, the terms of this Agreement shall control the




scope of the Indemnitee’s rights to advancement and indemnification, and nothing under Maryland law shall reduce the benefits available to Indemnitee hereunder. 

Section 4. Standard for Indemnification . Once Indemnitee is, or is threatened to be, made a party to any Proceeding by reason of Indemnitee’s Corporate Status, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established by clear and convincing evidence that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
 
Section 5. Certain Limits on Indemnification . Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:
 
(a) indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;
 
(b) indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in Indemnitee’s Corporate Status; or
 
(c) indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
 
Section 6. Court-Ordered Indemnification . Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:
 
(a) if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or
 
(b) if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.
 
Section 7. Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful . Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably




incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section 7, and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
 
Section 8. Advance of Expenses for Indemnitee . If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding. In connection with any particular amount of advancement requested, Indemnitee (or a third party acting on Indemnitee’s behalf in providing services that are the subject of the specific advancement demand) shall provide a statement or statements requesting such advance, whether prior to or after final disposition of such Proceeding, including in the form of an invoice for services so long as the statement reasonably evidences the Expenses incurred by Indemnitee. Indemnitee shall also provide with his or her first request for advancement a written affirmation by Indemnitee and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof. Within 10 days of receiving the statement or statements requesting advancement, the Company shall, at Indemnitee’s reasonable discretion (but without duplication), make payment of such Expenses either directly to (a) third parties on behalf of Indemnitee or (b) Indemnitee, including in those instances where Indemnitee has made prior payment of such Expenses. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
 
Section 9. Indemnification and Advance of Expenses as a Witness or Other Participant . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other person, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. In connection with any such advance of Expenses, the Company may require Indemnitee to provide an affirmation and undertaking substantially in the form attached hereto as Exhibit A.
 
Section 10. Procedure for Determination of Entitlement to Indemnification .
 
(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary or appropriate to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion. The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
 
(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not occurred, (A) by a majority vote of the Disinterested Directors or by the majority vote of a group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of




Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, other than directors or officers who are parties to the Proceeding. If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b). Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
 
(c) The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.
 
Section 11. Presumptions and Effect of Certain Proceedings .
 
(a) In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.
 
(b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
 
(c) The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.
 
Section 12. Remedies of Indemnitee .
 
(a) If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, or in an arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association of Indemnitee’s entitlement to indemnification or advance of Expenses. Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement. Except as set forth herein, the provisions of Maryland law (without regard




to its conflicts of laws rules) shall apply to any such arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
 
(b) In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed). The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.
 
(c) If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not disclosed in connection with the determination.
 
(d) In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by Indemnitee in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
 
(e) Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Section 8 or 9 of this Agreement or the 60 th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) and ending on the date such payment is made to Indemnitee by the Company.
 
Section 13. Defense of the Underlying Proceeding .
 
(a) Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding. The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b) Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of




Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee, or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee. This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.
 
(c) Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.
 
Section 14. Non-Exclusivity; Survival of Rights; Subrogation .
 
(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise [; provided, however, that this Agreement supersedes and replaces the rights to indemnification and advancement of Expenses of the Indemnitee set forth in the Prior Agreement] . Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the charter or Bylaws of the Company, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.
 
(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
 
Section 15. Insurance . (a) The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status. In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance carrier or carriers and through the insurance broker in place at the time of the Change in Control; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best rating




that is the same or better than the AM Best rating of the existing insurance carrier; provided, further, however, in no event shall the Company be required to expend in the aggregate in excess of 250% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control. In the event that 250% of the annual premium paid by the Company for such existing directors and officers liability insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount.

(b)    Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee which would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a). The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies. If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

(c)    The Indemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any Proceeding.
 
Section 16. Coordination of Payments . The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
 
Section 17. Contribution . If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, with respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties, and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

Section 18. Reports to Stockholders . To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.
 
Section 19. Duration of Agreement; Binding Effect .
 
(a) This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).
 




(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
 
(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
 
(d) The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith. The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.
 
Section 20. Severability . If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
 
Section 21. Counterparts . This Agreement may be executed in one or more counterparts, (delivery of which may be by facsimile, or via e-mail as a portable document format (.pdf) or other electronic format), each of which will be deemed to be an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one such counterpart. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
 
Section 22. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
 
Section 23. Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor, unless otherwise expressly stated, shall such waiver constitute a continuing waiver.
 




Section 24. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:
 
(a) If to Indemnitee, to the address set forth on the signature page hereto.
 
(b) If to the Company, to:
 
Healthcare Trust, Inc.
405 Park Avenue, 3rd Floor
New York, NY 10022
Attn: General Counsel
 
or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
 
Section 25. Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.
 
 

 
[SIGNATURE PAGE FOLLOWS]



 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
 
 
HEALTHCARE TRUST, INC.



By: ________________________________
Name:
Title:


INDEMNITEE


____________________________________
Name:
Address:





EXHIBIT A
 
AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED
 
To: The Board of Directors of Healthcare Trust, Inc.
 
Re: Affirmation and Undertaking
 
Ladies and Gentlemen:
 
This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement, dated the _____ day of __________, 2018, by and between Healthcare Trust, Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).
 
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
 
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm my good faith belief that at all times, insofar as I was involved as a director, officer or service provider of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
 
In consideration of the advance by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established by clear and convincing evidence that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses, relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.
 
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this _____ day of _______________, 20____.
 
 
 
_____________________________
Name:
 
 




Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, W. Todd Jensen, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 3rd day of August, 2018
 
/s/ W. Todd Jensen
 
 
W. Todd Jensen
 
 
Chief Executive Officer and President
 
 
(Principal Executive Officer)





Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Katie P. Kurtz, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Healthcare Trust, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated this 3rd day of August, 2018
 
/s/ Katie P. Kurtz
 
 
Katie P. Kurtz
 
 
Chief Financial Officer, Treasurer and Secretary
 
 
(Principal Financial Officer and Principal Accounting Officer)






Exhibit 32
SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
The undersigned, who are the Chief Executive Officer and Chief Financial Officer of Healthcare Trust, Inc. (the “Company”), each hereby certify as follows:
The Quarterly report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated this 3rd day of August, 2018
 
/s/ W. Todd Jensen
 
W. Todd Jensen
 
Chief Executive Officer and President
 
(Principal Executive Officer)
 
 
 
/s/ Katie P. Kurtz
 
Katie P. Kurtz
 
Chief Financial Officer, Treasurer and Secretary
 
(Principal Financial Officer and Principal Accounting Officer)