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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this Annual Report on Form 10-K. The discussion contains forward looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly under “Risk Factors” and “Forward-Looking Statements.” All forward-looking statements in this document are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements.

This section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. A discussion of the changes in our financial condition and results of operations for the years ended December 31, 2022, and 2021 may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal years ended December 31, 2022 and December 31, 2021.

Overview

We invest in high quality properties leased to tenants capitalizing on critical and structural economic growth drivers. We are primarily focused on investing in healthcare assets across the continuum of care, which we believe typically generate predictable, durable and growing income streams. We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities.

As of December 31, 2023, we owned 131 real estate properties and two undeveloped land parcels.

We raised the equity capital for our real estate investments through our Offerings from May 2014 through November 2018, and we have offered shares pursuant to the DRIP Offerings since November 2017.

Critical Accounting Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. Changes in these estimates and assumptions could have a significant effect on the financial statements. From time to time, we evaluate our estimates based on historical experience and various assumptions that we believe are reasonable under the circumstances. Although our actual results historically have not deviated materially from those determined using estimates, our results of operations or financial condition could differ materially from these estimates under different assumptions or conditions.

We consider our critical accounting estimates to be those used in the determination of the reported amounts and disclosure related to the impairment of long-lived assets.

We review our real estate assets on an asset group basis for impairment. Typically, an individual property constitutes an asset group. We identify an asset group based on the lowest level of identifiable cash flows. In the impairment analysis we must determine whether there are indicators of impairment. For operating properties, these indicators could include a tenant being delinquent or not paying rent, a reduction in our estimated hold period, a significant decline in a property’s leasing percentage, a current period operating loss or negative cash flows combined with a history of losses at the property, a significant decline in lease rates for that property or others in the property’s market, a significant change in the market value of the property, or an adverse change in the financial condition of significant tenants.

If we determine that an asset has indicators of impairment, we then determine whether the undiscounted cash flows associated with the asset group exceed the carrying amount of the asset group. In calculating the undiscounted net cash flows of an asset group, we use considerable judgment to estimate several inputs. We estimate future rental rates, future capital expenditures, future operating expenses, and market capitalization rates for residual values, among other things. In addition, if there are alternative strategies for the future use of the asset, we assess the probability of each alternative strategy and perform a probability-weighted undiscounted cash flow analysis to assess the recoverability of the asset group. If the carrying value of the asset group exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of carrying value over the estimated fair value of the asset group.

In determining the fair value of an asset group, we exercise considerable judgment on several factors. We may determine fair value by using a direct capitalization method, a discounted cash flow method or by utilizing comparable sales information. The direct capitalization method is based on a capitalization rate applied to the underlying asset group's most recent stabilized trailing twelve-month net operating income at the measurement date. The discounted cash flow method is based on estimated future cash flow projections utilizing discount rates, terminal capitalization rates, and planned capital expenditures. We use

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judgment to determine an appropriate discount rate to apply to the cash flows in the discounted cash flow calculation. We also use judgment in analyzing comparable market information because no two real estate assets are identical in location and price.

The estimates and judgments used in the impairment process are highly subjective and susceptible to frequent change. Significant increases or decreases in any of these inputs, particularly with regard to cash flow projections and discount and capitalization rates, would result in a significantly lower or higher fair value measurement of the real estate assets being assessed. Additionally, changes in economic and operating conditions, including changes in the financial condition of our tenants, and changes to our intent and ability to hold the related asset, that occur after our impairment assessment could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results.

Real Estate Acquisitions and Dispositions in 2023

•We purchased two healthcare properties, comprising approximately 130,000 rentable square feet for an aggregate purchase price of approximately $69,822,000.

•We sold three healthcare properties for an aggregate sale price of $271,107,000 and generated net proceeds of $270,306,000.

Factors That May Influence Results of Operations

We are not aware at this time of any material trends or uncertainties, other than national economic conditions and those discussed below and in Part I. Item 1A. "Risk Factors" of this Annual Report on Form 10-K, affecting our real estate properties, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income, management and operation of our properties.

Rental Revenue

The amount of rental revenue generated by our properties depends principally on our ability to maintain the occupancy rates of leased space and to lease available space at existing rental rates. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods. We continually monitor our tenants' ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. As of December 31, 2023, our real estate properties were 99.4% leased.

GenesisCare Bankruptcy Filing

As disclosed in the Current Report on Form 8-K that the Company filed with the SEC on June 5, 2023, GenesisCare, sponsor and owner of the tenant in 17 of our real estate properties, announced that it filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code. GenesisCare sought U.S. bankruptcy court approval to reject certain unexpired real property leases. GenesisCare's lease obligations with us were not included in any motions. GenesisCare continues to make its lease payments due to us in accordance with their contractual terms, although we are in ongoing negotiations with GenesisCare regarding certain adjustments to its lease. Bankruptcy proceedings are subject to uncertainty and there can be no assurance how the bankruptcy court's or other parties' actions or decisions may impact GenesisCare. Due to GenesisCare filing for bankruptcy and its subsequent emergence from bankruptcy on February 16, 2024, we determined the collectability of amounts owed under the contractual terms of GenesisCare's lease were no longer reasonably assured. As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for GenesisCare to the extent we have received cash. In addition, during the year ended December 31, 2023, we wrote off $1,630,000 of straight-line rent receivables related to GenesisCare, as a reduction in rental revenue, because the amounts were determined to be uncollectible.

Results of Operations

Our results of operations are influenced by the timing of acquisitions and the performance of our real estate properties. The following table shows the property statistics of our real estate properties as of December 31, 2023 and 2022:

December 31,

Number of real estate properties (1) 131 132

Weighted average percentage of rentable square feet leased 99.4 % 99.5 %

(1)As of December 31, 2023, we owned 131 real estate properties and two undeveloped land parcels. As of December 31, 2022, we owned 132 real estate properties and two undeveloped land parcels.

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The following table summarizes our real estate activity for the years ended December 31, 2023 and 2022:

Year EndedDecember 31,

Real estate properties acquired 2 7

Real estate properties disposed 3 — (1)

Net book value of real estate properties disposed $ 270,279,000 $ — (1)

Leased square feet of real estate property additions 130,000 284,000

Leased square feet of real estate property dispositions 551,000 —

(1)During the year ended December 31, 2022, we disposed of one land parcel that formerly contained a property.

(2)Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions.

This section describes and compares our results of operations for the years ended December 31, 2023 and 2022. We generate substantially all of our revenue from property operations. In order to evaluate our overall portfolio, management analyzes the results of our same store properties. We define "same store properties" as properties that were owned and operated for the entirety of both calendar periods being compared and exclude properties under development, re-development, or classified as held for sale.

By evaluating the results of our same store properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and readily observe the expected effects of our new acquisitions and dispositions on net income.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

The following table allocates total rental revenue for the year ended December 31, 2023 compared to the comparable period in 2022 (amounts in thousands).

Year EndedDecember 31,

Other operating income 6 4 2 50.0 %

•Same store rental revenue decreased primarily due to a $1,861,000 decrease related to tenants who ceased paying all or a portion of their rent, an $834,000 increase in the write-off of straight-line rent receivables related to prior periods due to tenant uncertainty and an impairment of above-market lease intangible assets of $260,000, partially offset by a $913,000 increase in annual base rent escalations for leases indexed to CPI and a $256,000 increase from new and renewal leases.

•Same store tenant reimbursements increased $487,000 primarily due to higher operating costs in the current year which are generally passed along to our tenants.

•Non-same store rental revenue increased primarily due to lease termination income of $5,185,000 and a $6,406,000 increase attributable to properties acquired and properties placed in service since January 1, 2022, partially offset by a $2,427,000 decrease due to property dispositions and a $99,000 decrease due to deferment of rent on a property under renovation.

•Non-same store tenant reimbursements increased $1,311,000 primarily due to properties acquired and placed in service since January 1, 2022.

•There were no significant changes in other operating income.

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Changes in our expenses are summarized in the following table (amounts in thousands):

Year EndedDecember 31,

Gain on real estate dispositions $ 22 $ 460 $ (438) (95.2) %

•Same store rental expenses, certain of which are subject to reimbursement by our tenants, increased $789,000 primarily due to higher operating costs in the current year.

•Non-same store rental expenses, certain of which are subject to reimbursement by our tenants, increased primarily due to a $1,666,000 increase from properties acquired and properties placed in service since January 1, 2022, partially offset by a $209,000 decrease due to property dispositions.

•General and administrative expenses increased primarily due to a $2,188,000 increase in stock-based compensation due to equity awards granted in 2023, and $512,000 additional separation pay primarily related to our former chief accounting officer and former chief administrative officer, partially offset by a $84,000 decrease in accelerated stock-based compensation related to former officers and directors, a decrease of $449,000 as a result of a reduction in personnel, and a $350,000 decrease in reporting costs.

•Depreciation and amortization decreased primarily due to a $1,392,000 decrease from property dispositions, a $771,000 decrease attributable to fully amortized in-place leases and tenant improvements, a $1,038,000 decrease related to properties impaired and a $3,215,000 decrease in impairments of an in-place lease intangible assets, partially offset by a $3,330,000 increase attributable to properties acquired and properties placed in service since January 1, 2022, and a $180,000 increase due to capital expenditures placed in service.

•Impairment losses were recorded in the aggregate amount of $24,252,000 during the year ended December 31, 2023, as a result of property sales and tenant related triggering events that occurred at certain properties. Impairment losses were recorded in the aggregate amount of $47,424,000 during the year ended December 31, 2022, as a result of tenant related triggering events that occurred at certain properties.

•Gains on real estate dispositions were $22,000 and $460,000 during the years ended December 31, 2023 and 2022, respectively.

Changes in interest expense and interest and other income are summarized in the following table (amounts in thousands):

Year EndedDecember 31,

•Interest expense decreased primarily due to $3,367,000 in loss on extinguishment of debt and $1,400,000 in interest rate swap amortization recognized during the year ended December 31, 2022, partially offset by an increase of $3,054,000 related to changes in the weighted average interest rate on our credit facility that was subject to variable rates during the year and an increase of $856,000 due to an increase in the weighted average outstanding principal balance on our credit facility of $32,452,000.

•Interest and other income increased primarily due to a $457,000 increase in dividend income from investments in money market funds, a $118,000 increase in interest income from cash deposits, and a $105,000 increase in interest income on a note receivable, partially offset by a decrease of $283,000 in settlement income from disposed properties.

Liquidity and Capital Resources

Our principal uses of funds are for acquisitions of real estate and real estate-related investments, capital expenditures, operating expenses, distributions to, and share repurchases from, stockholders, and principal and interest payments on current

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and future indebtedness. While interest rates on variable rate debt have increased and may continue to increase, we believe our exposure is limited at this time due to our hedging strategy, which has effectively fixed 100% of our outstanding debt as of December 31, 2023, allowing us to reasonably project our liquidity needs. Generally, cash for these items is generated from operations of our current and future investments. Our sources of funds are primarily operating cash flows, funds equal to amounts reinvested in the DRIP, our credit facility and other potential borrowings.

When we acquire a property, we prepare a capital plan that contemplates the estimated capital needs of that investment. In addition to operating expenses, capital needs may also include, for example, costs of refurbishment, tenant improvements or other major capital expenditures. The capital plan also sets forth the anticipated sources of the necessary capital, which may include a line of credit, operating cash generated by the investment, additional equity investments from us, and when necessary, capital reserves. The capital plan for each investment will be adjusted through ongoing, regular reviews of our portfolio or, as necessary, to respond to unanticipated additional capital needs.

Short-term Liquidity and Capital Resources

For at least the next twelve months, we expect our principal demands for funds will be for operating expenses, including our general and administrative expenses, as well as the acquisition of real estate and real estate-related investments and funding of capital improvements and tenant improvements, distributions to and stock repurchases from stockholders, and interest payments on our credit facility. We expect to meet our short-term liquidity requirements through net cash flows provided by operations, funds equal to amounts reinvested in the DRIP and borrowings on our credit facility and potential other borrowings.

We believe we will have sufficient liquidity available to meet our obligations in a timely manner, under both normal and stressed conditions, for the next twelve months.

Long-term Liquidity and Capital Resources

Beyond the next twelve months, we expect our principal demands for funds will be for costs to acquire additional real estate properties, interest and principal payments on our credit facility, long-term capital investment demands for our real estate properties and our distributions necessary to maintain our REIT status.

We currently expect to meet our long-term liquidity requirements through proceeds from cash flows from operations and borrowings on our credit facility and potential other borrowings.

We expect to pay distributions to our stockholders from cash flows from operations; however, we have used, and may continue to use, other sources to fund distributions, as necessary, such as funds equal to amounts reinvested in the DRIP. To the extent cash flows from operations are lower due to lower-than-expected returns on the properties held or the disposition of properties, distributions paid to stockholders may be lower. We currently expect that substantially all net cash flows from our operations will be used to fund acquisitions, certain capital expenditures identified at acquisition, ongoing capital expenditures, interest and principal payments on outstanding debt and distributions to our stockholders.

Material Cash Requirements

As of December 31, 2023, we had approximately $202,019,000 in cash and cash equivalents. In addition to the cash we need to conduct our normal business operations, we expect to require approximately $19,944,000 in cash over the next twelve months, of which $17,198,000 is related to estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2023) and $2,746,000 is related to our various obligations as lessee. We cannot provide assurances, however, that actual expenditures will not exceed these estimates. The 2024 Term Loan (as defined below) has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee. We currently meet these conditions and therefore may exercise our option to extend the maturity date if we so choose.

As of December 31, 2023, we had material obligations beyond 12 months (or that we will meet the extension criteria on the maturity date) in the amount of approximately $676,064,000, inclusive of $560,444,000 related to principal and estimated interest payments on our outstanding debt (calculated based on our effective interest rates as of December 31, 2023) and $115,620,000 related to our various obligations as lessee.

One of our principal liquidity needs is the payment of principal and interest on outstanding indebtedness. As of December 31, 2023, we had $525,000,000 of principal outstanding under our Unsecured Credit Facility (as defined below). We are required by the terms of certain loan documents to meet certain covenants, such as financial ratios and reporting requirements. As of December 31, 2023, we were in compliance with all such covenants and requirements on our Unsecured Credit Facility.

As of December 31, 2023, the aggregate notional amount under our derivative instruments was $525,000,000. We have agreements with each derivative counterparty that contain cross-default provisions; if we default on our indebtedness, then we could also be declared in default on our derivative obligations, resulting in an acceleration of payment of any net amounts due under our derivative contracts. As of December 31, 2023, we were in compliance with all such cross-default provisions.

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Debt Service Requirements

Credit Facility

As of December 31, 2023, the maximum commitments available under our senior unsecured revolving line of credit with Truist Bank, as Administrative Agent for the lenders, or the Revolving Credit Agreement, were $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000. The maturity date for the Revolving Credit Agreement is February 15, 2026, which, at our election, may be extended for a period of six-months on no more than two occasions, subject to certain conditions, including the payment of an extension fee. As of December 31, 2023, the Revolving Credit Agreement had no outstanding principal balance.

As of December 31, 2023, the maximum commitments available under our senior unsecured term loan with Truist Bank, as Administrative Agent for the lenders, or the 2024 Term Loan Agreement, were $250,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $550,000,000. The 2024 Term Loan Agreement has a maturity date of December 31, 2024, and, at our election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions (which we currently meet), including the payment of an extension fee. As of December 31, 2023, the 2024 Term Loan Agreement had an aggregate outstanding principal balance of $250,000,000.

As of December 31, 2023, the maximum commitments available under our senior unsecured term loan with Truist Bank, as Administrative Agent for the lenders, or the 2028 Term Loan Agreement, were $275,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000 and has a maturity date of January 31, 2028. The 2028 Term Loan Agreement is pari passu with our Revolving Credit Agreement and 2024 Term Loan Agreement. As of December 31, 2023, the 2028 Term Loan Agreement had an aggregate outstanding principal balance of $275,000,000.

We refer to the Revolving Credit Agreement, the 2024 Term Loan Agreement and the 2028 Term Loan Agreement, collectively, as the “Unsecured Credit Facility,” which has aggregate commitments available of $1,025,000,000, as of December 31, 2023. Generally, the proceeds of loans made under our Unsecured Credit Facility may be used for acquisition of real estate investments, funding of tenant improvements and leasing commissions with respect to real estate, repayment of indebtedness, funding of capital expenditures with respect to real estate, and general corporate and working capital purposes.

As of December 31, 2023, we had a total pool availability under our Unsecured Credit Facility of $1,025,000,000 and an aggregate outstanding principal balance of $525,000,000; therefore, $500,000,000 was available to be drawn under our Unsecured Credit Facility. We were in compliance with all the financial covenant requirements as of December 31, 2023.

Cash Flows

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Year EndedDecember 31,

Operating Activities

•Net cash provided by operating activities increased primarily due to an increase in cash collected for rent resulting from acquiring and placing properties in service, annual rent increases, new leasing and renewal activity and the receipt of lease termination income, partially offset by a decrease related to property dispositions and tenants who ceased paying all or a portion of their rent and an increase in interest paid on our credit facility.

Investing Activities

Significant investing activities included:

•Investment of $69,822,000 to purchase two properties during the year ended December 31, 2023, compared to an investment of $157,194,000 to purchase seven properties during the year ended December 31, 2022.

•Sale of three properties for net proceeds of $270,306,000 during the year ended December 31, 2023, compared to receiving $22,822,000 from the sale of a land parcel that formerly contained a property during the year ended December 31, 2022.

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•Incurred capital expenditures, primarily for tenant improvements, of $3,177,000 during the year ended December 31, 2023, compared to incurring $8,440,000 during the year ended December 31, 2022.

Financing Activities

Significant financing activities included:

•Payment of $66,515,000 in cash distributions to common stockholders during the year ended December 31, 2023, compared to $65,310,000 during the year ended December 31, 2022.

•Repurchase of $12,374,000 of common stock under our share repurchase program during the year ended December 31, 2023, compared to $9,217,000 during the year ended December 31, 2022.

•The following Unsecured Credit Facility related activity during the year ended December 31, 2023:

◦Repayment of $58,000,000 on the Revolving Credit Agreement with cash flows from operations and proceeds from a disposition;

◦Repayment of $50,000,000 on the 2024 Term Loan Agreement with proceeds from dispositions, the collection of a note receivable related to a disposition and cash flows from operations; and

◦Draw of $50,000,000 on the Revolving Credit Agreement to fund an acquisition.

•The following Unsecured Credit Facility related activity during the year ended December 31, 2022:

◦Draw of $70,000,000 on the Revolving Credit Agreement to fund acquisitions;

◦Draw of $70,000,000 on the 2028 Term Loan Agreement to fund acquisitions;

◦Repayment of $57,000,000 on the Revolving Credit Agreement with proceeds from dispositions and cash flows from operations;

◦Replacement of $500,000,000 from our prior unsecured credit facility with borrowings from our new Revolving Credit Agreement and 2024 Term Loan Agreement;

◦Draw of $205,000,000 on the 2028 Term Loan Agreement at closing to pay down the $205,000,000 outstanding balance on the Revolving Credit Agreement; and

◦Payment of $6,937,000 in deferred financing costs as a result of entering into the Revolving Credit Agreement, 2024 Term Loan Agreement and 2028 Term Loan Agreement during the year ended December 31, 2022.

Distributions to Stockholders

We have paid, and may continue to pay, distributions from sources other than from our cash flows from operations. For the year ended December 31, 2023, our cash flows provided by operations of approximately $128,924,000 covered 100% of our ordinary distributions paid (total ordinary distributions were approximately $91,266,000, of which $66,515,000 was cash and $24,751,000 was reinvested in shares of our common stock pursuant to the DRIP) during such period. For the year ended December 31, 2022, our cash flows provided by operations of approximately $121,675,000 covered 100% of our ordinary distributions paid (total ordinary distributions were approximately $90,144,000, of which $65,310,000 was cash and $24,834,000 was reinvested in shares of our common stock pursuant to the DRIP) during such period.

We do not currently have any limits on the sources of funding distribution payments to our stockholders. We may pay distributions from any source, such as the sale of assets, the sale of additional securities, and offering proceeds and we do not currently have any limits on the amounts we may pay from such sources. See “Risk Factors – General Risk Factors – Distributions paid from sources other than our cash flows from operations, including from the proceeds of our Offerings, will result in us having fewer funds available for the acquisition of properties and real estate-related investments, which may adversely affect our ability to fund future distributions with cash flows from operations and may adversely affect a stockholder’s overall return” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of risks related to funding distribution payments from various sources.

For federal income tax purposes, distributions to common stockholders are characterized as ordinary dividends, capital gain distributions, or nontaxable distributions. To the extent that we make a distribution in excess of our current or accumulated earnings and profits, such excess will be a nontaxable return of capital, reducing the tax basis in each U.S. stockholder’s shares. Further, the amount of distributions in excess of a U.S. stockholder’s tax basis in such shares will be taxable as a realized gain.

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The following table shows the sources of distributions paid during the years ended December 31, 2023 and 2022 (amounts in thousands):

Year Ended December 31,

Capital gain distributions — % — %

(1)Attributable to Class A shares, Class I shares, Class T shares of common stock for the year ended December 31, 2023. Attributable to Class A shares, Class I shares, Class T shares, and Class T2 shares of common stock for the years ended December 31, 2022 and 2021.

The amount of distributions payable to our stockholders is determined by the Board and is dependent on a number of factors, including our funds available for distribution, financial condition, lenders' restrictions and limitations, capital expenditure requirements, corporate law restrictions and the annual distribution requirements needed to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended. The Board must authorize each distribution and may, in the future, authorize lower amounts of distributions or not authorize additional distributions and, therefore, distribution payments are not guaranteed.

The following table shows the sources of distributions paid during the years ended December 31, 2023 and 2022 (amounts in thousands):

Year Ended December 31,

Distributions paid in cash - common stockholders $ 66,515 $ 65,310

Distributions reinvested (shares issued) 24,751 24,834

Source of distributions:

(1)Percentages were calculated by dividing the respective source amount by the total sources of distributions.

Total distributions declared but not paid on Class A shares, Class I shares and Class T shares as of December 31, 2023, were approximately $7,782,000 for common stockholders. These distributions were paid on January 8, 2024.

Share Repurchase Program

Our SRP allows for repurchases of shares of our common stock when certain criteria are met. Under the SRP, we currently only repurchase shares due to death or involuntary exigent circumstances, subject in each case to the terms and limitations of the SRP, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations. See Part II, Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" for more information on the SRP.

During the year ended December 31, 2023, we repurchased 1,513,997 Class A shares, Class I shares and Class T shares of common stock (1,182,006 Class A shares, 105,660 Class I shares and 226,331 Class T shares), for an aggregate purchase price of approximately $12,374,000 (an average of $8.17 per share). During the year ended December 31, 2022, we repurchased 1,123,183 Class A shares, Class I shares and Class T shares of common stock (981,772 Class A shares, 31,666 Class I shares and 109,745 Class T shares), for an aggregate purchase price of approximately $9,217,000 (an average of $8.21 per share).

Commitments and Contingencies

For a discussion of our commitments and contingencies, see Note 17—"Commitments and Contingencies" to the consolidated financial statements that are a part of this Annual Report on Form 10-K.

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Non-GAAP Financial Measures

In the real estate industry, analysts and investors employ certain non-GAAP supplemental financial measures in order to facilitate meaningful comparisons between periods and among peer companies. We believe that these measures are useful to investors to consider because they may assist them to better understand and measure the performance of our business over time and against similar companies. We use the following non-GAAP financial measures: Funds From Operations, or FFO, Core Funds From Operations, or Core FFO, and Adjusted Funds From Operations, or AFFO.

Net Income (Loss) and FFO, Core FFO and AFFO

A description of FFO, Core FFO, and AFFO and reconciliations of these non-GAAP measures to net income (loss), the most directly comparable GAAP measure, are provided below.

The National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated the FFO measure, which we believe is an appropriate additional measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income as determined under GAAP.

We define FFO, consistent with NAREIT’s definition, as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of real estate assets and impairments of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. To date, we do not have any investments in unconsolidated partnerships or joint ventures.

We, along with many of our peers in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance, because it is based on a net income (loss) analysis of real estate portfolio performance that excludes non-cash items such as real estate depreciation and amortization and real estate impairments. We believe FFO provides a useful understanding of our performance to the investors and to our management, and when compared to year over year, FFO reflects the impact on our operations from trends in occupancy.

We calculate Core FFO by adjusting FFO to remove the effect of items that are not expected to impact our operating performance on an ongoing basis and consider it to be a useful supplemental measure because it provides investors with additional information to understand our sustainable performance. These include severance, write-off of straight-line rent receivables related to prior periods, accelerated stock-based compensation, amortization of above- and below-market lease intangibles (including ground leases) and loss on extinguishment of debt.

We calculate AFFO by further adjusting Core FFO for the following items: deferred rent, current period straight-line rent adjustments, amortization of deferred financing costs and stock-based compensation.

Presentation of this information is intended to assist management and investors in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO, Core FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO, Core FFO and AFFO are not necessarily indicative of cash flows available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance or as an indication of our liquidity, including our ability to make distributions to our stockholders. FFO, Core FFO and AFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods. All of our non-GAAP financial measures should be reviewed in conjunction with other measurements as an indication of our performance. The method used to evaluate the value and performance of real estate under GAAP should be considered as a more relevant measure of operating performance and considered more prominent than the non-GAAP financial measures presented here.

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Reconciliation of Net Income (Loss) to FFO, Core FFO and AFFO

The following table presents a reconciliation of net income (loss) attributable to common stockholders, which is the most directly comparable GAAP financial measure, to FFO, Core FFO and AFFO for the years ended December 31, 2023 and 2022 (amounts in thousands):

Year EndedDecember 31,

Net income (loss) attributable to common stockholders $ 24,042 $ (7,978)

Adjustments:

Depreciation and amortization of real estate assets 74,202 77,099

Gain on real estate dispositions (22) (460)

Adjustments:

Write-off of straight-line rent receivables related to prior periods 3,268 2,434

Accelerated stock-based compensation 318 402

Loss on extinguishment of debt — 3,367

Adjustments:

Straight-line rent adjustments (5,465) (9,695)

Amortization of deferred financing costs 1,665 1,679

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk.

We have obtained variable rate debt financing and we are exposed to such changes in the one-month Term SOFR. Loans under the Unsecured Credit Facility may be made as Base Rate Loans or SOFR Loans, at our election, and all of our interest rate swap agreements are indexed to SOFR. Our objectives in managing interest rate risk are to limit the impact of interest rate fluctuations on operations and cash flows, and to lower overall borrowing costs. To achieve these objectives, we will borrow primarily at interest rates with the lowest margins available and, in some cases, with the ability to convert variable interest rates to fixed rates.

As of December 31, 2023, our total principal debt outstanding of $525,000,000 was fixed through 11 interest rate swap agreements, which mature on various dates from December 2024 to January 2028. As of December 31, 2023, the interest rate swap agreements had an aggregate notional amount of $525,000,000 and an aggregate settlement asset value of $18,182,000. The settlement value of these interest rate swap agreements is dependent upon existing market interest rates and swap spreads. As of December 31, 2023, an increase of 50 basis points in the market rates of interest would have resulted in an increase to the settlement asset value of these interest rate swaps to a value of $24,111,000. These interest rate swap agreements were designated as cash flow hedging instruments.

As of December 31, 2023, the weighted average interest rate on our total debt outstanding was 3.3%. We have entered, and may continue to enter, into additional derivative financial instruments, such as interest rate swaps, in order to mitigate our interest rate risk on a given variable rate financial instrument. To the extent we do, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not possess credit risk. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We manage the market risk associated with

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interest rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. We have not entered, and do not intend to enter, into derivative or interest rate swap transactions for speculative purposes. We may also enter into rate-lock arrangements to lock interest rates on future borrowings.

In addition to changes in interest rates, the value of our future investments will be subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants, which may affect our ability to refinance our debt, if necessary.

We do not have any foreign operations and thus we are not exposed to foreign currency fluctuation risks.

Item 8. Financial Statements and Supplementary Data.

See the index at Part IV, Item 15. Exhibits and Financial Statement Schedules

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Evaluation of disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we conducted an evaluation as of December 31, 2023, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures, as of December 31, 2023, were effective at a reasonable assurance level.

(b) Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Under the supervision, and with the participation, of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission, or the Original Framework. Based on our evaluation under the Original Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the permanent deferral adopted by the Securities and Exchange Commission that permits us to provide only management’s report in this annual report.

(c) Changes in internal control over financial reporting. There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Insider trading arrangements and policies. During the three months ended December 31, 2023, none of the Company’s officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of Company

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securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this Item will be presented in our definitive proxy statement for our 2024 annual meeting of stockholders, which is expected to be filed with the SEC within 120 days after December 31, 2023, and is incorporated herein by reference.

Our Board has adopted a Code of Business Conduct and Ethics that is applicable to all members of our Board, our officers and our employees. The policy may be located on our Investor website at https://investors.silarealtytrust.com by clicking on “About Us,” and then on “Governance Documents.” If, in the future, we amend, modify or waive a provision in the Code of Business Conduct and Ethics, we may, rather than filing a Current Report on Form 8-K, satisfy the disclosure requirement by posting such information on our website as necessary.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

The following documents are filed as part of this Annual Report:

(a)(1) Consolidated Financial Statements:

The index of the consolidated financial statements contained herein is set forth on page F-1 hereof.

(a)(2) Financial Statement Schedules:

The financial statement schedules are listed in the index of the consolidated financial statements on page F-1 hereof.

No additional financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is disclosed in the Consolidated Financial Statements and notes thereto.

(a)(3) Exhibits:

The exhibits listed on the Exhibit Index are included, or incorporated by reference, in this Annual Report.

(b) Exhibits:

See Item 15(a)(3) above.

See Item 15(a)(2) above.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

OF SILA REALTY TRUST, INC.

Page

Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 2023 and 2022 F-4

Notes to Consolidated Financial Statements F-8

Financial Statement Schedules

Schedule III — Real Estate Assets and Accumulated Depreciation S-1

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Sila Realty Trust, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Sila Realty Trust, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of real estate for impairment

As discussed in Notes 2 and 3 to the consolidated financial statements, the Company assesses the recoverability of the carrying value of its real estate for impairment whenever events or changes in circumstances indicate that such amounts may not be recoverable. If the carrying amount of a real estate asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized for the amount by which the carrying amount of the asset group exceeds its estimated fair value. The Company recognized impairment losses of $24,252,000 during the year ended December 31, 2023, a portion of which related to real estate. The real estate balance was $1,628,652,000 as of December 31, 2023.

We identified the evaluation of real estate for impairment as a critical audit matter. Subjective and challenging auditor judgment was required to evaluate certain assumptions used in the impairment tests, including the terminal capitalization rates and market rental rates used to estimate the undiscounted cash flows and the sales prices of comparable properties and market rental rates used to estimate the fair value.

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The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal controls related to the Company’s real estate impairment process, including controls related to the assumptions noted above. For certain properties, we performed sensitivity analyses over terminal capitalization rates and market rental rates to assess the impact of changes in that assumption to the undiscounted cashflows. In addition, for certain properties we involved valuation professionals with specialized skills and knowledge, who assisted in (1) assessing terminal capitalization rates and market rental rates used by the Company to estimate the undiscounted cash flows by comparing them to publicly available market data for comparable entities, and (2) evaluating market rental rates and sales prices of comparable properties used by the Company to estimate the fair value, including adjustments to such transactions, by comparing them to publicly available market data for comparable entities and to publicly available market data for an independent selection of sales of similar properties.

/s/ KPMG LLP

We have served as the Company’s auditor since 2014.

Tampa, Florida

March 6, 2024

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SILA REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

ASSETS

Real estate:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:

Accounts payable and other liabilities 30,381 30,619

Stockholders’ equity:

Distributions in excess of accumulated earnings (567,188) (499,334)

Accumulated other comprehensive income 16,603 27,990

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

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SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except share data and per share amounts)

Year EndedDecember 31,

Revenue:

Expenses:

Gain on real estate dispositions 22 460 89

Income from discontinued operations — — 401,444

Weighted average number of common shares outstanding:

Net income (loss) per common share attributable to common stockholders:

Basic:

Continuing operations $ 0.11 $ (0.03) $ —

Discontinued operations — — 1.80

Net income (loss) attributable to common stockholders $ 0.11 $ (0.03) $ 1.80

Diluted:

Continuing operations $ 0.10 $ (0.03) $ —

Discontinued operations — — 1.79

Net income (loss) attributable to common stockholders $ 0.10 $ (0.03) $ 1.79

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

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SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except share data)

Common Stock

Vesting of restricted stock 160,453 — — — — —

Other offering costs — — (80) — — (80)

Distributions to common stockholders — — — (91,896) — (91,896)

Common Stock

Vesting of restricted stock 172,887 — — — — —

Other offering costs — — (4) — — (4)

Distributions to common stockholders — — — (90,687) — (90,687)

Common Stock

Vesting of restricted stock 24,955 — — — — —

Stock-based compensation — — 2,379 — — 2,379

Distribution and servicing fees — — 639 — — 639

Other offering costs — — (9) — — (9)

Distributions to common stockholders — — — (492,065) — (492,065)

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

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SILA REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year EndedDecember 31,

Cash flows from operating activities:

Amortization of above- and below-market leases 733 484 (1,098)

Gain on real estate dispositions from continuing operations (22) (460) (89)

Gain on real estate dispositions of discontinued operations — — (395,801)

Straight-line rent adjustments, net of write-offs (2,197) (7,261) (15,665)

Changes in operating assets and liabilities:

Accounts payable and other liabilities 26 (170) (4,521)

Cash flows from investing activities:

Consideration paid for the internalization transaction — — (15,000)

Cash flows from financing activities:

Payments on notes payable — — (453,422)

Payments for extinguishment of debt — (4) (29,244)

Payments of deferred financing costs (193) (6,937) (444)

Offering costs on issuance of common stock (47) (192) (2,326)

Supplemental cash flow disclosure:

Supplemental disclosure of non-cash transactions:

Change in accrued distributions to common stockholders $ 630 $ 543 $ (1,368)

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

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SILA REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

Note 1—Organization and Business Operations

Sila Realty Trust, Inc., or the Company, is a Maryland corporation, headquartered in Tampa, Florida, that has elected, and currently qualifies, to be taxed as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for federal income tax purposes. The Company is primarily focused on investing in high quality healthcare assets across the continuum of care, which the Company believes typically generate predictable, durable and growing income streams. The Company may also make other real estate-related investments, which may include equity or debt interests in other real estate entities.

Substantially all of the Company’s business is conducted through Sila Realty Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. The Company is the sole general partner of the Operating Partnership and directly and indirectly owns 100% of the Operating Partnership.

Except as the context otherwise requires, the “Company” refers to Sila Realty Trust, Inc., the Operating Partnership and their wholly-owned subsidiaries.

Note 2—Summary of Significant Accounting Policies

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and the accompanying notes thereto are the responsibility of management. These accounting policies conform to U.S. generally accepted accounting principles, or GAAP, in all material respects, and have been consistently applied in preparing the consolidated financial statements.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company, the Operating Partnership, and their wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements and accompanying notes in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

Cash consists of demand deposits at commercial banks. Cash equivalents consist of highly liquid investments in money market funds with original maturities of three months or less at the time of purchase. Restricted cash consists of cash held in an escrow account in accordance with a tenant's lease agreement. Restricted cash is reported in other assets in the accompanying consolidated balance sheets. The Company maintains its cash, cash equivalents and restricted cash at various financial institutions. As of December 31, 2023, certain of the Company’s cash deposits exceeded federally insured amounts. To date, the Company has experienced no loss or lack of access to cash in its accounts. The Company attempts to limit cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits.

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The following table presents a reconciliation of the beginning of year and end of year cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the totals shown in the consolidated statements of cash flows (amounts in thousands):

Year EndedDecember 31,

Beginning of year:

End of year:

Investment in Real Estate

Real estate costs related to the acquisition, development, construction and improvement of properties are capitalized. Repair and maintenance costs are expensed as incurred, and significant replacements and improvements are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate assets. The Company considers the period of future benefit of an asset in determining the appropriate useful life. Real estate assets, other than land, are depreciated on a straight-line basis over each asset’s useful life. The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings and improvements 15 – 40 years

Tenant improvements Shorter of lease term or expected useful life

Furniture, fixtures, and equipment 3 – 10 years

Allocation of Purchase Price of Real Estate

Upon the acquisition of real estate properties, the Company evaluates whether the acquisition is a business combination or an asset acquisition. For both business combinations and asset acquisitions, the Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings and improvements, and intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases. For asset acquisitions, the Company capitalizes transaction costs and allocates the purchase price using a relative fair value method allocating all accumulated costs. For business combinations, the Company expenses transaction costs incurred and allocates the purchase price based on the estimated fair value of each separately identifiable asset and liability. For the year ended December 31, 2023, all of the Company's acquisitions were determined to be asset acquisitions.

The fair value of the tangible assets of an acquired property (which includes land, buildings and improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and buildings and improvements based on management’s determination of the relative fair value of these assets.

The amount allocated to in-place leases includes an estimate of direct costs associated with obtaining a new tenant and opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease. These lease intangibles are amortized to depreciation and amortization expense over the remaining terms of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed.

The amounts allocated to above-market and below-market leases are recorded based on the present value of the difference between: (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of current market lease rates for the corresponding leases, measured over a period equal to the remaining non-cancelable term of the lease including any fixed rate bargain renewal periods, with respect to a below-market lease. These above-market and below-market amounts are amortized as an adjustment of rental revenue over the remaining terms of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts of above-market and below-market lease values related to that lease would be recorded as an adjustment to rental revenue.

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Held for Sale

The Company classifies a real estate property as held for sale upon satisfaction of all of the following criteria: (i) management commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such properties; (iii) there is an active program to locate a buyer; (iv) the sale of the property is probable and transfer of the asset is expected to be completed within one year; (v) the property is being actively marketed for sale; and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Upon the determination to classify a property as held for sale, the Company ceases depreciation and amortization on the real estate property held for sale, as well as the amortization of any related intangible assets. Such properties are recorded at the lesser of the carrying value or estimated fair value less estimated costs to sell.

Impairments

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate assets may not be recoverable, the Company assesses the recoverability of the asset group by estimating undiscounted future cash flows, including eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the asset group, an impairment charge will be recorded to the extent that the carrying value exceeds the estimated fair value of the asset group.

When developing estimates of expected future cash flows, the Company makes certain assumptions regarding future market rental rates subsequent to the expiration of current lease arrangements, property operating expenses, terminal capitalization and discount rates, probability weighting of potential uses of the property, sale prices of comparable properties, required tenant improvements and the number of years the property will be held for investment. The use of alternative assumptions in the future cash flow analysis could result in a different determination of the property’s future cash flows and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the carrying value of the real estate assets.

In addition, the Company determines fair value by using a direct capitalization method, a discounted cash flow method using the assumptions noted above, or by utilizing comparable market information based on the view of a market participant. The use of alternative assumptions in these approaches could result in a different determination of the property’s estimated fair value and a different conclusion regarding the existence of an impairment, the extent of such loss, if any, as well as the carrying value of the real estate assets.

The Company accounts for goodwill in accordance with Accounting Standards Codification, or ASC, 350, Intangibles - Goodwill and Other, and allocates its goodwill to its reporting units, which have been determined to be at the individual property level. Goodwill has an indefinite life and is not amortized.

The Company evaluates goodwill for impairment at least annually, as of the last day of each year, or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more-likely-than-not indicate that the fair value of a reporting unit is below its carrying value.

The Company has the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Under a qualitative assessment, the impairment analysis for goodwill represents an evaluation of whether it is more-likely-than-not the reporting unit's fair value is less than its carrying value, including goodwill. If a qualitative analysis indicates that it is more-likely-than-not that the estimated carrying value of a reporting unit, including goodwill, exceeds its fair value, the Company performs the quantitative analysis. The quantitative analysis consists of estimating the fair value of each reporting unit using discounted projected future cash flows and comparing those estimated fair values with the carrying values, which include the allocated goodwill. If the estimated fair value is less than the carrying value, the Company would then recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Deferred Financing Costs

Deferred financing costs are loan fees, legal fees and other third-party costs associated with obtaining and further modifying financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Deferred financing costs related to the term loan portion of the credit facility are recorded as a reduction of the related debt on the accompanying consolidated balance sheets. Deferred financing costs related to the revolving line of credit are recorded in other assets in the accompanying consolidated balance sheets.

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Fair Value

ASC 820, Fair Value Measurements and Disclosures, or ASC 820, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC 820 emphasizes that fair value is intended to be a market-based measurement, as opposed to a transaction-specific measurement.

Fair value is defined by ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate the fair value. Assets and liabilities are measured using inputs from three levels of the fair value hierarchy, as follows:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Inputs other than quoted prices for similar assets and liabilities in active markets that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

Level 3—Unobservable inputs, only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.

Revenue Recognition and Tenant Receivables

The majority of the Company's revenue is derived from rental revenue, which is accounted for in accordance with ASC 842, Leases, or ASC 842. Under ASC 842, rental revenue is recognized on a straight-line basis over the term of the related lease (including rent holidays). For lease arrangements where it is not probable that the Company will collect all or substantially all of the remaining lease payments under the term of the lease, rental revenue is limited to the lesser of the rental revenue that would be recognized on a straight-line basis or the lease payments that have been collected from the lessee. Differences between rental revenue recognized and amounts contractually due under the lease agreements are credited or charged to straight-line rent receivable. Tenant reimbursements, which are comprised of additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, are recognized when the services are provided and the performance obligations are satisfied.

Share Repurchase Program

The Company’s Amended and Restated Share Repurchase Program, or the SRP, allows for repurchases of shares of the Company’s common stock upon meeting certain criteria. The SRP provides that all repurchases during any calendar year, including those redeemable upon death or a "Qualifying Disability" (as defined in the Company's SRP) of a stockholder, be limited to those that can be funded with equivalent proceeds raised from the Company's distribution reinvestment plan, or DRIP, during the prior calendar year and other operating funds, if any, as the Company's board of directors, or the Board, in its sole discretion, may reserve for this purpose.

Repurchases of shares of the Company’s common stock are at the sole discretion of the Board, provided, however, that the Company limits the number of shares repurchased during any calendar year to 5.0% of the total number of shares of common stock outstanding as of December 31st of the previous calendar year. The SRP is subject to terms and limitations, including, but not limited to, quarterly share limitations, an annual 5.0% share limitation and DRIP funding limitations and any amendments to the plan. In addition, the Board, in its sole discretion, may suspend (in whole or in part) the SRP at any time, and may amend, reduce, terminate or otherwise change the SRP upon 30 days' prior notice to the Company’s stockholders for any reason it deems appropriate.

The Company will currently only repurchase shares due to death and involuntary exigent circumstances in accordance with the SRP, subject in each case to the terms and limitations of the SRP. Under the SRP, the Company may waive certain of the terms and requirements of the SRP in the event of the death of a stockholder who is a natural person, including shares held through an Individual Retirement Account or other retirement or profit-sharing plan, and certain trusts meeting the requirements of the SRP. The Company may also waive certain of the terms and requirements of the SRP in the event of an involuntary exigent circumstance, as determined by the Company or any of the executive officers thereof, in its or their sole discretion.

Distribution Policy

In order to maintain its status as a REIT, the Company is required to make distributions each taxable year equal to at least 90% of its REIT taxable income, computed without regard to the dividends paid deduction and excluding capital gains. To the extent funds are available, the Company intends to continue to pay regular distributions to stockholders. Distributions are paid to stockholders of record as of the applicable record dates. Distributions to stockholders are determined by the Board and are dependent upon a number of factors, including funds available for the payment of distributions, financial condition, the timing

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of property acquisitions, capital expenditure requirements, and annual distribution requirements in order to maintain the Company’s status as a REIT.

Stock-based Compensation

On March 6, 2020, the Board approved the Amended and Restated 2014 Restricted Share Plan, or the A&R Incentive Plan, pursuant to which the Company has the authority and power to grant awards of restricted shares of its Class A common stock to its directors, officers and employees. The Company accounts for its stock awards in accordance with ASC 718-10, Compensation—Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). For performance-based awards, compensation costs are recognized over the service period if it is probable that the performance condition will be satisfied, with changes of the assessment at each reporting period and recording the effect of the change in the compensation cost as a cumulative catch-up adjustment. The compensation costs for restricted stock are recognized based on the fair value of the restricted stock awards at grant date. Forfeitures are accounted for as they occur.

Earnings Per Share

The Company calculates basic earnings per share by dividing net income (loss) attributable to common stockholders for the period by the weighted average shares of its common stock outstanding for that period. All classes of common stock are allocated net income (loss) attributable to common stockholders at the same rate per share and receive the same gross distribution per share. Diluted earnings per share is computed based on the weighted average number of shares outstanding and all potentially dilutive securities. Shares of non-vested restricted common stock and performance-based deferred stock unit awards, or Performance DSUs, are considered to be participating securities because they contain non-forfeitable rights to distributions and give rise to potentially dilutive shares of common stock.

Reportable Segments

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an entity’s reportable segments. As of December 31, 2023 and December 31, 2022, all of the Company's consolidated revenues were generated from real estate investments in healthcare properties. The Company’s chief operating decision maker evaluates operating performance of healthcare properties on an individual property level, which are aggregated into one operating segment due to their similar economic characteristics. The aggregated operating segment is the Company's only reportable segment.

Derivative Instruments and Hedging Activities

As required by ASC 815, Derivatives and Hedging, or ASC 815, the Company records all derivative instruments at fair value as assets and liabilities on its consolidated balance sheets. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

In accordance with the fair value measurement guidance in Accounting Standards Update, or ASU, 2011-04, Fair Value Measurement, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

The Company is exposed to variability in expected future cash flows that are attributable to interest rate changes in the normal course of business. The Company’s primary strategy in entering into derivative contracts is to add stability to future cash flows by managing its exposure to interest rate fluctuations. The Company utilizes derivative instruments, including interest rate swaps, to effectively convert its variable rate debt to fixed rate debt. The Company does not enter into derivative instruments for speculative purposes.

In accordance with ASC 815, the Company designates interest rate swap contracts as cash flow hedges of floating-rate borrowings. For derivative instruments that are designated and qualify as cash flow hedges, the gains or losses on the derivative instruments are reported as other comprehensive (loss) income - unrealized (loss) gain on interest rate swaps, net in the consolidated statements of comprehensive income and are reclassified into earnings in the same line item associated with the forecasted transaction in the same period during which the hedged transactions affect earnings.

Income Taxes

The Company currently qualifies and is taxed as a REIT under Sections 856 through 860 of the Code. Accordingly, it will generally not be subject to corporate U.S. federal or state income tax to the extent that it makes qualifying distributions to stockholders, and provided it satisfies, on a continuing basis, through actual investment and operating results, the REIT requirements, including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT,

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it would be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Accordingly, failure to qualify as a REIT could have a material adverse impact on the results of operations and amounts available for distribution to stockholders.

The dividends paid deduction of a REIT for qualifying dividends paid to its stockholders is computed using the Company’s taxable income as opposed to net income reported in the consolidated financial statements. Taxable income, generally, will differ from net income reported in the consolidated financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company has concluded that there was no impact related to uncertain tax positions from results of operations of the Company for the years ended December 31, 2023, 2022 and 2021. The earliest tax year currently subject to examination is 2020.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. The Company is evaluating the disclosure requirements of ASU 2023-07 and does not anticipate that this update will have a material impact on its consolidated financial statements.

Note 3—Real Estate

Acquisitions

During the year ended December 31, 2023, the Company purchased two real estate properties in two separate transactions, which were determined to be asset acquisitions. The Company allocated the purchase price to tangible assets, consisting of land, building and improvements and tenant improvements, and intangible assets, consisting of in-place leases, based on the relative fair value method of allocating all accumulated costs.

The following table summarizes the consideration transferred and the purchase price allocation for acquisitions during the year ended December 31, 2023 (amounts in thousands):

Total

Building and improvements 51,337

Tenant improvements 1,826

In-place leases 9,767

Total assets acquired $ 69,822

The Company capitalized acquisition costs of approximately $158,000, which are included in the allocation of the real estate acquisitions presented above.

Dispositions

During the year ended December 31, 2023, the Company sold three real estate properties for $271,107,000, generating net proceeds of $270,306,000.

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Investment Risk Concentrations

As of December 31, 2023, the Company had one exposure to geographic concentration that accounted for at least 10.0% of rental revenue for the year ended December 31, 2023. Real estate properties located in the Houston-Pasadena-The Woodlands, Texas metropolitan statistical area accounted for 10.2% of rental revenue for the year ended December 31, 2023.

As of December 31, 2023, the Company had one exposure to tenant concentration that accounted for at least 10.0% of rental revenue for the year ended December 31, 2023. The leases with tenants at properties under the common control of Post Acute Medical, LLC and its affiliates accounted for 14.5% of rental revenue for the year ended December 31, 2023.

Impairment Losses

The Company recorded impairment losses on real estate of $24,252,000 (including goodwill impairments of $4,010,000), for the year ended December 31, 2023, as a result of property sales and tenant related triggering events that occurred at certain properties. In addition, during the year ended December 31, 2023, the Company recorded an impairment of in-place lease and above-market lease intangible assets of $1,130,000 and $260,000, respectively. The fair values of these properties were determined based on the guidance in ASC 820. These impairments were allocated to the asset groups, for each respective property, on a pro-rata basis, which included land, buildings and improvements, and their related intangible assets.

During the year ended December 31, 2022, the Company recorded impairment losses on real estate of $47,424,000 (including goodwill impairments of $1,574,000). In addition, during the year ended December 31, 2022, the Company recorded an impairment of an in-place lease intangible asset of $4,345,000.

During the year ended December 31, 2021, the Company recorded impairment losses on real estate of $27,837,000 (including goodwill impairments of $671,000). The impaired properties related to the 2021 impairments were all subsequently sold.

Impairment losses on real estate (including goodwill impairments) are recorded as impairment losses in the accompanying consolidated statements of comprehensive income. Impairments of in-place leases are included in depreciation and amortization in the accompanying consolidated statements of comprehensive income. Impairments of above-market leases are recorded as a reduction to rental revenue in the accompanying consolidated statements of comprehensive income.

The following table summarizes the rollforward of goodwill for the years ended December 31, 2023 and 2022 (amounts in thousands):

Year Ended December 31,

Note 4—Discontinued Operations

The Company formerly invested in data center properties and during the second quarter of 2021, the Board made a determination to sell the Company's data center properties. On May 19, 2021, the Company and certain of its wholly-owned subsidiaries entered into a purchase and sale agreement, or the PSA, for the sale of 29 data center properties owned by the Company, which constituted the entirety of the Company's data center segment. The decision of the Board to sell the data center properties, as well as the execution of the PSA, represented a strategic shift that had a major effect on the Company's results and operations. On July 22, 2021, the Company completed the sale of its data center segment, or the Data Center Sale, for an aggregate sale price of $1,320,000,000, and generated net proceeds of approximately $1,295,367,000. Concurrently, the Board declared a special cash distribution of $1.75 per share of Class A, Class I, Class T and Class T2 shares of common stock. The special cash distribution was funded with the proceeds from the Data Center Sale. The special cash distribution was paid on

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July 30, 2021 to stockholders of record at the close of business on July 26, 2021, in an aggregate amount of approximately $392,685,000.

The operations reflected in income from discontinued operations (which consisted solely of the Company's former data center segment) on the consolidated statements of comprehensive income for the year ended December 31, 2021, were as follows (amounts in thousands):

Year EndedDecember 31,

Revenue:

Lease termination revenue 7,075

Expenses:

Depreciation and amortization 11,759

Interest and other expense, net (1) 31,839

Income from discontinued operations 5,643

Gain on real estate dispositions 395,801

(1) Interest expense attributable to discontinued operations for the year ended December 31, 2021 was $31,856,000, which related to notes payable on certain data center properties. On July 22, 2021, in connection with the Data Center Sale, the Company paid off all data center and healthcare related notes payable, with an outstanding principal balance of $450,806,000 at the time of repayment and incurred approximately $23,738,000 of debt extinguishment costs related to the data center properties.

Capital expenditures on a cash basis for the year ended December 31, 2021, was $2,763,000, related to properties classified within discontinued operations.

There were no significant non-cash operating or investing activities for the properties classified within discontinued operations for the year ended December 31, 2021.

Note 5—Intangible Assets, Net

Intangible assets, net, consisted of the following as of December 31, 2023 and 2022 (amounts in thousands, except weighted average remaining life amounts):

The aggregate weighted average remaining life of the intangible assets was 7.7 years and 8.8 years as of December 31, 2023 and 2022, respectively.

Amortization of intangible assets was $23,766,000, $27,389,000 and $23,157,000 for the years ended December 31, 2023, 2022, and 2021, respectively. Amortization of in-place leases is included in depreciation and amortization, and amortization of above-market leases is recorded as an adjustment to rental revenue in the accompanying consolidated statements of comprehensive income.

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Estimated amortization expense on the intangible assets as of December 31, 2023, for each of the next five years ending December 31 and thereafter, is as follows (amounts in thousands):

Year Amount

Note 6—Intangible Liabilities, Net

Intangible liabilities, net, consisted of the following as of December 31, 2023 and 2022 (amounts in thousands, except weighted average remaining life amounts):

Amortization of below-market leases was $1,494,000, $1,479,000 and $1,322,000 for the years ended December 31, 2023, 2022, and 2021 respectively. Amortization of below-market leases is recorded as an adjustment to rental revenue in the accompanying consolidated statements of comprehensive income.

Estimated amortization of the intangible liabilities as of December 31, 2023, for each of the next five years ending December 31 and thereafter, are as follows (amounts in thousands):

Year Amount

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Note 7—Leases

Lessor

The Company’s real estate properties are leased to tenants under operating leases with varying terms. Typically, the leases have provisions to extend the terms of the lease agreements. The Company retains substantially all of the risks and benefits of ownership of the real estate properties leased to tenants.

Future rent to be received from the Company's investments in real estate assets under the terms of non-cancellable operating leases in effect as of December 31, 2023, for each of the next five years ending December 31, and thereafter, are as follows (amounts in thousands):

Lessee

The Company is subject to various non-cancellable operating lease agreements on which certain of its properties reside and for its corporate offices.

The Company's operating leases do not provide implicit interest rates. In order to calculate the present value of the remaining operating lease payments, the Company used incremental borrowing rates, or IBRs, adjusted for a number of factors. The determination of an appropriate IBR involves multiple inputs and judgments. The Company determined its IBRs considering the general economic environment, term of the underlying leases, and various financing and asset specific adjustments to ensure the IBRs are appropriate for the intended use of the underlying operating leases.

The effects of the Company's leases are recorded in right-of-use assets and lease liabilities on the consolidated balance sheets.

The future rent payments, discounted by the Company's IBRs, under non-cancellable operating leases in effect as of December 31, 2023, for each of the next five years ending December 31 and thereafter, are as follows (amounts in thousands):

Total undiscounted rental payments 118,366

Less imputed interest (77,208)

Total lease liabilities $ 41,158

Weighted average IBR 5.5 %

Weighted average remaining lease term 36.5 years

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The following table provides details of the Company's total lease costs for the years ended December 31, 2023, 2022 and 2021 (amounts in thousands):

Year EndedDecember 31,

Location in Consolidated Statements of Comprehensive Income 2023 2022 2021

Operating lease costs:

Ground lease costs (2) Income from discontinued operations — — 414

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases $ 732 $ 531 $ 1,067

(1)The Company receives reimbursements from tenants for certain operating ground leases, which are recorded as rental revenue in the accompanying consolidated statements of comprehensive income.

(2)Amount relates to lease costs attributable to operating ground leases related to data center properties disposed of in the Data Center Sale on July 22, 2021.

Note 8—Other Assets

Other assets consisted of the following as of December 31, 2023 and 2022 (amounts in thousands):

Amortization of deferred financing costs related to the revolver portion of the credit facility for the years ended December 31, 2023, 2022, and 2021 was $1,027,000, $1,087,000, and $1,430,000, respectively, which was recorded as interest expense, in the accompanying consolidated statements of comprehensive income.

Note 9—Accounts Payable and Other Liabilities

Accounts payable and other liabilities consisted of the following as of December 31, 2023 and 2022 (amounts in thousands):

Accounts payable and accrued expenses $ 3,906 $ 5,387

Distributions payable to stockholders 7,782 7,719

Performance DSUs distributions payable 1,140 573

Derivative liabilities 457 —

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Note 10—Credit Facility

The Company's outstanding credit facility as of December 31, 2023 and 2022 consisted of the following (amounts in thousands):

WeightedAverage Contractual Rate(1) December 31, 2023 December 31, 2022

Variable rate revolving line of credit —% $ — $ 8,000

Variable rate term loans fixed through interest rate swaps 3.28% 525,000 485,000

Variable rate term loans —% — 90,000

Total credit facility, net of deferred financing costs $ 523,153 $ 580,588

(1)Weighted average contractual rate is as of December 31, 2023.

Significant activities regarding the credit facility during the year ended December 31, 2023 include:

•On February 17, 2023, the Company entered into an interest rate swap agreement to hedge $40,000,000 of its variable rate term loans with an effective date of March 1, 2023.

•On March 8, 2023, the Company repaid $8,000,000 on its revolving line of credit with cash flows from operations.

•On April 13, 2023, the Company repaid $10,000,000 on its 2024 term loan with proceeds from a disposition and cash flows from operations.

•On July 13, 2023, the Company repaid $10,000,000 on its 2024 term loan with proceeds from the collection of a note receivable related to a disposition and cash flows from operations.

•On September 26, 2023, the Company drew $50,000,000 on its revolving line of credit to fund an acquisition.

•On November 1, 2023, the Company repaid $8,000,000 on its revolving line of credit with cash flows from operations and proceeds from a disposition.

•On December 8, 2023, the Company, the Operating Partnership, and Truist Bank amended the credit facility to address the calculation of pool availability, including (i) removing the implied debt service coverage ratio restriction which reduces the impact of market interest rate volatility on the Company’s ability to access commitments available, (ii) removing the ground lease concentration limitation, and (iii) amending the credit facility from a borrowing base calculation to an unencumbered pool structure, including the addition of an unsecured interest coverage ratio requirement.

•On December 19, 2023, the Company repaid $42,000,000 on its revolving line of credit and $30,000,000 on its 2024 term loan with proceeds from a disposition.

The principal payments due on the credit facility as of December 31, 2023, for each of the next five years ending December 31 and thereafter, are as follows (amounts in thousands):

Amount

Thereafter —

(1)The 2024 term loan has a maturity date of December 31, 2024, and, at the Company's election, may be extended for a period of six-months on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee. The Company currently meets these conditions and therefore may choose to exercise its option to extend the maturity date of the 2024 term loan.

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As of December 31, 2023, the maximum commitments available under the revolving line of credit were $500,000,000, which may be increased, subject to lender approval, through incremental term loans and/or revolving loan commitments in an aggregate amount not to exceed $1,000,000,000. As of December 31, 2023, the maximum commitments available under the 2024 Term Loan were $250,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $550,000,000. As of December 31, 2023, the maximum commitments available under the 2028 Term Loan Agreement were $275,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000.

At the Company’s election, loans under the credit facility may be made as Base Rate Loans or Secured Overnight Financing Rate, or SOFR, Loans. The applicable margin for loans that are Base Rate Loans is adjustable based on a total leverage ratio, ranging from 0.25% to 0.90%. The applicable margin for loans that are SOFR Loans is adjustable based on a total leverage ratio, ranging from 1.25% to 1.90%.

In addition to interest, the Company is required to pay a fee on the unused portion of the lenders’ commitments under the revolving line of credit at a rate per annum equal to 0.20% if the average daily amount outstanding under the revolving line of credit is less than 50% of the aggregate commitments, or 0.15% if the average daily amount outstanding under the revolving line of credit is equal to or greater than 50% of the aggregate commitments. The unused fee is payable quarterly in arrears and recorded as interest expense in the accompanying consolidated statements of comprehensive income.

The revolving line of credit contains customary financial and operating covenants, including covenants relating to a maximum consolidated leverage ratio, maximum secured leverage ratio, fixed charge coverage ratio, unsecured interest coverage ratio, minimum consolidated tangible net worth, maximum distribution/payout ratio, covenants restricting the issuance of debt, imposition of liens, and entering into affiliate transactions.

Note 11—Fair Value

Cash and cash equivalents, restricted cash, tenant receivables, prepaid and other assets, accounts payable and other liabilities—The Company considers the carrying values of these financial instruments, assets and liabilities, to approximate fair value because of the short period of time between origination of the instruments and their expected realization.

Credit facility—The outstanding principal of the credit facility was $525,000,000 and $583,000,000, which approximated its fair value due to the variable nature of the terms as of December 31, 2023 and 2022, respectively.

The fair value of the Company's credit facility is estimated based on the interest rates currently offered to the Company by its financial institutions.

Derivative instruments—The Company’s derivative instruments consist of interest rate swaps. These swaps are carried at fair value to comply with the provisions of ASC 820. The fair value of these instruments is determined using interest rate market pricing models. The Company incorporated credit valuation adjustments to appropriately reflect the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. The Company determined that the majority of the inputs used to value its interest rate swaps fall within Level 2 of the fair value hierarchy. The credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the respective counterparty. However, as of December 31, 2023, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or be liable for on disposition of the financial assets and liabilities.

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The following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022 (amounts in thousands):

Fair Value Hierarchy

Assets:

Total assets at fair value $ — $ 17,060 $ — $ 17,060

Liabilities:

Derivative liabilities $ — $ 457 $ — $ 457

Total liabilities at fair value $ — $ 457 $ — $ 457

Fair Value Hierarchy

Assets:

Total assets at fair value $ — $ 27,990 $ — $ 27,990

Derivative assets and liabilities are reported in the consolidated balance sheets as other assets and accounts payable and other liabilities, respectively.

Real Estate Assets—Certain real estate assets (which include land, buildings and improvements and intangible assets) were adjusted to fair value as a result of impairments which occurred during the year ended December 31, 2023. The fair values of real estate assets were determined by using either third-party purchase offers, the direct capitalization method or comparable sales information. The fair values of real estate assets based on third-party purchase offers are reflected in the Level 2 fair value hierarchy. The direct capitalization method is based on applying a capitalization rate to the estimated market rental income to be generated by the property. The comparable sales technique uses estimates of properties similar to the subject property by comparing prices per square foot considering recent transaction activity. The estimates of comparable sales and prices per square foot have been adjusted, and are considered significant inputs and thus are classified within Level 3 of the fair value hierarchy.

The following table shows the fair value of the Company's real estate assets, including intangible assets (at fair value measured on a non-recurring basis on the date of impairment), which the Company continues to own, as of December 31, 2023 (amounts in thousands):

Fair Value Hierarchy

(1)Amount includes $1,400,000 attributable to a real estate asset that was adjusted to fair value on December 31, 2022, which the Company continues to own as of December 31, 2023. The Company recorded total losses of $29,010,000 for this real estate asset during the year ended December 31, 2022.

(2)Amount represents losses recorded during 2023 and includes impairments of in-place lease intangible assets of $1,130,000, and real estate assets of $19,628,000 (including goodwill impairments of $792,000).

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The following table sets forth quantitative information about the significant unobservable inputs of the Company’s Level 3 real estate recorded as of December 31, 2023:

Significant Unobservable Inputs December 31, 2023

Overall capitalization rate 8.5%

Market rent per square foot $45.00

Range of comparable sale price per square foot $ 60.86 - $ 98.04

Note 12—Derivative Instruments and Hedging Activities

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest is incurred on the Company’s variable rate debt. During the next twelve months, the Company estimates that an additional $14,114,000 will be reclassified from accumulated other comprehensive income as a reduction to interest expense.

The following table summarizes the notional amount and fair value of the Company’s derivative instruments (amounts in thousands):

OutstandingNotionalAmount Fair Value of OutstandingNotionalAmount Fair Value of

Assets (Liabilities) Assets

(1) Derivative assets and liabilities are reported in the consolidated balance sheets as other assets and accounts payable and other liabilities, respectively.

The notional amount under the agreements is an indication of the extent of the Company’s involvement in each instrument at the time, but does not represent exposure to credit, interest rate or market risks.

The table below summarizes the amount of income and loss recognized on the interest rate derivatives designated as cash flow hedges for the years ended December 31, 2023, 2022 and 2021 (amounts in thousands):

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Credit Risk-Related Contingent Features

The Company has agreements 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. The Company records credit risk valuation adjustments on its interest rate swaps based on the respective credit quality of the Company and the counterparty. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. As of December 31, 2023, the Company had no derivatives with fair value in a net liability position, inclusive of accrued interest but excluding any adjustment for nonperformance risk related to the agreement. As of December 31, 2023, there were no termination events or events of default related to the interest rate swaps.

Tabular Disclosure Offsetting Derivatives

The Company has elected not to offset derivative positions in its consolidated financial statements. The following tables present the effect on the Company’s financial position had the Company made the election to offset its derivative positions as of December 31, 2023 and December 31, 2022 (amounts in thousands):

Offsetting of Derivative Assets

Gross Amounts Not Offset in the Balance Sheet

Offsetting of Derivative Liabilities

Gross Amounts Not Offset in the Balance Sheet

Note 13—Stockholders' Equity

Distributions Paid and Distributions Payable

SILA US Equity

SILA · 10-K · period ended 2023-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits and Financial Statement Schedules.

SILA US Equity☆

SILA · 10-K · period ended 2023-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

Item 15. Exhibits and Financial Statement Schedules.

SILA US Equity