10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission file number: 001-37815

Global Medical REIT Inc.

(Exact name of registrant as specified in its charter)

Maryland	46-4757266
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2 Bethesda Metro Center, Suite 440 Bethesda, MD	20814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (202) 524-6851

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Common Stock, par value $0.001 per share	GMRE	NYSE
Series A Preferred Stock, par value $0.001 per share	GMRE PrA	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes þ  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	þ
Non-accelerated filer	¨	Smaller reporting company	þ
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

The number of shares of the registrant’s common stock outstanding at November 1, 2019 was 36,371,564.

TABLE OF CONTENTS

PART I   FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets – September 30, 2019 and December 31, 2018	3
	Condensed Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2019 and 2018	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income – Three and Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Equity – Three and Nine Months Ended September 30, 2019 and 2018	6
	Condensed Consolidated Statements of Cash Flows  – Nine Months Ended September 30, 2019 and 2018	8
	Notes to the Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
PART II   OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		45

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GLOBAL MEDICAL REIT INC.

Condensed Consolidated Balance Sheets

(unaudited and in thousands, except par values)

	As of
	September 30, 2019			December 31, 2018
Assets
Investment in real estate:
Land	$	86,878		$	63,710
Building		637,505			518,451
Site improvements		9,100			6,880
Tenant improvements		31,465			15,357
Acquired lease intangible assets		65,498			43,152
		830,446			647,550
Less: accumulated depreciation and amortization		(48,731	)		(30,625	)
Investment in real estate, net		781,715			616,925
Cash and cash equivalents		2,815			3,631
Restricted cash		3,011			1,212
Tenant receivables		4,167			2,905
Due from related parties		75			-
Escrow deposits		2,865			1,752
Deferred assets		13,307			9,352
Other assets		4,363			322
Total assets	$	812,318		$	636,099
Liabilities and Equity
Liabilities:
Credit facility, net of unamortized discount of $3,983 and $3,922 at September 30, 2019 and December 31, 2018, respectively	$	363,242		$	276,353
Notes payable, net of unamortized discount of $701 and $799 at September 30, 2019 and December 31, 2018, respectively		38,651			38,654
Accounts payable and accrued expenses		5,501			3,664
Dividends payable		9,470			6,981
Security deposits and other		6,362			4,152
Due to related parties, net		1,584			1,030
Derivative liability		10,399			3,487
Other liability		2,379			-
Acquired lease intangible liability, net		3,287			2,028
Total liabilities		440,875			336,349
Commitments and Contingencies
Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized; 3,105 issued and outstanding at September 30, 2019 and December 31, 2018, respectively (liquidation preference of $77,625 at September 30, 2019 and December 31, 2018, respectively)		74,959			74,959
Common stock, $0.001 par value, 500,000 shares authorized; 36,290 shares and 25,944 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		36			26
Additional paid-in capital		340,435			243,038
Accumulated deficit		(63,846	)		(45,007	)
Accumulated other comprehensive loss		(10,596	)		(3,721	)
Total Global Medical REIT Inc. stockholders' equity		340,988			269,295
Noncontrolling interest		30,455			30,455
Total equity		371,443			299,750
Total liabilities and equity	$	812,318		$	636,099

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

- 3 -

GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Operations

(unaudited and in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue
Rental revenue	$	18,117		$	13,995		$	50,093		$	38,790
Other income		78			8			182			27
Total revenue		18,195			14,003			50,275			38,817
Expenses
General and administrative		1,681			1,395			4,928			4,169
Operating expenses		1,362			941			3,826			2,726
Management fees – related party		1,621			1,104			4,539			3,280
Depreciation expense		5,006			3,614			13,481			9,965
Amortization expense		1,500			953			3,757			2,645
Interest expense		4,549			4,055			12,707			10,681
Preacquisition fees		168			168			224			294
Total expenses		15,887			12,230			43,462			33,760
Net income	$	2,308		$	1,773		$	6,813		$	5,057
Less: Preferred stock dividends		(1,455	)		(1,455	)		(4,366	)		(4,366	)
Less: Net income attributable to noncontrolling interest		(83	)		(32	)		(246	)		(59	)
Net income attributable to common stockholders	$	770		$	286		$	2,201		$	632
Net income attributable to common stockholders per share – basic and diluted	$	0.02		$	0.01		$	0.07		$	0.03
Weighted average shares outstanding – basic and diluted		35,512			21,797			32,514			21,687

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

- 4 -

GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited and in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	2,308		$	1,773		$	6,813		$	5,057
Other comprehensive loss:
Decrease in fair value of interest rate swap agreement		(1,303	)		(109	)		(6,875	)		(109	)
Total other comprehensive loss		(1,303	)		(109	)		(6,875	)		(109	)
Comprehensive income (loss)		1,005			1,664			(62	)		4,948
Less: Preferred stock dividends		(1,455	)		(1,455	)		(4,366	)		(4,366	)
Less: Comprehensive loss (income) attributable to noncontrolling interest		44			(21	)		442			(48	)
Comprehensive (loss) income attributable to common stockholders	$	(406	)	$	188		$	(3,986	)	$	534

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

- 5 -

GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Equity

(unaudited and in thousands)

For the Nine Months Ended September 30, 2019:

	Common Stock				Preferred Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Global Medical REIT Inc. Stockholders’			Non- controlling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity			Interest			Equity
Balances, December 31, 2018		25,944	$	26		3,105	$	74,959	$	243,038	$	(45,007	)	$	(3,721	)	$	269,295		$	30,455		$	299,750
Net income		-		-		-		-		-		6,567			-			6,567			246			6,813
Issuance of shares of common stock, net		10,284		10		-		-		96,767		-			-			96,777			-			96,777
LTIP Units and OP Units redeemed for common stock		62		-		-		-		630		-			-			630			(630	)		-
Change in fair value of interest rate swap agreements		-		-		-		-		-		-			(6,875	)		(6,875	)		-			(6,875	)
Stock-based compensation expense		-		-		-		-		-		-			-			-			2,493			2,493
Dividends to common stockholders		-		-		-		-		-		(21,040	)		-			(21,040	)		-			(21,040	)
Dividends to preferred stockholders		-		-		-		-		-		(4,366	)		-			(4,366	)		-			(4,366	)
Dividends to noncontrolling interest		-		-		-		-		-		-			-			-			(2,615	)		(2,615	)
OP Units issued to third parties		-		-		-		-		-		-			-			-			506			506
Balances, September 30, 2019		36,290	$	36		3,105	$	74,959	$	340,435	$	(63,846	)	$	(10,596	)	$	340,988		$	30,455		$	371,443

For the Three Months Ended September 30, 2019:

	Common Stock				Preferred Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Global Medical REIT Inc. Stockholders’			Non- controlling			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity			Interest			Equity
Balances, June 30, 2019		34,653	$	35		3,105	$	74,959	$	322,872	$	(57,397	)	$	(9,293	)	$	331,176		$	30,427		$	361,603
Net income		-		-		-		-		-		2,225			-			2,225			83			2,308
Issuance of shares of common stock, net		1,632		1		-		-		17,509		-			-			17,510			-			17,510
LTIP Units and OP Units redeemed for common stock		5		-		-		-		54		-			-			54			(54	)		-
Change in fair value of interest rate swap agreements		-		-		-		-		-		-			(1,303	)		(1,303	)		-			(1,303	)
Stock-based compensation expense		-		-		-		-		-		-			-			-			868			868
Dividends to common stockholders		-		-		-		-		-		(7,219	)		-			(7,219	)		-			(7,219	)
Dividends to preferred stockholders		-		-		-		-		-		(1,455	)		-			(1,455	)		-			(1,455	)
Dividends to noncontrolling interest		-		-		-		-		-		-			-			-			(869	)		(869	)
Balances, September 30, 2019		36,290	$	36		3,105	$	74,959	$	340,435	$	(63,846	)	$	(10,596	)	$	340,988		$	30,455		$	371,443

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

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GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Equity - Continued

(unaudited and in thousands)

For the Nine Months Ended September 30, 2018:

	Common Stock				Preferred Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Global Medical REIT Inc. Stockholders’			Non- controlling			Total
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity			Interest			Equity
Balances, December 31, 2017		21,631	$	22		3,105	$	74,959	$	205,788		$	(34,434	)	$	-		$	246,335		$	12,678		$	259,013
Net income		-		-		-		-		-			4,998			-			4,998			59			5,057
Issuance of shares of common stock		372		-		-		-		3,452			-			-			3,452			-			3,452
Reclassification of deferred offering costs		-		-		-		-		(302	)		-			-			(302	)		-			(302	)
Change in fair value of interest rate swap		-		-		-		-		-			-			(109	)		(109	)		-			(109	)
Stock-based compensation expense		-		-		-		-		-			-			-			-			1,978			1,978
Dividends to common stockholders		-		-		-		-		-			(13,053	)		-			(13,053	)		-			(13,053	)
Dividends to preferred stockholders		-		-		-		-		-			(4,366	)		-			(4,366	)		-			(4,366	)
Dividends to noncontrolling interest		-		-		-		-		-			-			-			-			(1,493	)		(1,493	)
OP Units issued to third parties		-		-		-		-		-			-			-			-			4,742			4,742
LTIP Units redeemed in cash		-		-		-		-		-			-			-			-			(263	)		(263	)
Balances, September 30, 2018		22,003	$	22		3,105	$	74,959	$	208,938		$	(46,855	)	$	(109	)	$	236,955		$	17,701		$	254,656

For the Three Months Ended September 30, 2018:

	Common Stock				Preferred Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Global Medical REIT Inc. Stockholders’			Non- controlling			Total
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity			Interest			Equity
Balances, June 30, 2018		21,631	$	22		3,105	$	74,959	$	205,798		$	(42,739	)	$	-		$	238,030		$	17,483		$	255,513
Net income		-		-		-		-		-			1,741			-			1,741			32			1,773
Issuance of shares of common stock		372		-		-		-		3,452			-			-			3,452			-			3,452
Reclassification of deferred offering costs		-		-		-		-		(302	)		-			-			(302	)		-			(302	)
Change in fair value of interest rate swap		-		-		-		-		-			-			(109	)		(109	)		-			(109	)
Stock-based compensation expense		-		-		-		-		-			-			-			-			741			741
Dividends to common stockholders		-		-		-		-		-			(4,402	)		-			(4,402	)		-			(4,402	)
Dividends to preferred stockholders		-		-		-		-		-			(1,455	)		-			(1,455	)		-			(1,455	)
Dividends to noncontrolling interest		-		-		-		-		-			-			-			-			(555	)		(555	)
Balances, September 30, 2018		22,003	$	22		3,105	$	74,959	$	208,938		$	(46,855	)	$	(109	)	$	236,955		$	17,701		$	254,656

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

- 7 -

GLOBAL MEDICAL REIT INC.

Condensed Consolidated Statements of Cash Flows

(unaudited and in thousands)

	Nine Months Ended September 30,
	2019			2018
Operating activities
Net income	$	6,813		$	5,057
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		13,481			9,965
Amortization of acquired lease intangible assets		3,757			2,645
Amortization of above market leases, net		634			484
Amortization of deferred financing costs and other		1,000			1,327
Stock-based compensation expense		2,493			1,978
Capitalized preacquisition costs charged to expense		162			132
Other		82			-
Changes in operating assets and liabilities:
Tenant receivables		(1,232	)		(1,040	)
Deferred assets		(3,955	)		(4,597	)
Other assets		(154	)		(126	)
Accounts payable and accrued expenses		911			1,434
Security deposits and other		2,210			1,800
Accrued management fees due to related party		479			41
Net cash provided by operating activities		26,681			19,100
Investing activities
Purchase of land, buildings, and other tangible and intangible assets and liabilities		(181,440	)		(133,851	)
Escrow deposits for purchase of properties		(897	)		(774	)
Loans to related parties		-			(49	)
Capital expenditures on existing real estate investments		(337	)		(2,014	)
Preacquisition costs		-			257
Net cash used in investing activities		(182,674	)		(136,431	)
Financing activities
Net proceeds received from common equity offerings		96,799			3,209
Escrow deposits required by third party lenders		(216	)		(216	)
Repayment of note payable		(101	)		-
Proceeds from Credit Facility		164,450			142,900
Repayment of Credit Facility		(77,500	)		(10,400	)
Payments of deferred financing costs		(924	)		(2,750	)
Redemption of LTIP Units		-			(263	)
Dividends paid to common stockholders, and OP Unit and LTIP Unit holders		(21,167	)		(14,075	)
Dividends paid to preferred stockholders		(4,365	)		(4,366	)
Net cash provided by financing activities		156,976			114,039
Net increase (decrease) in cash and cash equivalents and restricted cash		983			(3,292	)
Cash and cash equivalents and restricted cash—beginning of period		4,843			7,114
Cash and cash equivalents and restricted cash—end of period	$	5,826		$	3,822
Supplemental cash flow information:
Cash payments for interest	$	11,687		$	9,106
Noncash financing and investing activities:
Accrued dividends payable	$	9,470		$	5,995
Initial recognition of lease liability related to right of use asset	$	3,143		$	-
OP Units issued for property acquisition	$	506		$	4,742
Interest rate swap agreements fair value change recognized in other comprehensive loss	$	6,875		$	109
Accrued common stock offering costs	$	22		$	302
LTIP Units and OP Units redeemed for common stock	$	630		$	-
Accrued preacquisition costs for purchase of properties and tenant improvements	$	901		$	774
Construction-in-process completed and transferred to real estate investments	$	100		$	2,043

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

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GLOBAL MEDICAL REIT INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share amounts)

Note 1 – Organization

Global Medical REIT Inc. (the “Company”) is a Maryland corporation engaged primarily in the acquisition of purpose-built healthcare facilities and the leasing of those facilities to strong healthcare systems and physician groups with leading market share. The Company is externally managed and advised by Inter-American Management, LLC (the “Advisor”), a Delaware limited liability company and an affiliate of the Company.

The Company holds its facilities and conducts its operations through a Delaware limited partnership subsidiary named Global Medical REIT L.P. (the “Operating Partnership”). The Company serves as the sole general partner of the Operating Partnership through a wholly-owned subsidiary of the Company named Global Medical REIT GP LLC, a Delaware limited liability company. As of September 30, 2019, the Company was the 90.22% limited partner of the Operating Partnership, with an aggregate of 9.78% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for common limited partnership units (“OP Units”).

Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2018. In the opinion of management, all adjustments of a normal and recurring nature necessary for a fair presentation of the condensed consolidated financial statements for the interim periods have been made.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including the Operating Partnership and its wholly-owned subsidiaries. The Company presents the portion of any equity it does not own but controls (and thus consolidates) as noncontrolling interest. Noncontrolling interest in the Company includes the LTIP Units that have been granted to the Company’s and Advisor’s directors, officers and employees and the OP Units held by third parties. Refer to Note 5 – “Equity” and Note 7 – “Stock-Based Compensation” for additional information regarding the OP Units and LTIP Units.

The Company classifies noncontrolling interest as a component of consolidated equity on its Condensed Consolidated Balance Sheets, separate from the Company’s total equity. The Company’s net income or loss is allocated to noncontrolling interests based on the respective ownership or voting percentage in the Operating Partnership associated with such noncontrolling interests and is removed from consolidated income or loss on the Condensed Consolidated Statements of Operations in order to derive net income or loss attributable to common stockholders. The noncontrolling ownership percentage is calculated by dividing the aggregate number of LTIP Units and OP Units held by third parties by the total number of shares of common stock, LTIP Units and OP Units outstanding. Any future issuances of additional shares of common stock, LTIP Units or OP Units could change the noncontrolling ownership interest.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Actual results could differ from those estimates.

- 9 -

Investment in Real Estate

The Company determines when an acquisition meets the definition of a business or alternatively should be accounted for as an asset acquisition in accordance with ASU 2017-01 – “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 requires that, when substantially all of the fair value of an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset or group of similar identifiable assets does not meet the definition of a business and therefore is required to be accounted for as an asset acquisition. Transaction costs are capitalized for asset acquisitions and expensed as incurred for business combinations. ASU 2017-01 results in most, if not all, of the Company’s acquisitions being accounted for as asset acquisitions because substantially all of the fair value of the gross assets the Company acquires are concentrated in a single asset or group of similar identifiable assets. For asset acquisitions that are “owner occupied” (meaning that the seller either is the tenant or controls the tenant), the purchase price, including capitalized acquisition costs, will be allocated to land and building based on their relative fair values with no value allocated to intangible assets or liabilities. For asset acquisitions where there is a lease in place but not “owner occupied,” the Company will also allocate the purchase price to tangible assets and any intangible assets acquired or liabilities assumed based on their relative fair values.

Real estate and related assets are stated net of accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the buildings, which are generally between 23 and 50 years, tenant improvements, which are generally between one and 19 years, and site improvements, which are generally between three and 14 years.

Revenue Recognition

The Company’s operations primarily consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations. The leases have been accounted for as operating leases. For operating leases with contingent rental escalators, revenue is recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators are recognized on a straight-line basis over the initial lease term, subject to a collectability assessment, with the difference between the contractual rental receipts and the straight-line amounts recorded as a “deferred rent receivable.” Additionally, rental revenue includes expense recoveries, which represents revenue recognized related to tenant reimbursement of real estate taxes, insurance, and certain other operating expenses. The Company recognizes these reimbursements and related expenses on a gross basis in its Condensed Consolidated Statements of Operations. Expense required to be paid directly by the tenant are not subject to reimbursement.

For all leases where rent collection has been deemed probable, the Company assesses the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant defaults, or the inability of tenants to make contractual rent and tenant recovery payments at each reporting date. The Company also monitors the liquidity and creditworthiness of its tenants and operators on a continuous basis. This evaluation considers industry and economic conditions, property performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company's assessment is based on amounts estimated to be recoverable over the term of the lease. As of September 30, 2019 and December 31, 2018, based on the Company’s assessment, no allowance was recorded as one was not deemed necessary. However, because future events may adversely affect the Company’s tenants, a valuation allowance may need to be established in the future.

Cash and Cash Equivalents and Restricted Cash

The Company considers all demand deposits, cashier’s checks, money market accounts, and certificates of deposit with an original maturity of three months or less to be cash equivalents. Amounts included in restricted cash represent (1) certain security deposits received from tenants at the inception of their leases; (2) cash required to be held by a third-party lender as a reserve for debt service; and (3) funds held by the Company that were received from certain tenants that the Company collected to pay specific tenant expenses, such as real estate taxes and insurance, on the tenant’s behalf (“tenant reimbursements”). The following table provides a reconciliation of the Company’s cash and cash equivalents and restricted cash that sums to the total of those amounts at the end of the periods presented on the Company’s accompanying Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018:

	As of September 30,
	2019		2018
Cash and cash equivalents	$	2,815	$	3,005
Restricted cash		3,011		817
Total cash and cash equivalents and restricted cash	$	5,826	$	3,822

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Escrow Deposits

The escrow deposits balance as of September 30, 2019 and December 31, 2018 was $2,865 and $1,752, respectively. Escrow deposits include funds held in escrow to be used for the acquisition of properties in the future and for the payment of taxes, insurance, and other amounts as stipulated by the Company’s Cantor Loan, as hereinafter defined.

Deferred Assets

The deferred assets balance as of September 30, 2019 and December 31, 2018 was $13,307 and $9,352, respectively. The balance as of September 30, 2019 consisted of $13,020 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $287 of other deferred costs. The balance as of December 31, 2018 consisted of $8,706 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $646 of other deferred costs.

Other Assets

The other assets balance was $4,363 as of September 30, 2019, which consisted of $3,094 for a right of use asset that was recorded in connection with the implementation of ASC Topic 842 on January 1, 2019 (refer to Note 8 – “Leases” for additional details), $930 in deferred preacquisition and construction in process costs, and $339 in a prepaid asset. The other assets balance was $322 as of December 31, 2018, which consisted of $139 in capitalized costs related to property acquisitions and $183 in a prepaid asset.

Security Deposits and Other

The security deposits and other liability balance as of September 30, 2019 and December 31, 2018 was $6,362 and $4,152, respectively. The balance as of September 30, 2019 consisted of security deposits of $4,942 and a tenant impound liability of $1,420 related to amounts owed for specific tenant expenses. The balance as of December 31, 2018 consisted of security deposits of $3,272 and a tenant impound liability of $880 related to amounts owed for specific tenant expenses.

Derivative Instruments - Interest Rate Swaps

As of September 30, 2019 and December 31, 2018, the Company had three interest rate swaps that were designated as cash flow hedges of interest rate risk. In accordance with the Company’s risk management strategy, the purpose of the interest rate swaps is to manage interest rate risk for a portion of the Company’s variable-rate debt. The interest rate swaps involve the Company’s receipt of variable-rate amounts from three counterparties in exchange for the Company making fixed-rate payments over the life of the agreement. The Company accounts for derivative instruments in accordance with the provisions of ASC Topic 815, “Derivatives and Hedging” and ASU No. 2017-12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” As of September 30, 2019 and December 31, 2018, the Company’s liability balance related to these interest rate swaps was $10,399 and $3,487, respectively. Refer to Note 4 – “Credit Facility, Notes Payable and Derivative Instruments” for additional details regarding these interest rate swaps. Additionally, as discussed in Note 11 – “Subsequent Events,” on October 3, 2019, the Company executed two additional interest rate swaps with a combined notional amount of $130 million.

Other Liability

The Company adopted ASC Topic 842 on January 1, 2019, and had an other liability balance of $2,379 as of September 30, 2019, based on the provisions of that standard (refer to Note 8 – “Leases” for additional details).

Reclassification

The Company reclassified the line item “Expense Recoveries” on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018, of $884 and $2,610, respectively, to present this amount as a component of “Rental Revenue,” in order to conform to the current period presentation.

Note 3 – Property Portfolio

Summary of Properties Acquired During the Nine Months Ended September 30, 2019

During the nine months ended September 30, 2019 the Company completed 13 acquisitions. For each acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, each acquisition represents an asset acquisition. Accordingly, transaction costs for these acquisitions were capitalized.

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A rollforward of the gross investment in land, building and improvements as of September 30, 2019 resulting from these acquisitions as well as other tenant improvements and the implementation of ASC 842 is as follows:

	Land		Building		Site & Tenant Improvements		Acquired Lease Intangible Assets			Gross Investment in Real Estate
Balances as of December 31, 2018	$	63,710	$	518,451	$	22,237	$	43,152		$	647,550
Facility Acquired – Date Acquired:
Zachary – 2/28/19		-		3,336		512		835			4,683
Gilbert and Chandler – 3/19/19		4,616		11,643		-		-			16,259
Las Vegas – 4/15/19		2,479		15,277		2,449		2,297			22,502
Oklahoma Northwest – 4/15/19		2,364		19,501		3,187		3,155			28,207
Mishawaka – 4/15/19		1,924		10,084		1,872		2,223			16,103
Surprise – 4/15/19		1,738		18,737		4,347		3,860			28,682
San Marcos – 7/12/19		2,322		6,934		530		2,188			11,974
Lansing – 8/1/19		1,202		7,681		852		1,633			11,368
Bannockburn – 8/5/19		731		3,419		1,214		1,325			6,689
Aurora – 8/6/19		1,521		7,446		911		2,679			12,557
Livonia – 8/14/19		980		7,629		643		1,340			10,592
Gilbert – 8/23/19		2,408		2,027		424		733			5,592
Morgantown – 9/26/19		883		5,286		879		902			7,950
ASC 842 Reclassification		-		-		-		(824	)		(824	)
Site and Tenant improvements(1)		-		-		508		-			508
Capitalized costs(2)		-		54		-		-			54
Total Additions:		23,168		119,054		18,328		22,346			182,896
Balances as of September 30, 2019	$	86,878	$	637,505	$	40,565	$	65,498		$	830,446

(1)	Represents tenant improvements that were completed and placed in service during the nine months ended September 30, 2019 related to the Sherman facility that was acquired in June 2017 and the Bountiful facility that was acquired in October 2018. Also includes site improvements at the Watertown facility that was acquired in September 2016.
(2)	Represents capitalized costs incurred during the nine months ended September 30, 2019 at the Derby facility that was acquired in August 2018.

Depreciation expense was $5,006 and $13,481 for the three and nine months ended September 30, 2019, respectively, and $3,614 and $9,965 for the three and nine months ended September 30, 2018, respectively.

As of September 30, 2019, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of $19,137. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all. In accordance with the terms of the Company’s leases, capital improvement obligations in the next 12 months could total up to approximately $10,867.

The following is a summary of the acquisitions completed during the nine months ended September 30, 2019. The purchase price allocations are preliminary and subject to revision within the measurement period, not to exceed one year from the date of the acquisition.

Zachary Facility

On February 28, 2019, the Company assumed the following leasehold interests in the real property located in Zachary, Louisiana for a purchase price of $4.6 million: (i) the interest, as ground lessee, in an existing ground lease of the facility, with approximately 46 years remaining in the initial term with no extension options; and (ii) the interest, as landlord, in an existing lease of the facility with LTAC Hospital of Feliciana, LLC, as tenant, with approximately 16 years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	103
Building and tenant improvements		3,745
In-place leases		305
Above-market lease intangibles		117
Leasing costs		413
Below-market lease intangibles		(34	)
Total purchase price	$	4,649

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Gilbert and Chandler Facilities

On March 19, 2019, the Company purchased the following facilities located in Gilbert, Arizona and Chandler, Arizona for a total purchase price of $16.3 million: (i) a medical office building located in Gilbert, Arizona; (ii) a medical office building located in Gilbert, Arizona; (iii) a medical office suite located in Chandler, Arizona; and (iv) a medical office suite located in Chandler, Arizona (collective, the “Gilbert and Chandler Facilities”). Upon the closing of the acquisition, the Company assumed the seller’s interest, as lessor, in two existing leases and entered into three new leases, as lessor, at the Gilbert and Chandler Facilities. The Gilbert and Chandler Leases have a weighted average remaining lease term of 10.5 years, exclusive of tenant renewal options.

IRF Portfolio

On April 15, 2019, the Company purchased four in-patient rehabilitation facilities located in Las Vegas, Nevada; Surprise, Arizona; Oklahoma City, Oklahoma and Mishawaka, Indiana (collectively, the “IRF Portfolio”) for a total purchase price of approximately $94.6 million. Upon the closing of the acquisition, the Company assumed the sellers’ interest, as lessor, in four existing leases at the properties (collectively, the “IRF Portfolio Leases”) with (i) Encompass Health (Las Vegas, Nevada facility); (ii) a joint venture between Cobalt Rehabilitation and Tenet Healthcare (the Surprise, Arizona facility); (iii) a joint venture between Mercy Health and Kindred Healthcare (the Oklahoma City, Oklahoma facility); and (iv) St. Joseph’s Health System (the Mishawaka, Indiana facility). The IRF Portfolio leases have a weighted average remaining lease term of approximately 8.3 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

	Las Vegas			Surprise		Oklahoma Northwest		Mishawaka
Land and site improvements	$	2,723		$	1,966	$	2,507	$	1,998
Building and tenant improvements		17,482			22,856		22,545		11,882
In-place leases		1,778			1,845		1,890		1,465
Above-market lease intangibles		-			938		367		236
Leasing costs		519			1,077		898		522
Below-market lease intangibles		(863	)		-		-		-
Total purchase price	$	21,639		$	28,682	$	28,207	$	16,103

San Marcos Facility

On July 12, 2019, the Company purchased a medical office building located in San Marcos, California (the “San Marcos Facility”), for a purchase price of $12.0 million. Upon closing, the Company assumed the existing lease of the San Marcos Facility with California Cancer Associates for Research and Excellence, Inc., as tenant. The lease has eight years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,448
Building and tenant improvements		7,338
In-place leases		698
Above-market lease intangibles		1,101
Leasing costs		389
Total purchase price	$	11,974

Lansing Facilities

On August 1, 2019, the Company purchased the following real property and buildings thereon located in Lansing, Michigan for a total purchase price of $11.1 million: (i) 3390 East Jolly Road; (ii) 3955 Patient Care Drive; and (iii) 3400 East Jolly Road (“collectively, the “Lansing Facilities”). Upon closing, the Company assumed sellers’ interest, as lessor, in four existing leases and entered into two new leases at the Lansing Facilities (the “Lansing Leases”). The Lansing Leases have a weighted-average remaining term of 8.5 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,387
Building and tenant improvements		8,348
In-place leases		953
Above-market lease intangibles		130
Leasing costs		550
Below-market lease intangibles		(248	)
Total purchase price	$	11,120

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Bannockburn Facility

On August 5, 2019, the Company purchased an office building located in Bannockburn, Illinois (the “Bannockburn Facility”), for a purchase price of $6.6 million. Upon closing, the Company assumed seller’s interest, as lessor, in 14 existing leases at the Bannockburn Facility (the “Bannockburn Leases”). The Bannockburn Leases have a weighted-average remaining term of 6.3 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed.

Land and site improvements	$	858
Building and tenant improvements		4,506
In-place leases		763
Above-market lease intangibles		240
Leasing costs		322
Below-market lease intangibles		(138	)
Total purchase price	$	6,551

Aurora Facility

On August 6, 2019, the Company purchased a medical office building located in Aurora, Illinois (the “Aurora Facility”), for a purchase price of $12.6 million. Upon closing, the Company assumed the existing lease of the Aurora Facility with Dreyer Clinic Inc., as tenant (the “Dreyer Lease”). The Dreyer Lease has approximately six years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,829
Building and tenant improvements		8,049
In-place leases		1,417
Above-market lease intangibles		861
Leasing costs		401
Total purchase price	$	12,557

Livonia Facility

On August 14, 2019, the Company purchased a medical office building located in Livonia, Michigan (the “Livonia Facility”) for a purchase price of $10.4 million. Upon closing, the Company assumed 10 existing leases at the Livonia Facility (the “Livonia Leases”). The Livonia Leases have a weighted-average remaining term of 3.2 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,181
Building and tenant improvements		8,071
In-place leases		1,252
Above-market lease intangibles		53
Leasing costs		35
Below-market lease intangibles		(236	)
Total purchase price	$	10,356

Gilbert Facility

On August 23, 2019, the Company purchased certain condominium units within two medical office buildings located in Gilbert, Arizona (the “Gilbert Facility”) for a total purchase price of $5.6 million. Upon closing, the Company leased the Gilbert Facility to Covenant Surgical Partners, Inc., a Delaware corporation (the “Covenant Lease”). The Covenant Lease has approximately ten (10) years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,470
Building and tenant improvements		2,389
In-place leases		121
Above-market lease intangibles		300
Leasing costs		312
Total purchase price	$	5,592

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Morgantown Facility

On September 26, 2019, the Company purchased a parcel of land and an office building that is being constructed thereon, located in Morgantown, West Virginia (the “Morgantown Facility”) for a total purchase price of $8.0 million. Upon closing, the Company assumed the existing lease of the Morgantown Facility with Urgent Care MSO, LLC, as tenant (the “Urgent Care Lease”). The Urgent Care Lease has approximately ten years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,256
Building and tenant improvements		5,792
In-place leases		457
Leasing costs		445
Total purchase price	$	7,950

Summary of Properties Acquired During the Nine Months Ended September 30, 2018

During the nine months ended September 30, 2018, the Company completed eight acquisitions. For all eight acquisitions, substantially all of the fair value of the acquisitions was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, all of the acquisitions represent asset acquisitions under the guidance provided by ASU 2017-01. Accordingly, transaction costs for these acquisitions were capitalized.

A rollforward of the gross investment in land, building and improvements as of September 30, 2018, resulting from these acquisitions is as follows:

	Land		Building		Site & Tenant Improvements		Acquired Lease Intangibles		Gross Investment in Real Estate
Balances as of January 1, 2018	$	42,701	$	384,338	$	12,818	$	31,650	$	471,507
Facility Acquired – Date Acquired:
Moline / Silvis – 1/24/18		-		4,895		1,216		989		7,100
Freemont – 2/9/18		162		8,335		-		-		8,497
Gainesville – 2/23/18		625		9,885		-		-		10,510
Dallas – 3/1/18		6,272		17,012		-		-		23,284
Orlando – 3/22/18		2,543		11,720		756		1,395		16,414
Belpre – 4/19/18		3,025		50,526		3,966		7,166		64,683
McAllen – 7/3/18		1,099		4,296						5,395
Derby – 8/3/18		412		2,496		243		453		3,604
Tenant improvements(1)		-		-		2,043		-		2,043
Total Additions:		14,138		109,165		8,224		10,003		141,530
Balances as of September 30, 2018	$	56,839	$	493,503	$	21,042	$	41,653	$	613,037

⁽¹⁾ Represents tenant improvements that were completed and placed in service during the three months ended September 30, 2018 related to the Silvis and Sherman facilities that were acquired in January 2018 and June 2017, respectively. These amounts were recorded as construction-in-process within the “Other Assets” line item in the Company’s Consolidated Balance Sheet as of September 30, 2018, and reclassified to investment in real estate once completed.

The following is a summary of the acquisitions completed during the nine months ended September 30, 2018.

Moline / Silvis Facilities

Moline Facility - On January 24, 2018, the Company purchased a medical office building located in Moline, Illinois, which included the seller’s interest, as ground lessee, in an existing ground lease. The ground lease has approximately 10 years remaining in the initial term, with 12 consecutive five-year renewal options. Upon the closing of this acquisition, the Company assumed two subleases: one sublease with Fresenius Medical Care Quad Cities, LLC (“Fresenius”) with approximately 13 years remaining in the initial term, exclusive of tenant renewal options; and one sublease with Quad Cities Nephrology Associates, P.L.C. with approximately 15 years remaining in the initial term, exclusive of tenant renewal options. 

Silvis Facility - On January 24, 2018, the Company purchased a medical office building located in Silvis, Illinois from the same seller as the Moline facility, which included the seller’s interest, as ground lessee, in an existing ground lease. The ground lease has approximately 67 years remaining in the initial term, with no renewal options. Upon the closing of this acquisition, the Company assumed one sublease with Fresenius with approximately 13 years remaining in the initial term, exclusive of tenant renewal options.

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The aggregate purchase price for the Moline/Silvis facilities was $6.9 million. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed for this acquisition:

Site improvements	$	249
Building and tenant improvements		5,862
In-place leases		343
Above market ground lease intangibles		219
Leasing costs		427
Below market lease intangibles		(229	)
Total purchase price	$	6,871

Fremont Facility - On February 9, 2018, the Company purchased a medical office building located in Fremont, Ohio for a purchase price of approximately $8.5 million. Upon the closing of this acquisition, the Company entered into a new 12-year lease with Northern Ohio Medical Specialists, LLC (NOMS), exclusive of tenant renewal options.

Gainesville Facility - On February 23, 2018, the Company purchased a medical office building and ambulatory surgery center located in Gainesville, Georgia for a purchase price of approximately $10.5 million. Upon the closing of this acquisition, the Company entered into a new 12-year lease with SCP Eye Care Services, LLC , exclusive of tenant renewal options.

Dallas Facility - On March 1, 2018, the Company purchased a hospital, a three-story parking garage, and land all located in Dallas, Texas for an aggregate purchase price of $23.3 million. In addition to the hospital and the parking garage, the land underlays two medical office buildings that are not owned by the Company, each of which is ground leased to the hospital. Upon the closing of this acquisition, the Company entered into two leases with Pipeline East Dallas, LLC, with one lease relating to the hospital and the other lease relating to the underlying land and parking garage.

Orlando Facilities - On March 22, 2018, the Company purchased five medical office buildings from five affiliated sellers for an aggregate purchase price of $16.4 million. Upon the closing of this acquisition, the Company assumed five existing leases with Orlando Health, Inc. (the “Orlando Leases”) The Orlando Leases have a weighted average remaining term of 4.5 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,075
Building and tenant improvements		11,944
In-place leases		808
Above market lease intangibles		229
Leasing costs		358
Below market lease intangibles		(10	)
Total purchase price	$	16,404

Belpre Portfolio - On April 19, 2018, the Company purchased a portfolio of four medical office buildings and a right of first refusal to purchase a fifth, yet to be built, medical office building on the same campus, for an aggregate purchase price of $64.1 million. Upon the closing of the acquisition the Company assumed the existing leases with Marietta Memorial Hospital, a subsidiary of Memorial Health System and such leases had a weighted average remaining lease term of approximately 11.35 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,997
Building and tenant improvements		53,520
In-place leases		2,660
Above market lease intangibles		2,527
Leasing costs		1,979
Below market lease intangibles		(632	)
Total purchase price	$	64,051

McAllen Facility - On July 3, 2018, the Company purchased a medical office building (and adjacent condominium) located in McAllen, Texas for a purchase price of $5.4 million. Upon the closing of this acquisition, the Company entered into a new 11-year lease with Valley Ear, Nose, and Throat Specialists, PA, exclusive of tenant renewal options.

Derby Facility - On August 3, 2018, the Company purchased a medical office building located in Derby, Kansas for a purchase price of $3.6 million. Upon the closing of this acquisition, the Company assumed the existing lease with Rock Surgery Center, LLC. The lease has approximately nine years remaining in its initial term, exclusive of a tenant renewal option. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

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Land and site improvements	$	566
Building and tenant improvements		2,585
In-place leases		299
Above market lease intangibles
Leasing costs		154
Below market lease intangibles		(23	)
Total purchase price	$	3,581

Intangible Assets and Liabilities

The following is a summary of the carrying amount of intangible assets and liabilities as of the dates presented:

	As of September 30, 2019
	Cost		Accumulated Amortization			Net
Assets
In-place leases	$	34,697	$	(6,599	)	$	28,098
Above market leases		12,236		(1,991	)		10,245
Leasing costs		18,565		(2,899	)		15,666
	$	65,498	$	(11,489	)	$	54,009
Liabilities
Below market leases	$	3,855	$	(568	)	$	3,287

	As of December 31, 2018
	Cost		Accumulated Amortization			Net
Assets
In-place leases	$	21,753	$	(4,037	)	$	17,716
Above market ground lease		707		(28	)		679
Above market leases		8,009		(1,096	)		6,913
Leasing costs		12,683		(1,703	)		10,980
	$	43,152	$	(6,864	)	$	36,288
Liability
Below market leases	$	2,336	$	(308	)	$	2,028

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Amortization expense related to in-place leases	$	1,033	$	647	$	2,562	$	1,797
Amortization expense related to leasing costs	$	467	$	307	$	1,195	$	848
Decrease in rental revenue related to above market leases	$	343	$	240	$	895	$	620
Increase in rental revenue related to below market leases	$	114	$	56	$	261	$	152

The following is a summary of the acquired lease intangible amortization:

As of September 30, 2019, scheduled future aggregate net amortization of the acquired lease intangible assets and liabilities for each fiscal year ended December 31 is listed below:

- 17 -

	Net Decrease in Revenue			Net Increase in Expenses
2019 (three months remaining)	$	(246	)	$	1,655
2020		(986	)		6,601
2021		(988	)		5,987
2022		(998	)		5,620
2023		(1,024	)		5,004
Thereafter		(2,716	)		18,897
Total	$	(6,958	)	$	43,764

As of September 30, 2019, the weighted average amortization periods for asset lease intangibles and liability lease intangibles were 6.42 years and 6.41 years, respectively.

Note 4 – Credit Facility, Notes Payable and Derivative Instruments

Credit Facility

The Company, the Operating Partnership, as borrower, and certain of its subsidiaries (such subsidiaries, the “Subsidiary Guarantors”) are parties to a syndicated credit facility with BMO Harris Bank N.A. (“BMO”), as administrative agent (the “Credit Facility”). Amounts outstanding under the Credit Facility bear interest at a floating rate that is based on LIBOR, plus a specified margin based on the Company’s leverage. On September 30, 2019, the Company entered into an amendment to the Credit Facility that, among other things, (i) increased the borrowings under the term-loan component (the “Term Loan”) from $175 million to $300 million, representing the exercise of the remaining $75 million accordion feature and a re-allocation of $50 million from the revolver component (the “Revolver”) to the Term Loan and (ii) added a new $150 million accordion feature. Upon execution of the first amendment to the Company’s Credit Facility, the Credit Facility consisted of a $200 million capacity Revolver, a $300 million Term Loan and a $150 million accordion. The term of the Company’s Credit Facility expires in August 2022, subject to a one-year extension option. The amendment also amends the restricted payments financial covenant by deferring implementation of the 95% AFFO payout limitation contained in Section 8.24(a) of the Credit Facility from the fourth quarter of 2019 to the fourth quarter of 2020 and provides a mechanism for determining an alternative benchmark rate to LIBOR.

The Subsidiary Guarantors and the Company are guarantors of the obligations under the Credit Facility. The amount available to borrow from time to time under the Credit Facility is limited according to a quarterly borrowing base valuation of certain properties owned by the Subsidiary Guarantors.

The Operating Partnership is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales. The Operating Partnership must also maintain (i) a maximum consolidated leverage ratio as of the end of each fiscal quarter of less than (y) 0.65:1.00 for each fiscal quarter ending prior to October 1, 2019 and (z) thereafter, 0.60:1.00, (ii) a minimum fixed charge coverage ratio of 1.50:1.00, (iii) a minimum net worth of $203,795 plus 75% of all net proceeds raised through equity offerings subsequent to March 31, 2018, and (iv) a ratio of total secured recourse debt to total asset value of not greater than 0.10:1.00. The Company was in compliance with the Credit Facility covenants as of September 30, 2019.

The Company has entered into interest rate swaps to hedge its interest rate risk on the Term Loan. For additional information related to the interest rate swaps, see the “Derivative Instruments - Interest Rate Swaps” and “Subsequent Events” sections herein.

During the nine months ended September 30, 2019, the Company borrowed $164,450 under the Credit Facility and repaid $77,500, for a net amount borrowed of $86,950. During the nine months ended September 30, 2018 the Company borrowed $142,900 under the Credit Facility and repaid $10,400, for a net amount borrowed of $132,500. Interest expense incurred on the Credit Facility was $3,716 and $10,268 for the three and nine months ended September 30, 2019, respectively, and $3,211 and $7,872 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019 and December 31, 2018, the Company had the following outstanding borrowings under the Credit Facility:

	September 30, 2019			December 31, 2018
Revolver	$	67,225		$	180,275
Term Loan		300,000			100,000
Less: Unamortized deferred financing costs		(3,983	)		(3,922	)
Credit Facility, net	$	363,242		$	276,353

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Costs incurred related to the Credit Facility, net of accumulated amortization, are netted against the Company’s “Credit Facility, net of unamortized discount” balance in the accompanying Condensed Consolidated Balance Sheets. The Company paid $924 and $2,750 during the nine months ended September 30, 2019 and 2018, respectively, related to modifications to the Credit Facility and borrowing base additions. Amortization expense incurred was $303 and $863 for the three and nine months ended September 30, 2019, respectively, and $455 and $1,373 for the three and nine months ended September 30, 2018, respectively, and is included in the “Interest Expense” line item in the accompanying Condensed Consolidated Statements of Operations.

In July 2017, the Financial Conduct Authority (the “FCA”) that regulates LIBOR announced its intention to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC") which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Credit Facility provides that, on or about the LIBOR cessation date (subject to an early opt-in election), LIBOR shall be replaced as a benchmark rate in the Credit Facility with a new benchmark rate to be agreed upon by the Company and BMO, with such adjustments to cause the new benchmark rate to be economically equivalent to LIBOR. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets.

The Company has interest rate swap agreements that are indexed to LIBOR and is monitoring and evaluating the related risks. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our interest rate swap agreements is likely to vary by agreement. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Notes Payable, Net of Discount

The Company’s notes payable, net, includes two loans: (1) the Cantor Loan and (2) the West Mifflin Note, described in detail below. The following table sets forth the aggregate balances of these loans as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
Notes payable, gross	$	39,475		$	39,475
Less: Unamortized debt discount		(701	)		(799	)
Cumulative principal repayments		(123	)		(22	)
Notes payable, net	$	38,651		$	38,654

Amortization expense incurred related to the debt discount was $32 and $98 for the three and nine months ended September 30, 2019, respectively, and $33 and $98 for the three and nine months ended September 30, 2018, respectively, and is included in the “Interest Expense” line item in the accompanying Condensed Consolidated Statements of Operations.

Cantor Loan

On March 31, 2016, through certain of its wholly-owned subsidiaries, the Company entered into a $32,097 portfolio commercial mortgage-backed securities loan (the “Cantor Loan”) with Cantor Commercial Real Estate Lending, LP (“CCRE”). The subsidiaries are GMR Melbourne, LLC, GMR Westland, LLC, GMR Memphis, LLC, and GMR Plano, LLC (the “GMR Loan Subsidiaries”). The Cantor Loan has cross-default and cross-collateral terms. The Cantor Loan has a maturity date of April 6, 2026 and accrues annual interest at 5.22%. The first five years of the term require interest-only payments and thereafter payments will include interest and principal, amortized over a 30-year schedule. Prepayment can only occur within four months prior to the maturity date, except that the Cantor Loan can be fully or partially defeased upon payment of amounts due under the Cantor Loan and payment of a defeasance amount that is sufficient to purchase U.S. government securities equal to the scheduled payments of principal, interest, fees, and any other amounts due related to a full or partial defeasance under the Cantor Loan.

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The Company secured the payment of the Cantor Loan with the assets, including property, facilities, and rents, held by the GMR Loan Subsidiaries and has agreed to guarantee certain customary recourse obligations, including findings of fraud, gross negligence, or breach of environmental covenants by the GMR Loan Subsidiaries. The GMR Loan Subsidiaries are required to maintain an aggregate monthly debt service coverage ratio of 1.35:1.00 for all of the collateral properties.

The note balance as of September 30, 2019 and December 31, 2018 was $32,097. Interest expense incurred on this note was $429 and $1,271 for the three and nine months ended September 30, 2019, respectively, and $428 and $1,271 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019	$	-
2020		-
2021		282
2022		447
2023		471
Thereafter		30,897
Total	$	32,097

West Mifflin Note

On September 25, 2015, the Company, through its wholly-owned subsidiary GMR Pittsburgh LLC, as borrower, entered into a Term Loan and Security Agreement with Capital One to borrow $7,378. The note bears interest at 3.72% per annum and all unpaid interest and principal is due on September 25, 2020. Interest is paid in arrears and interest payments began on November 1, 2015 and have continued on the first day of each calendar month thereafter. Principal payments began on November 1, 2018 and have continued on the first day of each calendar month thereafter based on an amortization schedule with the remaining principal balance due on the maturity date. The Company, at its option, may prepay the note at any time in whole (but not in part) with advanced written notice. The West Mifflin facility serves as collateral for the note. The note requires a quarterly fixed charge coverage ratio of at least 1:1, a quarterly minimum debt yield of 0.09:1.00, and annualized Operator EBITDAR (as defined in the note) measured on a quarterly basis of not less than $6,000. The Operators are Associates in Ophthalmology, Ltd. and Associates Surgery Centers, LLC.

The Company made principal payments of $101 during the nine months ended September 30, 2019. The note balance as of September 30, 2019 and December 31, 2018 was $7,255 and $7,356, respectively. Interest expense incurred on this note was $69 and $207 for the three and nine months ended September 30, 2019, respectively, and $72 and $211 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019 (three months remaining)	$	35
2020		7,220
Total	$	7,255

Derivative Instruments - Interest Rate Swaps

As of September 30, 2019, the Company had three interest rate swaps that are used to manage the interest rate risk and fix the LIBOR component of certain of its floating rate debt as follows: (i) on August 7, 2018 the Company executed an interest rate swap with BMO that was designated as a cash flow hedge on the Term Loan, with a notional amount of $100 million, a fixed interest rate of 2.88%, and a maturity date of August 8, 2023; and (ii) on November 16, 2018 the Company executed separate interest rate swaps with SunTrust Bank (“SunTrust”) and Citizens Bank of Pennsylvania (“Citizens”) that were each designated as cash flow hedges. The swap with SunTrust has a notional amount of $40 million and the swap with Citizens has a notional amount of $30 million and both have a fixed interest rate of 2.93% and a maturity date of August 7, 2024. Additionally, as discussed in Note 11 – “Subsequent Events,” on October 3, 2019, the Company executed two additional interest rate swaps with a combined notional amount of $130 million.

In accordance with the provisions of ASC Topic 815, the Company records the swaps either as an asset or a liability measured at its fair value at each reporting period. When hedge accounting is applied, the change in the fair value of derivatives designated and that qualify as cash flow hedges is (i) recorded in accumulated other comprehensive loss in the equity section of the Company’s Condensed Consolidated Balance Sheets and (ii) subsequently reclassified into earnings as interest expense for the period that the hedged forecasted transactions affect earnings. If specific hedge accounting criteria are not met, changes in the Company’s derivative instruments’ fair value are recognized currently as an adjustment to net income.

The Company’s interest rate swaps are not traded on an exchange. The Company’s interest rate swaps are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis based on the expected size of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair values are based on Level 2 inputs within the framework of ASC Topic 820, “Fair Value Measurement.” The Company considers its own credit risk, as well as the credit risk of its counterparty, when evaluating the fair value of its derivative instruments.

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The fair value of the Company’s interest rate swaps was a liability of $10,399 and $3,487 as of September 30, 2019 and December 31, 2018, respectively. These amounts are included in the “Derivative Liability” line item on the Company’s Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

The table below details the components of the loss presented on the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income recognized on the Company’s interest rate swaps designated as cash flow hedges for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Amount of loss recognized in other comprehensive loss	$	1,603		$	122		$	7,559		$	122
Amount of loss reclassified from accumulated other comprehensive loss into interest expense		(300	)		(13	)		(684	)		(13	)
Total change in accumulated other comprehensive loss	$	1,303		$	109		$	6,875		$	109

During the next twelve months, the Company estimates that an additional $2,193 will be reclassified as an increase to interest expense. Additionally, during the three and nine months ended September 30, 2019, the Company recorded total interest expense in its Condensed Consolidated Statements of Operations of $4,549 and $12,707.

Weighted-Average Interest Rate and Term

The weighted average interest rate and term of the Company’s debt was 4.19% and 3.85 years at September 30, 2019, compared to 4.64% and 4.24 years as of December 31, 2018.

Note 5 – Equity

Preferred Stock

The Company’s charter authorizes the issuance of 10,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2019 and December 31, 2018, there were 3,105 shares of Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), issued and outstanding. The Series A Preferred Stock has a liquidation preference of $25 per share.

Preferred stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

Date Announced	Record Date	Applicable Quarter	Payment Date	Quarterly Dividend			Dividends per Share
December 13, 2018	January 15, 2019	Q4 2018	January 31, 2019	$	1,455		$	0.46875
March 6, 2019	April 15, 2019	Q1 2019	April 30, 2019	$	1,455		$	0.46875
June 14, 2019	July 15, 2019	Q2 2019	July 31, 2019	$	1,455		$	0.46875
September 13, 2019	October 15, 2019	Q3 2019	October 31, 2019	$	1,455	(1)	$	0.46875

⁽¹⁾ Two months of this amount, equal to $970, was accrued at September 30, 2019.

The holders of the Series A Preferred Stock are entitled to receive dividend payments only when, as and if declared by the Board (or a duly authorized committee of the Board). Dividends will accrue or be payable in cash from the original issue date, on a cumulative basis, quarterly in arrears on each dividend payment date at a fixed rate per annum equal to 7.50% of the liquidation preference of $25.00 per share (equivalent to $1.875 per share on an annual basis). Dividends on the Series A Preferred Stock will be cumulative and will accrue whether or not (i) funds are legally available for the payment of those dividends, (ii) the Company has earnings or (iii) those dividends are declared by the Board. The quarterly dividend payment dates on the Series A Preferred Stock are January 31, April 30, July 31 and October 31 of each year. During the nine month periods ended September 30, 2019 and 2018, the Company paid preferred dividends of $4,365 and $4,366, respectively. The Company may, at its option, redeem the Serial A Preferred Stock for cash in whole or in part, from time-to-time, on or after September 15, 2022 at a cash redemption price of $25.00 per share, plus any accrued and unpaid dividends up to, but not including, the date of redemption.

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Common Stock

The Company has 500,000 authorized shares of common stock, $0.001 par value. As of September 30, 2019 and December 31, 2018, there were 36,290 and 25,944 outstanding shares of common stock, respectively.

On March 18, 2019, the Company closed an underwritten public offering of its common stock and on March 25, 2019 the Company closed on part of the related over-allotment option granted to the underwriters, resulting in $75,191 in net proceeds.

On August 17, 2018, the Company, its Advisor, and the Operating Partnership entered into a Sales Agreement, as amended on June 21, 2019, with a number of financial institutions, pursuant to which the Company may offer and sell, from time to time, up to $50 million of its common stock (the “ATM Program”). During the nine months ended September 30, 2019, pursuant to the ATM Program, the Company sold and issued 2,051 shares of its common stock at an average price of $10.73 per share, receiving net proceeds of $21,608.

Common stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

Date Announced	Record Date	Applicable Quarter	Payment Date	Dividend Amount(1)		Dividends per Share
December 13, 2018	December 26, 2018	Q4 2018	January 10, 2019	$	5,695	$	0.20
March 6, 2019	March 26, 2019	Q1 2019	April 10, 2019	$	7,688	$	0.20
June 14, 2019	June 26, 2019	Q2 2019	July 11, 2019	$	7,699	$	0.20
September 13, 2019	September 25, 2019	Q3 2019	October 10, 2019	$	8,004	$	0.20

⁽¹⁾ Includes distributions on LTIP Units and OP Units.

During the nine months ended September 30, 2019 and 2018, the Company paid total dividends on its common stock, LTIP Units and OP Units in the aggregate amount of $21,167 and $14,075, respectively.

As of September 30, 2019 and December 31, 2018, the Company had an accrued dividend balance of $496 and $316 for dividends payable on the aggregate annual and long-term LTIP Units that are subject to retroactive receipt of dividends on the amount of LTIP Units ultimately earned. During the nine months ended September 30, 2019, $265 of dividends were accrued and $85 of dividends were paid related to these units. During the nine months ended September 30, 2018, $180 of dividends were accrued and $46 of dividends were paid.

The amount of the dividends paid to the Company’s stockholders is determined by the Company’s Board and is dependent on a number of factors, including funds available for payment of dividends, the Company’s financial condition and capital expenditure requirements except that, in accordance with the Company’s organizational documents and Maryland law, the Company may not make dividend distributions that would: (i) cause it to be unable to pay its debts as they become due in the usual course of business; (ii) cause its total assets to be less than the sum of its total liabilities plus senior liquidation preferences; or (iii) jeopardize its ability to maintain its qualification as a REIT.

OP Units

OP Units are limited partnership interests in the Company’s Operating Partnership. OP Units are redeemable by the holder for cash or, at the Company’s option, an equivalent number of shares of the Company’s common stock. During the nine months ended September 30, 2019, the Company issued an aggregate of 49 OP Units with a value of $506 in connection with a facility acquisition. Additionally, during the nine months ended September 30, 2019, two OP Unit holders redeemed an aggregate of 51 OP Units that were issued during 2017 in connection with a facility acquisition. The Company redeemed such OP Units for shares of its common stock with a value of $519. During the year ended December 31, 2018, the Company issued an aggregate of 1,899 OP Units with a value of $16,363 in connection with three facility acquisitions. As of September 30, 2019 and December 31, 2018, there were 3,143 and 3,145 OP Units issued and outstanding, respectively, with an aggregate value of $27,881 and $27,894, respectively. The OP Unit value is based on the Company’s closing share price on the date of the respective transaction and is included as a component of noncontrolling interest equity in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

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Note 6 – Related Party Transactions

Management Agreement

Upon completion of the Company’s initial public offering on July 1, 2016, the Company and the Advisor entered into an amended and restated management agreement (the “Management Agreement”). Certain material terms of the Management Agreement are summarized in the section titled “Business — Our Advisor and our Management Agreement,” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 11, 2019.

Management Fees and Accrued Management Fees

The Company’s management fee to the Advisor is calculated in accordance with the terms of the Management Agreement, which requires an annual base management fee equal to 1.5% of our stockholders’ equity (as defined in the Management Agreement). For the three and nine months ended September 30, 2019, management fees of $1,621 and $4,539, respectively, were incurred and expensed by the Company. For the three and nine months ended September 30, 2018, management fees of $1,104 and $3,280, respectively, were incurred and expensed by the Company. Accrued management fees due to the Advisor were $1,622 and $1,143 as of September 30, 2019 and December 31, 2018, respectively. No incentive management fee was incurred by the Company during the three and nine months ended September 30, 2019 or 2018.

Allocated General and Administrative Expenses

Effective May 8, 2017, the Company and the Advisor entered into an agreement pursuant to which, for a period of one year commencing on May 8, 2017, the Company agreed to reimburse the Advisor for $125 of the annual salary of the General Counsel and Secretary of the Company for so long as he continues to be primarily dedicated to the Company in his capacity as its General Counsel and Secretary. This agreement expired in May 2018 and was not renewed. In the future, the Company may receive additional allocations of general and administrative expenses from the Advisor that are either clearly applicable to or were reasonably allocated to the operations of the Company. There were no allocated general and administrative expenses from the Advisor for the three and nine months ended September 30, 2019. Other than via the terms of the reimbursement agreement noted above, there were no allocated general and administrative expenses from the Advisor for the three and nine months ended September 30, 2018.

Related Party Balances

A rollforward of the due from related parties and due to related party balance, net, as of September 30, 2019 is as follows:

	Due From Related Parties		Due to Related Party, Net
	Funds for Various Purposes		Mgmt. Fees due to Advisor			Other Funds due from Advisor			Due to Related Party, net
Balance as of January 1, 2019	$	61	$	(1,143	)		52		$	(1,091	)
Management fee expense incurred		-		(4,539	)		-			(4,539	)
Management fees paid to Advisor		-		4,060			-			4,060
Loans to Advisor		-		-			(14	)		(14	)
Loans to other related parties		14		-			-			-
Balance as of September 30, 2019	$	75	$	(1,622	)		38		$	(1,584	)

Note 7 – Stock-Based Compensation

2016 Equity Incentive Plan

The 2016 Equity Incentive Plan, as amended (the “Plan”) is intended to assist the Company and its affiliates in recruiting and retaining employees of the Manager, members of the Board, executive officers of the Company, and individuals who provide services to those entities or affiliates of those entities.

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The Plan is intended to permit the grant of both qualifying and non-qualified options and the grant of stock appreciation rights, restricted stock, unrestricted stock, awards of restricted stock units, performance awards and other equity-based awards (including LTIP Units) for up to an aggregate of 2,232 shares of common stock, subject to increase under certain provisions of the Plan. On May 29, 2019, the Company’s stockholders approved an amendment to the Plan to increase the number of authorized shares available for issuance under the Plan by 1,000 shares from 1,232 to 2,232. Based on the grants outstanding as of September 30, 2019, there are 1,020 units that remain available to be granted under the Plan. Units subject to awards under the Plan that are forfeited, cancelled, lapsed, settled in cash or otherwise expired (excluding shares withheld to satisfy exercise prices or tax withholding obligations) are available for grant.

Time-Based Grants

The time-based vesting LTIP unit activity under the Plan during the nine months ended September 30, 2019 was as follows:

LTIP Units outstanding as of December 31, 2018	588
LTIP Units earned and granted via the 2018 performance program – Annual Awards (1)	108
LTIP Units granted on a discretionary basis related to the Annual Awards (2)	28
LTIP Units granted as 2019 long-term time based awards (3)	54
LTIP Units granted to independent directors of the Board (4)	22
LTIP Units – other grant and forfeitures, net (5)	(9	)
LTIP Units outstanding as of September 30, 2019	791

(1)	The 108 LTIP Units represents earned and granted units from the previously disclosed 2018 annual awards (the “Annual Awards”). On March 5, 2019 the Compensation Committee of the Board (the “Compensation Committee”) determined the extent to which the Company achieved the performance goals related to the 2018 Annual Awards and determined the number of LTIP Units that each grantee was entitled to receive. These grants vested 50% on March 5, 2019, the determination date, and 50% vest on March 5, 2020.
(2)	The 28 LTIP Units represents a discretionary grant by the Board. These grants vested 50% on March 5, 2019, the grant date, and 50% vest on March 5, 2020.
(3)	The 54 LTIP Units represent grants approved by the Board on March 5, 2019 pursuant to the Company’ 2019 Long-Term Incentive Plan. These grants are valued based on the Company’s share price at the date of grant of $10.07 and vest in equal one-third increments on each of March 5, 2020, March 5, 2021, and March 5, 2022.
(4)	The 22 LTIP Units represent a grant to the independent directors of the Board made on May 29, 2019, which vest on May 29, 2020.
(5)	The decrease of nine LTIP Units net represents 11 LTIP Units redeemed for the Company’s common stock with a value of $110 and one LTIP Unit that was forfeited, partially offset by three LTIP Units that were granted on March 15, 2019 related to a new hire. These three LTIP Units vest in equal one-third increments on each of March 15, 2020, March 15, 2021, and March 5, 2022.

A detail of the vested and unvested LTIP units outstanding as of September 30, 2019 is as follows:

Total vested units	483
Unvested units:
Granted to employees of the Advisor	286
Granted to the Company’s independent directors	22
Total unvested units	308
LTIP Units outstanding as of September 30, 2019	791

Performance Based Awards

For each of the past three years the Company’s Board has approved annual performance-based LTIP awards (“Annual Awards”) and long-term performance-based LTIP awards (“Long-Term Awards”) to the executive officers of the Company and other employees of the Advisor who perform services for the Company. As described in detail below the Annual Awards have one-year performance periods and the Long-Term Awards have three-year performance periods. In addition to meeting specified performance metrics, vesting in both the Annual Awards and the Long-Term Awards is subject to service requirements.

A detail of the Annual Awards and Long-Term Awards under the 2017, 2018, and 2019 programs as of September 30, 2019 is as follows:

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	2017 Program		2018 Program					2019 Program
	Long-Term		Annual			Long-Term		Annual		Long-Term		Total
Net annual and long-term LTIP awards as of December 31, 2018 (at target)		96		161			110		-		-		367
LTIP Unit target grants via the 2019 Performance Program – Annual Awards and Long-Term Awards (1)		-		-			-		133		82		215
LTIP Units earned and granted via the 2018 Performance Program – Annual Awards (2)		-		(108	)		-		-		-		(108	)
LTIP Units granted on a discretionary basis via the 2018 Performance Program – Annual Awards (2)		-		(28	)		-		-		-		(28	)
LTIP Units not earned under the 2018 Performance Program – Annual Awards (3)		-		(25	)		-		-		-		(25	)
Net annual and long-term LTIP awards as of September 30, 2019 (at target)		96		-			110		133		82		421

⁽¹⁾ These target Annual Awards and Long-Term Awards were approved by the Board on March 5, 2019.

⁽²⁾ These amounts represent grants from the 2018 program Annual Awards. Refer to the “Time-Based Grants” table above which presents these grants as earned and time-based.

⁽³⁾ On March 5, 2019 the Compensation Committee determined the extent to which the Company achieved the performance goals and concluded that these target awards were not achieved.

The number of target LTIP Units comprising each 2019 program Annual Award target grant was based on the closing price of the Company’s common stock reported on the New York Stock Exchange (“NYSE”) on the date of grant. The number of target LTIP Units comprising each Long-Term Award target grant was based on the fair value of the Long-Term Awards as determined by an independent valuation consultant, in each case rounded to the nearest whole LTIP unit in order to eliminate fractional units.

Annual Awards. The Annual Awards are subject to the terms and conditions of LTIP Annual Award Agreements (“LTIP Annual Award Agreements”) between the Company and each grantee.

The Compensation Committee and Board established performance goals for fiscal year 2019, as set forth in Exhibit A to the 2019 LTIP Annual Award Agreements (the “Performance Goals”) that will be used to determine the number of LTIP Units earned by each grantee. As of September 30, 2019, management estimated that the Performance Goals would be met at a 100% level, and accordingly, applied 100% to the net target 2019 program Annual Awards to estimate the 2019 program Annual Awards expected to be earned at the end of the performance period. Cumulative stock-based compensation expense during the nine months ended September 30, 2019 reflects management’s estimate that 100% of these awards will be earned. As soon as reasonably practicable following the last day of the 2019 fiscal year, the Compensation Committee and Board will determine the extent to which the Company has achieved each of the Performance Goals (expressed as a percentage) and, based on such determination, will calculate the number of LTIP Units that each grantee is entitled to receive. Each grantee may earn up to 150% of the number of his/her target LTIP Units. Any 2019 Annual Award LTIP Units that are not earned will be forfeited and cancelled.

Vesting. LTIP Units that are earned as of the end of the applicable performance period will be subject to vesting, subject to continued employment through each vesting date, in two installments as follows: 50% of the earned LTIP Units will become vested on the date in 2020 that the Board approves the number of LTIP Units to be awarded pursuant to the performance components set forth in the 2019 LTIP Annual Award Agreements and 50% of the earned LTIP Units become vested on the one year anniversary of the initial vesting date. Vesting may be accelerated under certain circumstances such as a “change-in-control” transaction or a “qualified termination” event.

Distributions. Distributions equal to the dividends declared and paid by the Company will accrue during the applicable performance period on the maximum number of LTIP Units that the grantee could earn and will be paid with respect to all of the earned LTIP Units at the conclusion of the applicable performance period, in cash or by the issuance of additional LTIP Units at the discretion of the Compensation Committee.

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Long-Term Awards. The Long-Term Awards are subject to the terms and conditions of 2017, 2018 and 2019 LTIP Long-Term Award Agreements (collectively the “LTIP Long-Term Award Agreements”) between the Company and each grantee. The number of LTIP Units that each grantee is entitled to earn under the LTIP Long-Term Award Agreements will be determined following the conclusion of a three-year performance period based on the Company’s total stockholder return (“TSR”), which is determined based on a combination of appreciation in stock price and dividends paid during the performance period. Each grantee may earn up to 200% of the number of target LTIP Units covered by the grantee’s Long-Term Award. Any target LTIP Units that are not earned will be forfeited and cancelled. The number of LTIP Units earned under the Long-Term Awards will be determined as soon as reasonably practicable following the end of the applicable three-year performance period (2020, 2021, or 2022 depending on the program) based on the Company’s TSR on an absolute basis (as to 75% of the Long-Term Award) and relative to the SNL Healthcare REIT Index (as to 25% of the Long-Term Award).

Vesting. LTIP Units that are earned as of the end of the applicable three year performance period will be subject to forfeiture restrictions that will lapse (“vesting”), subject to continued employment through each vesting date as follows; 50% of the earned LTIP Units will vest upon the third anniversary of the respective grant dates and the remaining 50% will vest on the fourth anniversary of the respective grant dates. Vesting may be accelerated under certain circumstances such as a “change-in-control” transaction or a “qualified termination” event.

Distributions. Pursuant to the LTIP Long-Term Award Agreements, distributions equal to the dividends declared and paid by the Company will accrue during the applicable performance period on the maximum number of LTIP Units that the grantee could earn and will be paid with respect to all of the earned LTIP Units at the conclusion of the applicable performance period, in cash or by the issuance of additional LTIP Units at the discretion of the Compensation Committee.

Stock-Based Compensation Expense

In July 2018, the Company implemented the provisions of ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). This standard simplifies several aspects of the accounting for non-employee transactions by stipulating that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, “Compensation-Stock Compensation”) will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, “Equity”). Under the provisions of ASU 2018-07, the Company’s prospective compensation expense for all unvested LTIP Units, Annual Awards, and Long-Term Awards is recognized using the adoption date fair value of the awards, with no remeasurement required. Compensation expense for future LTIP Unit grants, Annual Awards, and Long-Term Awards is based on the grant date fair value of the units/awards, with no subsequent remeasurement required.

As the Long-Term Awards involve market-based performance conditions, the Company utilizes a Monte Carlo simulation to provide a grant date fair value for expense recognition. The Monte Carlo simulation is a generally accepted statistical technique used, in this instance, to simulate a range of possible future stock prices for the Company and the members of the SNL Healthcare REIT Index (the “Index”) over the Performance Periods. The purpose of this modeling is to use a probabilistic approach for estimating the fair value of the performance share award for purposes of accounting under ASC Topic 718.

The assumptions used in the Monte Carlo simulation include beginning average stock price, valuation date stock price, expected volatilities, correlation coefficients, risk-free rate of interest, and expected dividend yield. The beginning average stock price is the beginning average stock price for the Company and each member of the Index for the five trading days leading up to the grant date of the Long-Term Award. The valuation date stock price is the closing stock price of the Company and each of the peer companies in the Index on the grant dates of the Long-Term Awards. The expected volatilities are modeled using the historical volatilities for the Company and the members of the Index. The correlation coefficients are calculated using the same data as the historical volatilities. The risk-free rate of interest is taken from the U.S. Treasury website and relates to the expected life of the remaining performance period on valuation or revaluation. Lastly, the dividend yield assumption is 0.0%, which is mathematically equivalent to reinvesting dividends in the issuing entity, which is part of the Company’s award agreement assumptions.

Below are details regarding certain of the assumptions for the Long-Term Awards using Monte Carlo simulations:

	2019 Long-Term Awards		2018 Long-Term Awards		2017 Long-Term Awards
Share price		$10.07		$8.86		$8.86
Target awards		82		110		96
Volatility		31.7%		33.8%		33.8% - 35.4%
Risk-free rate		2.5%		2.6%		2.4% - 2.6%
Dividend assumption		reinvested		reinvested		reinvested
Expected term in years		3		2.7		1.7 – 2.7

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The Company incurred stock compensation expense of $868 and $2,493, for the three and nine months ended September 30, 2019, respectively, and $741 and $1,978, for the three and nine months ended September 30, 2018, respectively, related to the grants awarded under the Plan. Compensation expense is included within “General and Administrative” expense in the Company’s Condensed Consolidated Statements of Operations.

As of September 30, 2019, total unamortized compensation expense related to these awards of approximately $3.5 million is expected to be recognized over a weighted average remaining period of 1.5 years.

Note 8 – Leases

On January 1, 2019, the Company adopted ASC Topic 842, which supersedes Accounting Standards Codification Topic 840 “Leases” (“ASC Topic 840”). Information in this note with respect to the Company’s leases and lease-related costs as both lessee and lessor and lease-related receivables as lessor is presented under ASC Topic 842 as of and for the three and nine months ended September 30, 2019 and under ASC Topic 840 as of and for the year ended December 31, 2018.

The Company adopted ASC Topic 842 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to accumulated deficit as of January 1, 2019 as a result of this adoption. ASC Topic 842 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Company operates as both a lessor and a lessee. As a lessor, the Company is required under ASC Topic 842 to account for leases using an approach that is substantially similar to ASC Topic 840's guidance for operating leases and other leases such as sales-type leases and direct financing leases. In addition, ASC Topic 842 requires lessors to capitalize and amortize only incremental direct leasing costs. As a lessee, the Company is required under the new standard to apply a dual approach, classifying leases, such as ground leases, as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASC Topic 842 also requires lessees to record a right of use asset and a lease liability for all leases with a term of greater than a year regardless of their classification. The Company has also elected the practical expedient not to recognize right of use assets and lease liabilities for leases with a term of a year or less.

On adoption of the standard, we elected the package of practical expedients provided for in ASC Topic 842, including:

·     No reassessment of whether any expired and existing contracts were or contained leases;

·     No reassessment of the lease classification for any expired and existing leases; and

·     No reassessment of initial direct costs for any existing leases.

The package of practical expedients was made as a single election and was consistently applied to all existing leases as of January 1, 2019. We also elected the practical expedient provided to lessors in a subsequent amendment to ASC Topic 842 that removed the requirement to separate lease and nonlease components, provided certain conditions were met.

Information as Lessor Under ASC Topic 842 (As of and for the three and nine months ended September 30, 2019)

To generate positive cash flow, as a lessor, the Company leases its facilities to tenants in exchange for fixed monthly payments that cover rent, property taxes, insurance and certain cost recoveries, primarily common area maintenance (“CAM”). The Company’s leases were determined to be operating leases and have a portfolio average lease years remaining of approximately 10 years. Payments from the Company’s tenants for CAM are considered nonlease components that are separated from lease components and are generally accounted for in accordance with the revenue recognition standard. However, the Company qualified for and elected the practical expedient related to combining the components because the lease component is classified as an operating lease and the timing and pattern of transfer of CAM income, which is not the predominant component, is the same as the lease component. As such, consideration for CAM is accounted for as part of the overall consideration in the lease. Payments from customers for property taxes and insurance are considered noncomponents of the lease and therefore no consideration is allocated to them because they do not transfer a good or service to the customer. Fixed contractual payments from the Company’s leases are recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the tenant assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

Some of the Company’s leases are subject to annual changes in the Consumer Price Index (“CPI”). Although increases in CPI are not estimated as part of the Company’s measurement of straight-line rental revenue, for leases with base rent increases based on CPI, the amount of rent revenue recognized is adjusted in the period the changes in CPI are measured and effective. Additionally, some of the Company’s leases have extension options.

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Initial direct costs, primarily commissions, related to the leasing of our facilities are capitalized when material as incurred. Capitalized leasing costs are amortized on a straight-line basis over the remaining useful life of the respective leases. All other costs to negotiate or arrange a lease are expensed as incurred.

Lease-related receivables, which include accounts receivable and accrued straight-line rents receivable, are reduced for credit losses, if applicable. To date the Company’s receivables have not had any credit losses. Such amounts would be recognized as a reduction to rental and other revenues. The Company regularly evaluates the collectability of its lease-related receivables. The Company’s evaluation of collectability primarily consists of reviewing past due account balances and considering such factors as the credit quality of our tenant, historical trends of the tenant and changes in tenant payment terms. If the Company’s assumptions regarding the collectability of lease-related receivables prove incorrect, the Company could experience credit losses in excess of what was recognized in rental and other revenues.

The Company recognized $18,117 and $50,093 of rental and other revenues related to operating lease payments for the three and nine months ended September 30, 2019, respectively. Of these amounts $1,202 and $3,597 was for variable lease payments related to expense recoveries for the three and nine months ended September 30, 2019, respectively. The aggregate annual minimum cash to be received by the Company on the noncancelable operating leases related to its portfolio as of September 30, 2019 is as follows for the subsequent years ended December 31:

2019 (three months remaining)	$	16,507
2020		66,310
2021		64,947
2022		63,461
2023		62,040
Thereafter		391,576
Total	$	664,841

Information as Lessor Under ASC Topic 840 (As of and for the year ended December 31, 2018)

The Company adopted the provisions of ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) effective January 1, 2018 using the modified retrospective transition method.  Rental income from leasing arrangements is specifically excluded from the standard. The Company analyzed its remaining revenue streams and concluded there were no changes in revenue recognition with the adoption of the new standard. 

The Company’s operations consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations. These leases were accounted for as operating leases. For operating leases with contingent rental escalators, revenue was recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators were recognized on a straight-line basis over the initial lease term, subject to a collectability assessment. If the Company determined that collectability of rents was not reasonably assured, future revenue recognition was limited to amounts contractually owed and paid, and, when appropriate, an allowance for estimated losses was established.

The Company consistently assessed the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant defaults, or the inability of tenants to make contractual rent and tenant recovery payments. The Company also monitored the liquidity and creditworthiness of its tenants and operators on a continuous basis. This evaluation considered industry and economic conditions, property performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company’s assessment was based on amounts estimated to be recoverable over the term of the lease. As of December 31, 2018, no allowance was recorded as it was not deemed necessary.

The Company’s real estate assets are leased to tenants under operating leases. The minimum rental amounts under the leases were generally subject to scheduled fixed increases. The aggregate annual minimum cash to be received by the Company on its noncancelable operating leases as of December 31, 2018 were as follows:

2019	$	50,527
2020		51,450
2021		49,926
2022		48,862
2023		47,743
Thereafter		330,180
Total	$	578,688

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Information as Lessee Under ASC Topic 842 (As of and for the three and nine months ended September 30, 2019)

The Company has four facilities subject to operating ground leases with a weighted average remaining term of 24 years. Rental payments on these leases are adjusted periodically based on either the CPI or on a pre-determined schedule. The monthly payments on a pre-determined schedule are recognized on a straight-line basis over the terms of the respective leases. Changes in the CPI are not estimated as part of our measurement of straight-line rental expense. Upon initial adoption of ASC Topic 842, the Company recognized a lease liability of $2.2 million (included in “Other Liabilities”) and a related right of use asset of $2.2 million (included in “Other Assets”) on our Condensed Consolidated Balance Sheets equal to the present value of the minimum lease payments required under each ground lease. During the nine months ended September 30, 2019, the Company recorded an additional $0.1 million right of use asset and recognized an additional lease liability of $0.1 million. The Company used a weighted average discount rate of approximately 4.4%, which was derived from our assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments over appropriate tenors. Some of our ground leases contain extension options and, where we determined it was reasonably certain that an extension would occur, they were included in our calculation of the right of use asset and liability. We recognized approximately $35 and $66 of ground lease expense, which was paid in cash, during the three and nine months ended September 30, 2019, respectively.

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases at September 30, 2019 and a reconciliation of those cash flows to the operating lease liability at September 30, 2019:

2019 (three months remaining)	$	28
2020		116
2021		116
2022		116
2023		120
Thereafter		4,476
Total		4,972
Discount		(2,593	)
Lease liability	$	2,379

Information as Lessee Under ASC Topic 840 (As of and for the year ended December 31, 2018)

The Company acquired an interest, as ground lessee, in the ground lease related to the Omaha and Clermont facilities at their dates of acquisition. In connection with the acquisitions of the Moline facility the Company acquired the seller’s interest, as ground lessee, in an existing ground lease that has approximately 10 years remaining in the initial term, with 12 consecutive five-year renewal options. In connection with the acquisition of the Silvis facility the Company acquired the seller’s interest, as ground lessee, in an existing ground lease that has approximately 67 years remaining in the initial term, with no renewal options.

The aggregate minimum cash payments to be made by the Company on these land leases as of December 31, 2018, were as follows:

2019	$	109
2020		109
2021		109
2022		109
2023		113
Thereafter		2,121
Total	$	2,670

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Note 9 – Rent Concentration

The Company’s facilities with a concentration of rental revenue of 5% or greater is as follows for the periods below:

	Three Months Ended September 30,						Nine Months Ended September 30,
Facility	2019			2018			2019			2018
Encompass (four facilities and four locations)		10	%		11	%		10	%		12	%
Belpre		8			11			8			7
OCOM		7			9			6			10
Sherman		5			6			5			6
Austin		5			6			5			7
Aggregate of all other facilities		65			57			66			58
Total		100	%		100	%		100	%		100	%

Note 10 – Commitments and Contingencies

Litigation

The Company is not presently subject to any material litigation nor, to its knowledge, is any material litigation threatened against the Company, which if determined unfavorably to the Company, would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Environmental Matters

The Company follows a policy of monitoring its properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at its properties, the Company is not currently aware of any environmental liability with respect to its properties that would have a material effect on its financial position, results of operations, or cash flows. Additionally, the Company is not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that management believes would require additional disclosure or the recording of a loss contingency.

Note 11 – Subsequent Events

Subsequent events have been evaluated through November 7, 2019, the date the financial statements were issued.

Interest Rate Swaps

On October 3, 2019, the Company hedged its interest rate risk on the Term Loan by entering into two interest rate swaps with an aggregate notional amount of $130 million and a term of approximately five years, which effectively fixed the LIBOR component of the interest rate on a corresponding amount of the Term Loan at 1.21%.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements included herein, including the notes to those financial statements, included elsewhere in this Quarterly Report on Form 10-Q (this “Report”). Some of the comments we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2018, that was filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) on March 11, 2019. Unless otherwise indicated all dollar and share amounts in the following discussion are presented in thousands.

Special Note Regarding Forward-Looking Statements

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). In particular, statements pertaining to our trends, liquidity, capital resources, and the healthcare industry and healthcare real estate opportunity, among others, contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology including, but not limited to, “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

· defaults on or non-renewal of leases by tenants;

· decreased rental rates or increased vacancy rates, including expected rent levels on acquired properties;

· difficulties in identifying healthcare facilities to acquire and completing such acquisitions;

· adverse economic or real estate conditions or developments, either nationally or in the markets in which our facilities are located;

· our failure to generate sufficient cash flows to service our outstanding obligations;

· fluctuations in interest rates and increased operating costs;

· our failure to effectively hedge our interest rate risk;

· our ability to satisfy our short and long-term liquidity requirements;

· our ability to deploy the debt and equity capital we raise;

· our ability to raise additional equity and debt capital on terms that are attractive or at all;

· our ability to make distributions on shares of our common and preferred stock;

· expectations regarding the timing and/or completion of any acquisition;

· general volatility of the market price of our common and preferred stock;

· changes in our business or our investment or financing strategy;

· changes in our management internalization plans;

· our dependence upon key personnel whose continued service is not guaranteed;

· the ability of our external manager, Inter-American Management, LLC’s (the “Advisor”), to identify, hire and retain highly qualified personnel in the future;

· the degree and nature of our competition;

· changes in healthcare laws, governmental regulations, tax rates and similar matters;

· changes in current healthcare and healthcare real estate trends;

· changes in expected trends in Medicare, Medicaid and commercial insurance reimbursement trends;

· competition for investment opportunities;

· our failure to successfully integrate acquired healthcare facilities;

· our expected tenant improvement expenditures;

· changes in accounting policies generally accepted in the United States of America (“GAAP”);

· lack of or insufficient amounts of insurance;

· other factors affecting the real estate industry generally;

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· changes in the tax treatment of our distributions;

· our failure to qualify and maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;

· our ability to qualify for the safe harbors from the “100% Prohibited Transactions Tax” under the REIT rules with respect to our property dispositions; and

· limitations imposed on our business and our ability to satisfy complex rules relating to REIT qualification for U.S. federal income tax purposes.

See Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018 for further discussion of these and other risks, as well as the risks, uncertainties and other factors discussed in this Report and identified in other documents we may file with the SEC from time to time. You should carefully consider these risks before making any investment decisions in our company. New risks and uncertainties may also emerge from time to time that could materially and adversely affect us. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements.

 Overview

Global Medical REIT Inc. (the “Company,” “us,” “we,” or “our”) is an externally-managed, Maryland corporation engaged primarily in the acquisition of purpose-built healthcare facilities and the leasing of those facilities to strong healthcare systems and physician groups with leading market share. The Company is externally managed and advised by the Advisor.

We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016. We conduct our business through an umbrella partnership real estate investment trust, or UPREIT, structure in which our properties are owned by wholly-owned subsidiaries of our operating partnership, Global Medical REIT L.P. (the “Operating Partnership”). Our wholly-owned subsidiary, Global Medical REIT GP, LLC, is the sole general partner of our Operating Partnership and, as of September 30, 2019, we owned 90.22% of the outstanding common operating partnership units (“OP Units”) of our Operating Partnership.

Executive Summary

The following table summarizes certain financial information during the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands, except per share and unit amounts)
Rental revenue	$	18,117	$	13,995	$	50,093	$	38,790
Interest expense	$	4,549	$	4,055	$	12,707	$	10,681
General and administrative expense	$	1,681	$	1,395	$	4,928	$	4,169
Preferred stock dividends	$	1,455	$	1,455	$	4,366	$	4,366
Net income attributable to common stockholders per share	$	0.02	$	0.01	$	0.07	$	0.03
FFO per share and unit(1)	$	0.19	$	0.20	$	0.54	$	0.56
AFFO per share and unit(1)	$	0.19	$	0.20	$	0.54	$	0.56
Dividends per common share	$	0.20	$	0.20	$	0.60	$	0.60
Weighted average common shares		35,512		21,797		32,514		21,687
Weighted average OP Units		3,143		1,857		3,144		1,615
Weighted average LTIP Units		794		588		737		512
Total weighted average shares and units outstanding		39,449		24,242		36,395		23,814

⁽¹⁾ See “—Non-GAAP Financial Measures,” for a description of our non-GAAP financial measures and a reconciliation of our non-GAAP financial measures.

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	As of
	September 30, 2019			December 31, 2018
	(dollars in thousands)
Total investment in real estate, gross	$	830,446		$	647,550
Total debt, net of unamortized discount	$	401,893		$	315,007
Weighted average interest rate		4.19	%		4.64	%
Total equity (including noncontrolling interest)	$	371,443		$	299,750
Net leasable square feet		2,595,631			2,078,915

Our Properties

During the nine months ended September 30, 2019, we made 13 acquisitions encompassing an aggregate of 516,716 leasable square feet for an aggregate contractual purchase price of $180.7 million with annualized base rent of $13.5 million. As of September 30, 2019, our portfolio consisted of gross investment in real estate of $830.4 million, which was comprised of 63 facilities with an aggregate of approximately 2.6 million leasable square feet and approximately $64.6 million of annualized base rent.

Capital Raising Activity

During the nine months ended September 30, 2019, we raised $102.8 million of equity through a combination of common stock and OP Unit issuances at an average offering price of $9.95 per share. Our equity issuances during the nine months ended September 30, 2019 included the following:

· an underwritten public offering of our common stock in March 2019, which resulted in the issuance of 8.2 million shares of our common stock at a public offering price of $9.75 per share, generating gross proceeds of $80.3 million;

· at-the-market (“ATM”) offering issuances of 2.1 million shares of our common stock at an average offering price of $10.73 per share, generating gross proceeds of $22.0 million, of which 1.6 million shares were issued at an average offering price of $10.94, generating gross proceeds of $17.9 million during the three months ended September 30, 2019; and

· an OP Unit issuance of 49 thousand units with a value of $506 in connection with a facility acquisition. The per unit valuation of this OP Unit issuance was $10.30.

Recent Developments

Since September 30, 2019, we have closed and placed under contract the following properties:

Closed Acquisitions

Property	City, State	Leasable Square Feet		Purchase Price(1) (in thousands)		Annualized Base Rent(2) (in thousands)		Capitalization Rate(3)
Steward Surgical Hospital	Beaumont, TX		84,675	$	33,600	$	2,574		7.7	%
St. Davis Emergency Center	Bastrop, TX		28,500		11,828		917		7.8	%
Eye Center of NoFL	Panama City, FL		34,624		12,900		907		7.0	%
Total/Weighted Average			147,799	$	58,328	$	4,398		7.5	%

⁽¹⁾ Represents contractual purchase price.

⁽²⁾ Month of acquisition base rent, multiplied by 12.

⁽³⁾ Capitalization rates are calculated based on current lease terms and do not give effect to future rent escalations.

Properties Under Contract

We have three properties under contract for an aggregate purchase price of approximately $26 million. We are currently in the due diligence period for our properties under contract. If we identify problems with one or more of these properties or the operator of the property during our due diligence review, we may not close the transaction on a timely basis or we may terminate the purchase agreement and not close the transaction.

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Trends Which May Influence Our Results of Operations

We believe the following trends may positively impact our results of operations:

· Growing healthcare expenditures – According to the U.S. Department of Health and Human Services, overall healthcare expenditures are expected to grow at an average rate of 5.5% per year through 2027.  We believe the long-term growth in healthcare expenditures will correlate with the long-term leases at our properties and help maintain or increase the value of our healthcare real estate portfolio;

· An aging population – According to the 2010 U.S. Census, the segment of the population consisting of people 65 years or older comprise the fastest growing segment of the overall U.S. population.  We believe this segment of the U.S. population will utilize many of the services provided at our healthcare facilities such as orthopedics, cardiac, gastroenterology and rehabilitation;

· A continuing shift towards outpatient care – According to the American Hospital Association, patients are demanding more outpatient operations.  We believe this shift in patient preference from inpatient to outpatient facilities will benefit our tenants as most of our properties consist of outpatient facilities;

· Physician practice group and hospital consolidation – We believe the trend towards physician group consolidation will serve to strengthen the credit quality of our tenants if our tenants merge or are consolidated with larger health systems;

· A highly fragmented healthcare real estate market – Despite the move toward consolidation with respect to healthcare services, we believe the healthcare real estate market continues to be highly fragmented, which will provide us with significant acquisition opportunities;

We believe the following trends may negatively impact our results of operations:

· Changes in third party reimbursement methods and policies – As the price of healthcare services continues to increase, we believe third-party payors, such as Medicare and commercial insurance companies, will continue to scrutinize and reduce the types of healthcare services eligible for, and the amounts of, reimbursement under their health insurance plans.  Additionally, many employer-based insurance plans have continued to increase the percentage of insurance premiums for which covered individuals are responsible.  If these trends continue, our tenants may experience lower patient volumes as well as higher patient credit risks, which could negatively impact their business as well as their ability to pay rent to us.

Qualification as a REIT

We elected to be taxed as REIT commencing with our taxable year ended December 31, 2016. Subject to a number of significant exceptions, a corporation that qualifies as a REIT generally is not subject to U.S. federal corporate income taxes on income and gains that it distributes to its stockholders, thereby reducing its corporate-level taxes. In order to qualify as a REIT, a substantial percentage of our assets must be qualifying real estate assets and a substantial percentage of our income must be rental revenue from real property or interest on mortgage loans. We believe that we have organized and have operated in such a manner as to qualify for taxation as a REIT, and we intend to continue to operate in such a manner. However, we cannot provide assurances that we will continue to operate in a manner so as to qualify or remain qualified as a REIT.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Commission on March 11, 2019, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our consolidated financial statements included in Part I, Item 1 of this Report.

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Consolidated Results of Operations

The major factor that resulted in variances in our results of operations for each revenue and expense category for the three and nine months ended September 30, 2019 compared to the same periods in 2018 was the increase in the size of our property portfolio. Our total investments in real estate, net of accumulated depreciation and amortization, was $781.7 million and $586.2 million as of September 30, 2019 and 2018, respectively.

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

	Three Months Ended September 30,
	2019		2018		$ Change
	(in thousands)
Revenue
Rental revenue	$	18,117	$	13,995	$	4,122
Other income		78		8		70
Total revenue		18,195		14,003		4,192
Expenses
General and administrative		1,681		1,395		286
Operating expenses		1,362		941		421
Management fees – related party		1,621		1,104		517
Depreciation expense		5,006		3,614		1,392
Amortization expense		1,500		953		547
Interest expense		4,549		4,055		494
Preacquisition fees		168		168		-
Total expenses		15,887		12,230		3,657
Net income	$	2,308	$	1,773	$	535

Revenue 

Total Revenue

Total revenue for the three months ended September 30, 2019 was $18.2 million, compared to $14.0 million for the same period in 2018, an increase of $4.2 million. The increase was primarily the result of rental revenue earned from the facilities that we acquired subsequent to September 30, 2018, as well as from the recognition of a full three months of rental revenue in 2019 from acquisitions that were completed during the three months ended September 30, 2018. Additionally, included in rental revenue is $1.2 million in revenue that was recognized from expense recoveries during the three months ended September 30, 2019, compared to $0.9 million for the same period in 2018.

Expenses

General and Administrative

General and administrative expenses for the three months ended September 30, 2019 were $1.7 million, compared to $1.4 million for the same period in 2018, an increase of $0.3 million. The increase was primarily related to an increase in non-cash LTIP compensation expense, which was $0.9 million for the three months ended September 30, 2019, compared to $0.7 million for the same period in 2018.

Operating Expenses

Operating expenses for the three months ended September 30, 2019 were $1.4 million, compared to $0.9 million for the same period in 2018, an increase of $0.5 million. The increase resulted from $1.2 million of reimbursable property operating expenses incurred during the three months ended September 30, 2019, compared to $0.9 million for the same period in 2018.

Management Fees – related party

Management fee expense for the three months ended September 30, 2019 was $1.6 million, compared to $1.1 million for the same period in 2018, an increase of $0.5 million. This fee is calculated based on our stockholders’ equity balance and the increase in 2019 is the result of our larger stockholders’ equity balance during the three months ended September 30, 2019 compared to the prior year, reflecting the impact of our common stock and OP Unit issuances that were completed since September 30, 2018.

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Depreciation Expense

Depreciation expense for the three months ended September 30, 2019 was $5.0 million, compared to $3.6 million for the same period in 2018, an increase of $1.4 million. The increase resulted primarily from depreciation expense incurred on the facilities that we acquired subsequent to September 30, 2018, as well as from the recognition of a full three months of depreciation expense in 2019 from acquisitions that were completed during the three months ended September 30, 2018. 

Amortization Expense 

Amortization expense for the three months ended September 30, 2019 was $1.5 million, compared to $1.0 million for the same period in 2018, an increase of $0.5 million. The increase resulted primarily from amortization expense incurred on intangible assets acquired subsequent to September 30, 2018, as well as from the recognition of a full three months of amortization expense in 2019 from intangible assets recorded during the three months ended September 30, 2018. 

Interest Expense

Interest expense for the three months ended September 30, 2019 was $4.5 million, compared to $4.1 million for the same period in 2018, an increase of $0.4 million. This increase was primarily due to both higher average borrowings during the three months ended September 30, 2019, compared to the same period last year, the proceeds of which were used to finance our property acquisitions during that time period, as well as from higher interest rates compared to the same period in 2018.

The weighted average interest rate of our debt for the three months ended September 30, 2019 was 4.21%. Additionally, the weighted average interest rate and term of our debt was 4.19% and 3.85 years at September 30, 2019.

Preacquisition Fees

There were $0.2 million of preacquisition fees incurred for the three months ended September 30, 2019 and September 30, 2018. Preacquisition fees for both the three months ended September 30, 2019 and 2018 represent costs associated with acquisitions that the Company did not, or does not expect to, complete and therefore were expensed.

Net Income

Net income for three months ended September 30, 2019 was $2.3 million, compared to $1.8 million of net income for the same period in 2018, an increase of $0.5 million. The increase resulted primarily from an increase in rental revenue during the three months ended September 30, 2019, partially offset by the increase in expenses for that period.

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

	Nine Months Ended September 30,
	2019		2018		$ Change
	(in thousands)
Revenue
Rental revenue	$	50,093	$	38,790	$	11,303
Other income		182		27		155
Total revenue		50,275		38,817		11,458
Expenses
General and administrative		4,928		4,169		759
Operating expenses		3,826		2,726		1,100
Management fees – related party		4,539		3,280		1,259
Depreciation expense		13,481		9,965		3,516
Amortization expense		3,757		2,645		1,112
Interest expense		12,707		10,681		2,026
Preacquisition fees		224		294		(70	)
Total expenses		43,462		33,760		9,702
Net income	$	6,813	$	5,057	$	1,756

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Revenue 

Total Revenue

Total revenue for the nine months ended September 30, 2019 was $50.3 million, compared to $38.8 million for the same period in 2018, an increase of $11.5 million. The increase is primarily the result of rental revenue earned from the facilities we acquired subsequent to September 30, 2018, as well as from the recognition of a full nine months of rental revenue in 2019 from acquisitions that were completed during the nine months ended September 30, 2018. Additionally, $3.6 million in revenue was recognized from expense recoveries during the nine months ended September 30, 2019, compared to $2.6 million for the same period in 2018.

Expenses 

 General and Administrative

General and administrative expenses for the nine months ended September 30, 2019 were $4.9 million, compared to $4.2 million for the same period in 2018, an increase of $0.7 million. The increase was primarily related to an increase in non-cash LTIP compensation expense which was $2.5 million for the nine months ended September 30, 2019, compared to $2.0 million for the same period in 2018.

Operating Expenses

Operating expenses for the nine months ended September 30, 2019 were $3.8 million, compared to $2.7 million for the same period in 2018, an increase of $1.1 million. The increase results from $3.6 million of reimbursable property operating expenses incurred during the nine months ended September 30, 2019, compared to $2.6 million for the same period in 2018.

Management Fees – related party

Management fee expense for the nine months ended September 30, 2019 was $4.5 million, compared to $3.3 million for the same period in 2018, an increase of $1.2 million. This fee is calculated based on our stockholders’ equity balance and the increase in 2019 is the result of our larger stockholders’ equity balance during the nine months ended September 30, 2019 compared to the prior year, reflecting the impact of our common stock and OP Unit issuances that were completed subsequent to September 30, 2018.

Depreciation Expense

Depreciation expense for the nine months ended September 30, 2019 was $13.5 million, compared to $10.0 million for the same period in 2018, an increase of $3.5 million. The increase results primarily from depreciation expense incurred on the facilities we acquired subsequent to September 30, 2018, as well as from the recognition of a full nine months of depreciation expense in 2019 from acquisitions that were completed during the nine months ended September 30, 2018. 

Amortization Expense

Amortization expense for the nine months ended September 30, 2019 was $3.8 million, compared to $2.6 million for the same period in 2018, an increase of $1.2 million. The increase results primarily from amortization expense incurred on intangible assets recorded subsequent to September 30, 2018, as well as from the recognition of a full nine months of amortization expense in 2019 from intangible assets recorded during the nine months ended September30, 2018. 

Interest Expense

Interest expense for the nine months ended September 30, 2019 was $12.7 million, compared to $10.7 million for the same period in 2018, an increase of $2.0 million. This increase is primarily due to both higher average borrowings during the 2019 period compared to the same period last year, the proceeds of which were used to finance our property acquisitions during that time period, as well as higher interest rates compared to the same period in 2018.

The weighted average interest rate of our debt for the nine months ended September 30, 2019 was 4.40%. Additionally, the weighted average interest rate and term of our debt was 4.19% and 3.85 years at September 30, 2019.

Preacquisition Fees

There were $0.2 million of preacquisition fees incurred for the nine months ended September 30, 2019, compared to $0.3 million for the same period in 2018. Preacquisition fees for both the nine months ended September 30, 2019 and 2018 represent costs associated with acquisitions that the Company did not, or does not expect to, complete and therefore were expensed.

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Net Income

Net income for nine months ended September 30, 2019 was $6.8 million, compared to $5.1 million of net income for the same period in 2018, an increase of $1.7 million. The increase resulted primarily from an increase in rental revenue during the nine months ended September 30, 2019 partially offset by the increase in expenses for that period.

Assets and Liabilities

As of September 30, 2019 and December 31, 2018, our principal assets consisted of investments in real estate, net, of $781.7 million and $616.9 million, respectively, and our liquid assets consisted primarily of cash and cash equivalents and restricted cash of $5.8 million and $4.8 million, respectively.

 The increase in our investments in real estate, net, to $781.7 million as of September 30, 2019 compared to $616.9 million as of December 31, 2018 was the result of the 13 acquisitions that we completed during the nine months ended September 30, 2019.

The increase in our cash and cash equivalents and restricted cash balance to $5.8 million as of September 30, 2019, compared to $4.8 million as of December 31, 2018, was primarily due to the net proceeds from common stock offerings of $96.8 million, net Credit Facility borrowings of $87.0 million and cash provided by our operating activities of $26.7 million. These cash inflows were partially offset during the period by $181.4 million of cash used for the acquisitions that we completed during the nine months ended September 30, 2019 and $25.5 million of dividends paid during the nine months ended September 30, 2019.

 The increase in our total liabilities to $440.9 million as of September 30, 2019, compared to $336.3 million as of December 31, 2018, was primarily the result of higher net borrowings outstanding from our Credit Facility, which increased to $363.2 million as of September 30, 2019 compared to $276.3 million as of December 31, 2018, as well as increases in liabilities during the first nine months of 2019 related to our dividends payable, derivative liability, and our recording of the right of use liability resulting from the new lease standard that we implemented on January 1, 2019. The increase in our Credit Facility borrowings in 2019 was attributable to the real estate investments that we have made during 2019.

Liquidity and Capital Resources

General 

Our short-term liquidity requirements include:

· Interest expense and scheduled principal payments on outstanding indebtedness;

· General and administrative expenses;

· Operating expenses;

· Management fees; and

· Property acquisitions and tenant improvements.

In addition, we require funds for future distributions expected to be paid to our common and preferred stockholders and OP Unit and LTIP Unit holders in our Operating Partnership.

As of September 30, 2019, we had $5.8 million of cash and cash equivalents and restricted cash and had borrowing capacity under our Credit Facility as described below. Our primary sources of cash include rent and reimbursements we collect from our tenants, borrowings under our Credit Facility, secured term loans and net proceeds received from equity issuances.

On March 18, 2019, we closed an underwritten public offering of our common stock and on March 25, 2019 we closed on part of the related over-allotment option granted to the underwriters. These transactions resulted in the issuance of 8.2 million shares of our common stock at a public offering price of $9.75 per share, generating net proceeds of $75.2 million.

During the nine months ended September 30, 2019, we issued 2.1 million shares of our common stock at an average offering price of $10.73 per share pursuant to our ATM offering program, generating net proceeds of $21.6 million.

The Company is authorized to issue one million shares of common stock to stockholders under its Dividend Reinvestment and Stock Purchase Plan. As of September 30, 2019 we had not issued any shares under the plan.

On September 30, 2019, the Company entered into an amendment to its Credit Facility that, among other things, (i) increased the borrowings under the term-loan component (the “Term Loan”) from $175 million to $300 million, representing the exercise of the remaining $75 million accordion feature and a re-allocation of $50 million from the revolver component (the “Revolver”) to the Term Loan and (ii) added a new $150 million accordion feature. Upon execution of the first amendment to the Company’s Credit Facility, the Credit Facility consisted of a $200 million capacity Revolver, a $300 million Term Loan and a $150 million accordion. The term of the Company’s Credit Facility expires in August 2022, subject to a one-year extension option. As of September 30, 2019, the Company had outstanding borrowings of $363.2 million under the Credit Facility, net.

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On October 3, 2019, the Company hedged its interest rate risk on the Term Loan by entering into two interest rate swaps with an aggregate notional amount of $130 million and a term of approximately five years, which effectively fixed the LIBOR component of the interest rate on a corresponding amount of the Term Loan at 1.21%. As of October 3, 2019, in total the Company had entered into five interest rate swaps with three counterparties to hedge the LIBOR component of its interest rate risk related to the Term Loan. Together, these swaps fix the LIBOR component of the entire $300 million Term Loan on a weighted average basis at 2.17%. An aggregate of $200 million of the swaps mature in August 2024 and a $100 million swap matures in August 2023.

With the exception of funds required to make additional property acquisitions, we believe we will be able to satisfy our short-term liquidity requirements through our existing cash and cash equivalents and cash flow from operating activities. In order to continue acquiring healthcare properties, we will need to continue to have access to debt and equity financing or have the ability to issue OP Units.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, capital and tenant improvements at our properties, scheduled debt maturities, general and administrative expenses, operating expenses, management fees, distributions, and the cost of internalization. We expect to satisfy our long-term liquidity needs through cash flow from operations, debt financing, sales of additional equity securities, and, in connection with acquisitions of additional properties, the issuance of OP Units, and proceeds from select property dispositions and joint venture transactions.

Cash Flow Information

Net cash provided by operating activities for the nine months ended September 30, 2019 was $26.7 million, compared with $19.1 million for the same period in 2018. The increase during the 2019 period was primarily due to increases in net income, depreciation expense and amortization of acquired lease intangible assets for the nine months ended September 30, 2019 compared to the same period in 2018.

Net cash used in investing activities for the nine months ended September 30, 2019 was $182.7 million, compared with $136.4 million for the same period in 2018. The increase during the 2019 period was primarily the result of more acquisitions in the 2019 period compared to the same period in 2018.

Net cash provided by financing activities for the nine months ended September 30, 2019 was $157.0 million, compared with $114.0 million for the same period in 2018. The increase during the 2019 period was primarily due to net proceeds we received from common stock offerings during the 2019 period, partially offset by lower net draws from our Credit Facility. We did not have any equity offerings during the comparable 2018 period.

Common Stock Dividends

Common stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

Date Announced	Record Date	Applicable Quarter	Payment Date	Dividend Amount(1)		Dividends per Share
December 13, 2018	December 26, 2018	Q4 2018	January 10, 2019	$	5,695	$	0.20
March 6, 2019	March 26, 2019	Q1 2019	April 10, 2019	$	7,688	$	0.20
June 14, 2019	June 26, 2019	Q2 2019	July 11, 2019	$	7,699	$	0.20
September 13, 2019	September 25, 2019	Q3 2019	October 10, 2019	$	8,004	$	0.20

⁽¹⁾ Includes distributions on LTIP Units and OP Units.

During the nine months ended September 30, 2019 and 2018, the Company paid total dividends on its common stock, LTIP Units and OP Units in the aggregate amount of $21.2 million and $14.1 million, respectively.

The amount of the dividends paid to the Company’s stockholders is determined by the Company’s Board and is dependent on a number of factors, including funds available for payment of dividends, the Company’s financial condition and capital expenditure requirements except that, in accordance with the Company’s organizational documents and Maryland law, the Company may not make dividend distributions that would: (i) cause it to be unable to pay its debts as they become due in the usual course of business; (ii) cause its total assets to be less than the sum of its total liabilities plus senior liquidation preferences; or (iii) jeopardize its ability to maintain its qualification as a REIT.

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Preferred Stock Dividends

The holders of the Series A Preferred Stock are entitled to receive dividend payments only when, as and if declared by the Board of Directors (the “Board”) (or a duly authorized committee of the Board). Dividends will accrue or be payable in cash from the original issue date, on a cumulative basis, quarterly in arrears on each dividend payment date at a fixed rate per annum equal to 7.50% of the liquidation preference of $25.00 per share (equivalent to $1.875 per share on an annual basis). Dividends on the Series A Preferred Stock will be cumulative and will accrue whether or not (i) funds are legally available for the payment of those dividends, (ii) the Company has earnings or (iii) those dividends are declared by the Board.

The quarterly dividend payment dates on the Series A Preferred Stock are January 31, April 30, July 31 and October 31 of each year. During each of the nine-month periods ended September 30, 2019 and 2018, the Company paid preferred dividends of $4.4 million.

Non-GAAP Financial Measures

Funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) are non-GAAP financial measures within the meaning of the rules of the SEC. The Company considers FFO and AFFO to be important supplemental measures of its operating performance and believes FFO is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.

In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP Units and LTIP Units, excluding gains (or losses) from sales of property and extraordinary items, less preferred stock dividends, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and above-market lease amortization expense), and after adjustments for unconsolidated partnerships and joint ventures. The Company did not incur any gains or losses from the sales of property or record any adjustments for unconsolidated partnerships and joint ventures during the three and nine months ended September 30, 2019 and 2018. Because FFO excludes real estate-related depreciation and amortization (other than amortization of deferred financing costs and above and below market lease amortization expense), the Company believes that FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income or loss.

AFFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations. Management calculates AFFO by modifying the NAREIT computation of FFO by adjusting it for certain cash and non-cash items and certain recurring and non-recurring items. For the Company these items include recurring acquisition and disposition costs, loss on the extinguishment of debt, recurring straight line deferred rental revenue, recurring stock-based compensation expense, recurring amortization of above and below market leases, recurring amortization of deferred financing costs, recurring lease commissions, and other items.

Management believes that reporting AFFO in addition to FFO is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis. The Company’s FFO and AFFO computations may not be comparable to FFO and AFFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, that interpret the NAREIT definition differently than the Company does, or that compute FFO and AFFO in a different manner. 

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A reconciliation of FFO and AFFO for the three and nine months ended September 30, 2019 and 2018 is as follows:

	Three Months Ended September30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(unaudited, in thousands except per share and unit amounts)
Net income	$	2,308		$	1,773		$	6,813		$	5,057
Less: Preferred stock dividends		(1,455	)		(1,455	)		(4,366	)		(4,366	)
Depreciation and amortization expense		6,506			4,567			17,238			12,610
FFO	$	7,359		$	4,885		$	19,685		$	13,301
Amortization of above market leases, net(1)		229			190			634			484
Straight line deferred rental revenue		(1,476	)		(1,417	)		(4,314	)		(3,971	)
Stock-based compensation expense		868			741			2,493			1,978
Amortization of deferred financing costs and other		350			344			1,000			1,327
Preacquisition fees		168			168			223			294
AFFO	$	7,498		$	4,911		$	19,721		$	13,413
Net income attributable to common stockholders per share – basic and diluted	$	0.02		$	0.01		$	0.07		$	0.03
FFO per share and unit	$	0.19		$	0.20		$	0.54		$	0.56
AFFO per share and unit	$	0.19		$	0.20		$	0.54		$	0.56
Weighted Average Shares and Units Outstanding – basic and diluted		39,449			24,242			36,395			23,814
Reconciliation of Weighted Average Shares and Units Outstanding:
Weighted Average Common Shares		35,512			21,797			32,514			21,687
Weighted Average OP Units		3,143			1,857			3,144			1,615
Weighted Average LTIP Units		794			588			737			512
Weighted Average Shares and Units Outstanding – basic and diluted		39,449			24,242			36,395			23,814

⁽¹⁾The Company adopted the 2018 NAREIT FFO White Paper Restatement during the first quarter of 2019. Accordingly, amortization of above and below market leases is no longer included as a reconciling item in determining FFO.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Inflation

Historically, inflation has had a minimal impact on the operating performance of our healthcare facilities. Many of our triple-net lease agreements contain provisions designed to mitigate the adverse impact of inflation. These provisions include clauses that enable us to receive payment of increased rent pursuant to escalation clauses which generally increase rental rates during the terms of the leases. These escalation clauses often provide for fixed rent increases or indexed escalations (based upon the consumer price index or other measures). However, some of these contractual rent increases may be less than the actual rate of inflation. Most of our triple-net lease agreements require the tenant-operator to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance. This requirement reduces our exposure to increases in these costs and operating expenses resulting from inflation.

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Item 3. 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 and investment objectives, we expect that the primary market risk to which we will be exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a result of debt used to acquire healthcare facilities, including borrowings under the Credit Facility. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates. The range of changes chosen reflects our view of changes which are reasonably possible over a one-year period.

As of September 30, 2019, we had $197.2 million of unhedged borrowings outstanding under the Revolver (before the netting of unamortized deferred financing costs) that bears interest at a variable rate. See the “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources” for a detailed discussion of our Credit Facility. At September 30, 2019, LIBOR on our outstanding floating-rate borrowings was 2.08%. Assuming no increase in the amount of our variable interest rate debt, if LIBOR increased 100 basis points, our cash flow would decrease by approximately $2.0 million annually. Assuming no increase in the amount of our variable rate debt, if LIBOR were reduced 100 basis points, our cash flow would increase by approximately $2.0 million annually.

Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or variable rates. As of October 3, 2019, in total we had entered into five interest rate swaps with three counterparties to hedge the LIBOR component of our interest rate risk related to the Term Loan. Together, these swaps fix the LIBOR component of the entire $300 million Term Loan on a weighted average basis at 2.17%. See Note 4 – “Credit Facility, Notes Payable and Derivative Instruments” for further detail on our interest rate swaps. We may enter into additional derivative financial instruments, including interest rate swaps and caps, in order to mitigate our interest rate risk on our future borrowings. We will not enter into derivative transactions for speculative purposes.

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of September 30, 2019 pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Report, the Company’s disclosure controls and procedures were effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

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Changes in Internal Control over Financial Reporting

No changes were made to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on our financial condition or results of operations. From time to time, we may become involved in litigation relating to claims arising out of our operations in the normal course of business. There can be no assurance that these matters that arise in the future, individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations in any future period.

Item 1A. Risk Factors

During the three months ended September 30, 2019, there were no material changes to the risk factors that were disclosed in Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the three months ended June 30, 2019, filed on August 8, 2019 and our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 11, 2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits 

(a) Exhibits

Exhibit No.	Description
3.1	Articles of Restatement of Global Medical REIT Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Report on Form 10-Q as filed with the SEC on August 8, 2018).
3.2	Third Amended and Restated Bylaws of Global Medical REIT Inc., adopted as of August 13, 2019 (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on August 14, 2019).
10.1	First Amendment to Amended and Restated Credit Facility Agreement, dated September 30, 2019, by and among Global Medical REIT L.P., Global Medical REIT Inc., the certain Subsidiaries from time-to-time party thereto as Guarantors, and BMO Harris Bank N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with SEC on October 3, 2019.
10.2*	Second Amendment to Agreement of Limited Partnership of Global Medical REIT L.P., dated August 21, 2019.
31.1*	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

- 43 - 

31.2*	Certification of Principal Financial and Accounting Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *	XBRL Instance Document
101.SCH *	XBRL Taxonomy Schema
101.CAL *	XBRL Taxonomy Calculation Linkbase
101.DEF *	XBRL Taxonomy Definition Linkbase
101.LAB *	XBRL Taxonomy Label Linkbase
101.PRE *	XBRL Taxonomy Presentation Linkbase

* Filed herewith

- 44 - 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		GLOBAL MEDICAL REIT INC.
Dated: November 7, 2019	By:	/s/ Jeffrey M. Busch
		Jeffrey M. Busch
		Chief Executive Officer (Principal Executive Officer)
Dated: November 7, 2019	By:	/s/ Robert J. Kiernan
		Robert J. Kiernan
		Chief Financial Officer (Principal Financial and Accounting Officer)

- 45 - 

EX-10.2

Exhibit 10.2

SECOND AMENDMENT TO THE

AGREEMENT OF LIMITED PARTNERSHIP OF

GLOBAL MEDICAL REIT L.P.

August 21, 2019

Pursuant to Section 11.01 of the Agreement of Limited Partnership of Global Medical REIT L.P. (the “Partnership Agreement”), the General Partner hereby amends the Partnership Agreement as follows:

1.            Specified Redemption Date. The definition of “Specified Redemption Date” in Article I of the Partnership Agreement shall be deleted in its entirety and replaced with the following language:

“means the date that is 10 calendar days after the receipt by the General Partner of a Notice of Redemption”

2.            Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Partnership Agreement.

3.            Except as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms.

IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date first set forth above.

GENERAL PARTNER:
GLOBAL MEDICAL REIT GP LLC,
a Delaware limited liability company,
By:	GLOBAL MEDICAL REIT INC.,
a Maryland corporation
By:	/s/ Jamie Barber
Name:		Jamie A. Barber
Title:		General Counsel and Secretary

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Jeffrey M. Busch, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2019 of Global Medical REIT Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 7, 2019	/s/ Jeffrey M. Busch
	Jeffrey M. Busch, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Robert J. Kiernan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2019 of Global Medical REIT Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 7, 2019	/s/ Robert J. Kiernan
	Robert J. Kiernan, Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

In connection with the Quarterly Report on Form 10-Q of Global Medical REIT Inc. (the “Company”) for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey M. Busch, Chief Executive Officer of the Company and I, Robert J. Kiernan, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 7, 2019	/s/ Jeffrey M. Busch
	Jeffrey M. Busch, Chief Executive Officer
	(Principal Executive Officer)

Dated: November 7, 2019	/s/ Robert J. Kiernan
	Robert J. Kiernan, Chief Financial Officer
	(Principal Financial and Accounting Officer)

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

XML

Related Party Transactions - Additional information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	May 08, 2017
Related Party Transaction [Line Items]
Management Fee Expense	$ 1,621	$ 1,104	$ 4,539	$ 3,280
Loans to other related parties				49
Due to Related Parties	1,584		$ 1,584		$ 1,030
Percentage of Management Fees attributable to Shareholders			1.50%
Mgmt Fees Due To Advisor [Member]
Related Party Transaction [Line Items]
Management Fee Expense	1,621		$ 4,539
Payment for Management Fee		$ 1,104		$ 3,280
Due to Related Parties	$ 1,622		$ 1,622		$ 1,143
Mr Jamie Barber [Member]
Related Party Transaction [Line Items]
Accrued Salaries, Current						$ 125

XML

Credit Facility, Notes Payable and Derivative Instruments - Additional Information (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Aug. 07, 2018	Nov. 16, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Sep. 29, 2019	Apr. 15, 2019	Mar. 31, 2016	Sep. 25, 2015
Debt Instrument [Line Items]
Amortization of Financing Costs			$ 32	$ 33	$ 98	$ 98
Other Operating Activities, Cash Flow Statement					164,450	142,900
Increase (Decrease) in Security Deposits					2,210	1,800
Repayments of Lines of Credit					$ 77,500	10,400
Debt, Weighted Average Interest Rate			4.19%		4.19%		4.64%
Debt Instrument, Term					3 years 10 months 6 days		4 years 2 months 27 days
Long-term Debt, Gross			$ 39,475		$ 39,475		$ 39,475
Line Of Credit Cash Paid Other					924	2,750
Additional Interest Expense					2,193
Interest Expense, Total			4,549	4,055	12,707	10,681
EBITDAR					6,000
Minimum Net Worth Required for Compliance			203,795		$ 203,795
Net Proceeds raised Through Equity Offerings, Percent					75.00%
Extension option (in years)					1 year 5 months 13 days
Sun Trust Bank [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.93%
Citizens Bank of Pennsylvania [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.93%
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Derivative, Amount of Hedged Item	$ 100,000
Debt Instrument, Basis Spread on Variable Rate	2.88%
Derivative Instruments in Hedges, Liabilities, at Fair Value			10,399		$ 10,399		3,487
Interest Rate Swap [Member] | Sun Trust Bank [Member]
Debt Instrument [Line Items]
Derivative, Amount of Hedged Item		$ 40,000
Interest Rate Swap [Member] | Citizens Bank of Pennsylvania [Member]
Debt Instrument [Line Items]
Derivative, Amount of Hedged Item		$ 30,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Amortization of Financing Costs			303	455	863	1,373
Increase (Decrease) in Security Deposits			3,716	3,211	10,268	7,872
Long-term Debt, Gross			86,950	132,500	86,950	132,500
Cantor Loan [Member]
Debt Instrument [Line Items]
Long-term Debt, Total			32,097		32,097					$ 32,097
Debt Instrument, Interest Rate, Stated Percentage										5.22%
Interest Expense, Total			429	428	1,271	1,271
West Mifflin Note Payable [Member]
Debt Instrument [Line Items]
Long-term Debt, Total			7,255		7,255		$ 7,356				$ 7,378
Debt Instrument, Interest Rate, Stated Percentage											3.72%
Interest Expense, Debt			69	$ 72	207	$ 211
Repayments of Notes Payable					101
The Revolver [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			50,000		50,000				$ 200,000
The Term loan [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			300,000		300,000			$ 175,000
The Term loan [Member] | Revolving Credit Facility [Member] | Interest Rate Swap [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			300,000		300,000
Accordion [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			75,000		75,000				$ 150,000
Reallocation from / (to) another debt instrument			$ 150,000		$ 150,000

XML

Equity (Tables)

9 Months Ended

Sep. 30, 2019

Preferred Stock [Member]

Schedule of Dividends Payable

Preferred stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Quarterly			Dividends
Date Announced	Record Date	Quarter	Payment Date	Dividend			per Share
December 13, 2018	January 15, 2019	Q4 2018	January 31, 2019	$	1,455		$	0.46875
March 6, 2019	April 15, 2019	Q1 2019	April 30, 2019	$	1,455		$	0.46875
June 14, 2019	July 15, 2019	Q2 2019	July 31, 2019	$	1,455		$	0.46875
September 13, 2019	October 15, 2019	Q3 2019	October 31, 2019	$	1,455	(1)	$	0.46875

(1)Two months of this amount, equal to $970, was accrued at September 30, 2019.

Preferred stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Quarterly			Dividends
Date Announced	Record Date	Quarter	Payment Date	Dividend			per Share
December 13, 2018	January 15, 2019	Q4 2018	January 31, 2019	$	1,455		$	0.46875
March 6, 2019	April 15, 2019	Q1 2019	April 30, 2019	$	1,455		$	0.46875
June 14, 2019	July 15, 2019	Q2 2019	July 31, 2019	$	1,455		$	0.46875
September 13, 2019	October 15, 2019	Q3 2019	October 31, 2019	$	1,455	(1)	$	0.46875

(1)Two months of this amount, equal to $970, was accrued at September 30, 2019.

Common stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Dividend		Dividends
Date Announced	Record Date	Quarter	Payment Date	Amount(1)		per Share
December 13, 2018	December 26, 2018	Q4 2018	January 10, 2019	$	5,695	$	0.20
March 6, 2019	March 26, 2019	Q1 2019	April 10, 2019	$	7,688	$	0.20
June 14, 2019	June 26, 2019	Q2 2019	July 11, 2019	$	7,699	$	0.20
September 13, 2019	September 25, 2019	Q3 2019	October 10, 2019	$	8,004	$	0.20

(1)Includes distributions on LTIP Units and OP Units.

Common Stock [Member]

Schedule of Dividends Payable

Preferred stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Quarterly			Dividends
Date Announced	Record Date	Quarter	Payment Date	Dividend			per Share
December 13, 2018	January 15, 2019	Q4 2018	January 31, 2019	$	1,455		$	0.46875
March 6, 2019	April 15, 2019	Q1 2019	April 30, 2019	$	1,455		$	0.46875
June 14, 2019	July 15, 2019	Q2 2019	July 31, 2019	$	1,455		$	0.46875
September 13, 2019	October 15, 2019	Q3 2019	October 31, 2019	$	1,455	(1)	$	0.46875

(1)Two months of this amount, equal to $970, was accrued at September 30, 2019.

Common stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Dividend		Dividends
Date Announced	Record Date	Quarter	Payment Date	Amount(1)		per Share
December 13, 2018	December 26, 2018	Q4 2018	January 10, 2019	$	5,695	$	0.20
March 6, 2019	March 26, 2019	Q1 2019	April 10, 2019	$	7,688	$	0.20
June 14, 2019	June 26, 2019	Q2 2019	July 11, 2019	$	7,699	$	0.20
September 13, 2019	September 25, 2019	Q3 2019	October 10, 2019	$	8,004	$	0.20

(1)Includes distributions on LTIP Units and OP Units.

XML

Rent Concentration (Tables)

9 Months Ended

Sep. 30, 2019

Rent Concentration

Schedule of concentration of rental revenue

The Company’s facilities with a concentration of rental revenue of 5% or greater is as follows for the periods below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Facility	2019		2018		2019		2018
Encompass (four facilities and four locations)	10	%	11	%	10	%	12	%
Belpre	8		11		8		7
OCOM	7		9		6		10
Sherman	5		6		5		6
Austin	5		6		5		7
Aggregate of all other facilities	65		57		66		58
Total	100	%	100	%	100	%	100	%

XML

Property Portfolio - Additional Information (Details) $ in Thousands																	1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 26, 2019 USD ($)	Aug. 23, 2019 USD ($)	Aug. 14, 2019 USD ($)	Aug. 06, 2019 USD ($)	Aug. 05, 2019 USD ($)	Aug. 01, 2019 USD ($)	Jul. 12, 2019 USD ($)	Apr. 15, 2019 USD ($)	Aug. 03, 2018 USD ($)	Jul. 03, 2018 USD ($)	Apr. 19, 2018 USD ($)	Mar. 22, 2018 USD ($)	Mar. 01, 2018 USD ($)	Feb. 23, 2018 USD ($)	Feb. 09, 2018 USD ($)	Jan. 24, 2018 USD ($)	Mar. 19, 2019 USD ($)	Feb. 28, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) property	Sep. 30, 2018 USD ($)	Feb. 28, 2019
Property, Plant and Equipment [Line Items]
Number of Properties Acquired | property																					13
Depreciation, Total																			$ 5,006	$ 3,614	$ 13,481	$ 9,965
Property, Plant and Equipment, Additions																					182,896	141,530
Tenant Improvement Allowances Receivable																			$ 19,137		$ 19,137
Operating Lease, Weighted Average Remaining Lease Term																			24 years		24 years
Capital Lease Obligations, Noncurrent																			$ 10,867		$ 10,867
Lease Intangibles Asset [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Asset, Useful Life																					6 years 5 months 1 day
Lease Intangibles Liability [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Asset, Useful Life																					6 years 4 months 28 days
Zachary Facility [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions																		$ 4,600
Lessor, Operating Lease, Term of Contract																							46 years
Gilbert And Chandler Facility [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions																	$ 16,300
Dobson Facility [Member]
Property, Plant and Equipment [Line Items]
Lessor, Operating Lease, Term of Contract																	10 years 6 months
Moline Facility [Member]
Property, Plant and Equipment [Line Items]
Operating Lease, Weighted Average Remaining Lease Term																10 years
Fresenius Medical Care Quad Cities [Member]
Property, Plant and Equipment [Line Items]
Operating Lease, Weighted Average Remaining Lease Term																13 years
Quad Cities Nephrology Associates [Member]
Property, Plant and Equipment [Line Items]
Operating Lease, Weighted Average Remaining Lease Term																15 years
Silvis facility [Member]
Property, Plant and Equipment [Line Items]
Operating Lease, Weighted Average Remaining Lease Term																67 years
Fresenius [Member]
Property, Plant and Equipment [Line Items]
Operating Lease, Weighted Average Remaining Lease Term																13 years
Moline Silvis Facilities[Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions																$ 6,900
Freemont [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions															$ 8,500							8,497
Lessor, Operating Lease, Term of Contract															12 years
Gainesville [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions														$ 10,500								10,510
Lessor, Operating Lease, Term of Contract														12 years
Dallas [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions													$ 23,300									23,284
Orlando Facilities [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions												$ 16,400
Operating Lease, Weighted Average Remaining Lease Term												4 years 6 months
Belpre Portfolio [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions											$ 64,100
Operating Lease, Weighted Average Remaining Lease Term											11 years 4 months 6 days
McAllen [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions										$ 5,400												5,395
Lessor, Operating Lease, Term of Contract										11 years
IRF Portfolio [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions								$ 94,600
Operating Lease, Weighted Average Remaining Lease Term								8 years 3 months 18 days
San Marcos [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions							$ 12,000														$ 11,974
Operating Lease, Weighted Average Remaining Lease Term							8 years
Lansing [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions						$ 11,100															11,368
Operating Lease, Weighted Average Remaining Lease Term						8 years 6 months
Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions					$ 6,600																6,689
Operating Lease, Weighted Average Remaining Lease Term					6 years 3 months 18 days
Aurora [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions				$ 12,600																	12,557
Operating Lease, Weighted Average Remaining Lease Term				6 years
Livonia [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions			$ 10,400																		10,592
Operating Lease, Weighted Average Remaining Lease Term			3 years 2 months 12 days
Gilbert [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions		$ 5,600																			5,592
Operating Lease, Weighted Average Remaining Lease Term		10 years
Morgantown [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions	$ 8,000																				$ 7,950
Operating Lease, Weighted Average Remaining Lease Term	10 years
Derby [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Additions									$ 3,600													$ 3,604
Operating Lease, Weighted Average Remaining Lease Term									9 years
LTAC Hospital [Member]
Property, Plant and Equipment [Line Items]
Lessor, Operating Lease, Term of Contract																							16 years

XML

Property Portfolio - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Zachary Facility [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	$ 4,649
Zachary Facility [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	103
Zachary Facility [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	3,745
Zachary Facility [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	305
Zachary Facility [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	117
Zachary Facility [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	413
Zachary Facility [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(34)
Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Assets	21,639
Las Vegas [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,723
Las Vegas [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	17,482
Las Vegas [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,778
Las Vegas [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	0
Las Vegas [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	519
Las Vegas [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(863)
Surprise [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Assets	28,682
Surprise [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,966
Surprise [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	22,856
Surprise [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,845
Surprise [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	938
Surprise [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,077
Surprise [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	0
Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Assets	28,207
Oklahoma Northwest [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,507
Oklahoma Northwest [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	22,545
Oklahoma Northwest [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,890
Oklahoma Northwest [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	367
Oklahoma Northwest [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	898
Oklahoma Northwest [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	0
Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Financial Assets	16,103
Mishawaka [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,998
Mishawaka [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	11,882
Mishawaka [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,465
Mishawaka [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	236
Mishawaka [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	522
Mishawaka [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	0
Orlando Facilities [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	16,404
Orlando Facilities [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	3,075
Orlando Facilities [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	11,944
Orlando Facilities [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	808
Orlando Facilities [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	229
Orlando Facilities [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	358
Orlando Facilities [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(10)
Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	6,871
Moline / Silvis Facility [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	249
Moline / Silvis Facility [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	5,862
Moline / Silvis Facility [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	343
Moline / Silvis Facility [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	219
Moline / Silvis Facility [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	427
Moline / Silvis Facility [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(229)
Belpre Portfolio [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	64,051
Belpre Portfolio [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	3,997
Belpre Portfolio [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	53,520
Belpre Portfolio [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,660
Belpre Portfolio [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,527
Belpre Portfolio [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,979
Belpre Portfolio [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(632)
Derby [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	3,581
Derby [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	566
Derby [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,585
Derby [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	299
Derby [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	154
Derby [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(23)
San Marcos [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	11,974
San Marcos [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,448
San Marcos [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	7,338
San Marcos [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	698
San Marcos [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,101
San Marcos [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	389
Lansing [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	11,120
Lansing [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,387
Lansing [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	8,348
Lansing [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	953
Lansing [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	130
Lansing [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	550
Lansing [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(248)
Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	6,551
Bannockburn [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	858
Bannockburn [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	4,506
Bannockburn [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	763
Bannockburn [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	240
Bannockburn [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	322
Bannockburn [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(138)
Aurora [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	12,557
Aurora [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,829
Aurora [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	8,049
Aurora [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,417
Aurora [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	861
Aurora [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	401
Livonia [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	10,356
Livonia [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,181
Livonia [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	8,071
Livonia [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,252
Livonia [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	53
Livonia [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	35
Livonia [Member] | Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed, Below Market Lease Intangibles	(236)
Gilbert [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	5,592
Gilbert [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,470
Gilbert [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	2,389
Gilbert [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	121
Gilbert [Member] | Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	300
Gilbert [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	312
Morgantown [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	7,950
Morgantown [Member] | Land and Site Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	1,256
Morgantown [Member] | Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	5,792
Morgantown [Member] | In-place leases [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	457
Morgantown [Member] | Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	$ 445

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investment in real estate:
Land	$ 86,878	$ 63,710
Building	637,505	518,451
Site improvements	9,100	6,880
Tenant improvements	31,465	15,357
Acquired lease intangible assets	65,498	43,152
Real Estate Investment Property, at Cost, Total	830,446	647,550
Less: accumulated depreciation and amortization	(48,731)	(30,625)
Investment in real estate, net	781,715	616,925
Cash and cash equivalents	2,815	3,631
Restricted cash	3,011	1,212
Tenant receivables	4,167	2,905
Due from Related Parties	75
Escrow deposits	2,865	1,752
Deferred assets	13,307	9,352
Other assets	4,363	322
Total assets	812,318	636,099
Liabilities:
Credit facility, net of unamortized discount of $3,983 and $3,922 at September 30, 2019 and December 31, 2018, respectively	363,242	276,353
Notes payable, net of unamortized discount of $701 and $799 at September 30, 2019 and December 31, 2018, respectively	38,651	38,654
Accounts payable and accrued expenses	5,501	3,664
Dividends payable	9,470	6,981
Security deposits and other	6,362	4,152
Due to related parties, net	1,584	1,030
Derivative liability	10,399	3,487
Other liability	2,379
Acquired lease intangible liability, net	3,287	2,028
Total liabilities	440,875	336,349
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value, 10,000 shares authorized; 3,105 issued and outstanding at September 30, 2019 and December 31, 2018, respectively (liquidation preference of $77,625 at September 30, 2019 and December 31, 2018, respectively)	74,959	74,959
Common stock, $0.001 par value, 500,000 shares authorized; 36,290 shares and 25,944 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	36	26
Additional paid-in capital	340,435	243,038
Accumulated deficit	(63,846)	(45,007)
Accumulated other comprehensive loss	(10,596)	(3,721)
Total Global Medical REIT Inc. stockholders' equity	340,988	269,295
Noncontrolling interest	30,455	30,455
Total equity	371,443	299,750
Total liabilities and equity	$ 812,318	$ 636,099

XML

Credit Facility, Notes Payable and Derivative Instruments

9 Months Ended

Sep. 30, 2019

Credit Facility, Notes Payable and Derivative Instruments

Credit Facility, Notes Payable and Derivative Instruments

Note 4 –Credit Facility, Notes Payable and Derivative Instruments

Credit Facility

The Company, the Operating Partnership, as borrower, and certain of its subsidiaries (such subsidiaries, the “Subsidiary Guarantors”) are parties to a syndicated credit facility with BMO Harris Bank N.A. (“BMO”), as administrative agent (the “Credit Facility”). Amounts outstanding under the credit facility bear interest at a floating rate that is based on LIBOR, plus a specified margin based on the Company’s leverage. On September 30, 2019, the Company entered into an amendment to the Credit Facility that, among other things, (i) increased the borrowings under the term-loan component (the “Term Loan”) from $175 million to $300 million, representing the exercise of the remaining $75 million accordion feature and a re-allocation of $50 million from the revolver component (the “Revolver”) to the Term Loan and (ii) added a new $150 million accordion feature. Upon execution of the first amendment to the Company’s Credit Facility, the Credit Facility consisted of a $200 million capacity Revolver, a $300 million Term Loan and a $150 million accordion. The term of the Company’s Credit Facility expires in August 2022, subject to a one-year extension option. The amendment also amends the restricted payments financial covenant by deferring implementation of the 95% AFFO payout limitation contained in Section 8.24(a) of the Credit Facility from the fourth quarter of 2019 to the fourth quarter of 2020 and provides a mechanism for determining an alternative benchmark rate to LIBOR.

The Subsidiary Guarantors and the Company are guarantors of the obligations under the Credit Facility. The amount available to borrow from time to time under the Credit Facility is limited according to a quarterly borrowing base valuation of certain properties owned by the Subsidiary Guarantors.

The Operating Partnership is subject to ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales. The Operating Partnership must also maintain (i) a maximum consolidated leverage ratio as of the end of each fiscal quarter of less than (y) 0.65:1.00 for each fiscal quarter ending prior to October 1, 2019 and (z) thereafter, 0.60:1.00, (ii) a minimum fixed charge coverage ratio of 1.50:1.00, (iii) a minimum net worth of $203,795 plus 75% of all net proceeds raised through equity offerings subsequent to March 31, 2018, and (iv) a ratio of total secured recourse debt to total asset value of not greater than 0.10:1.00. The Company was in compliance with the Credit Facility covenants as of September 30, 2019.

The Company has entered into interest rate swaps to hedge its interest rate risk on the Term Loan.  For additional information related to the interest rate swaps, see the “Derivative Instruments - Interest Rate Swaps” and “Subsequent Events” sections herein.

During the nine months ended September 30, 2019, the Company borrowed $164,450 under the Credit Facility and repaid $77,500, for a net amount borrowed of $86,950. During the nine months ended September 30, 2018 the Company borrowed $142,900 under the Credit Facility and repaid $10,400, for a net amount borrowed of $132,500. Interest expense incurred on the Credit Facility was $3,716 and $10,268 for the three and  nine months ended September 30, 2019 , respectively, and $3,211 and $7,872 for the three and nine months ended September 30, 2018, respectively.

As of September 30, 2019 and December 31, 2018, the Company had the following outstanding borrowings under the Credit Facility:

	September 30, 2019		December 31, 2018
Revolver	$	67,225	$	180,275
Term Loan		300,000		100,000
Less: Unamortized deferred financing costs		(3,983)		(3,922)
Credit Facility, net	$	363,242	$	276,353

Costs incurred related to the Credit Facility, net of accumulated amortization, are netted against the Company’s “Credit Facility, net of unamortized discount” balance in the accompanying Condensed Consolidated Balance Sheets. The Company paid $924 and $2,750 during the nine months ended September 30, 2019 and 2018, respectively, related to modifications to the Credit Facility and borrowing base additions. Amortization expense incurred was $303 and $863 for the three and nine months ended September 30, 2019, respectively, and $455 and $1,373 for the three and nine months ended September 30, 2018, respectively, and is included in the “Interest Expense” line item in the accompanying Condensed Consolidated Statements of Operations.

In July 2017, the Financial Conduct Authority (the “FCA”) that regulates LIBOR announced its intention to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee ("ARRC") which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Credit Facility provides that, on or about the LIBOR cessation date (subject to an early opt-in election), LIBOR shall be replaced as a benchmark rate in the Credit Facility with a new benchmark rate to be agreed upon by the Company and BMO, with such adjustments to cause the new benchmark rate to be economically equivalent to LIBOR.  The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets.

The Company has interest rate swap agreements that are indexed to LIBOR and is monitoring and evaluating the related risks. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our interest rate swap agreements is likely to vary by agreement. If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Notes Payable, Net of Discount

The Company’s notes payable, net, includes two loans: (1) the Cantor Loan and (2) the West Mifflin Note, described in detail below. The following table sets forth the aggregate balances of these loans as of September 30, 2019 and December 31, 2018.

	September 30, 2019		December 31, 2018
Notes payable, gross	$	39,475	$	39,475
Less: Unamortized debt discount		(701)		(799)
Cumulative principal repayments		(123)		(22)
Notes payable, net	$	38,651	$	38,654

Amortization expense incurred related to the debt discount was $32 and $98 for the three and nine months ended September 30, 2019, respectively, and $33 and $98 for the three and nine months ended September 30, 2018, respectively, and is included in the “Interest Expense” line item in the accompanying Condensed Consolidated Statements of Operations.

Cantor Loan

On March 31, 2016, through certain of its wholly-owned subsidiaries, the Company entered into a $32,097 portfolio commercial mortgage-backed securities loan (the “Cantor Loan”) with Cantor Commercial Real Estate Lending, LP (“CCRE”). The subsidiaries are GMR Melbourne, LLC, GMR Westland, LLC, GMR Memphis, LLC, and GMR Plano, LLC (the “GMR Loan Subsidiaries”). The Cantor Loan has cross-default and cross-collateral terms. The Cantor Loan has a maturity date of April 6, 2026 and accrues annual interest at 5.22%. The first five years of the term require interest-only payments and thereafter payments will include interest and principal, amortized over a 30‑year schedule. Prepayment can only occur within four months prior to the maturity date, except that the Cantor Loan can be fully or partially defeased upon payment of amounts due under the Cantor Loan and payment of a defeasance amount that is sufficient to purchase U.S. government securities equal to the scheduled payments of principal, interest, fees, and any other amounts due related to a full or partial defeasance under the Cantor Loan.

The Company secured the payment of the Cantor Loan with the assets, including property, facilities, and rents, held by the GMR Loan Subsidiaries and has agreed to guarantee certain customary recourse obligations, including findings of fraud, gross negligence, or breach of environmental covenants by the GMR Loan Subsidiaries. The GMR Loan Subsidiaries are required to maintain an aggregate monthly debt service coverage ratio of 1.35:1.00 for all of the collateral properties.

The note balance as of September 30, 2019 and December 31, 2018 was $32,097. Interest expense incurred on this note was $429 and $1,271 for the three and nine months ended September 30, 2019, respectively, and $428 and $1,271 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019	$	—
2020		—
2021		282
2022		447
2023		471
Thereafter		30,897
Total	$	32,097

West Mifflin Note

On September 25, 2015, the Company, through its wholly-owned subsidiary GMR Pittsburgh LLC, as borrower, entered into a Term Loan and Security Agreement with Capital One to borrow $7,378. The note bears interest at 3.72% per annum and all unpaid interest and principal is due on September 25, 2020. Interest is paid in arrears and interest payments began on November 1, 2015 and have continued on the first day of each calendar month thereafter. Principal payments began on November 1, 2018 and have continued on the first day of each calendar month thereafter based on an amortization schedule with the remaining principal balance due on the maturity date. The Company, at its option, may prepay the note at any time in whole (but not in part) with advanced written notice. The West Mifflin facility serves as collateral for the note. The note requires a quarterly fixed charge coverage ratio of at least 1:1, a quarterly minimum debt yield of 0.09:1.00, and annualized Operator EBITDAR (as defined in the note) measured on a quarterly basis of not less than $6,000. The Operators are Associates in Ophthalmology, Ltd. and Associates Surgery Centers, LLC.

The Company made principal payments of $101 during the nine months ended September 30, 2019. The note balance as of September 30, 2019 and December 31, 2018 was $7,255 and $7,356, respectively. Interest expense incurred on this note was $69 and $207 for the three and nine months ended September 30, 2019, respectively, and $72 and $211 for the three and nine months ended September 30,  2018, respectively. As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019 (three months remaining)	$	35
2020		7,220
Total	$	7,255

Derivative Instruments - Interest Rate Swaps

As of September 30, 2019, the Company had three interest rate swaps that are used to manage the interest rate risk and fix the LIBOR component of certain of its floating rate debt as follows: (i) on August 7, 2018 the Company executed an interest rate swap with BMO that was designated as a cash flow hedge on the Term Loan, with a notional amount of $100 million, a fixed interest rate of 2.88%, and a maturity date of August 8, 2023; and (ii) on November 16, 2018 the Company executed separate interest rate swaps with SunTrust Bank (“SunTrust”) and Citizens Bank of Pennsylvania (“Citizens”) that were each designated as cash flow hedges. The swap with SunTrust has a notional amount of $40 million and the swap with Citizens has a notional amount of $30 million and both have a fixed interest rate of 2.93%   and a maturity date of August 7, 2024. Additionally, as discussed in Note 11 - "Subsequent Events," on October 3, 2019, the Company executed two additional interest rate swaps with a combined notional amount of $130 million.

In accordance with the provisions of ASC Topic 815, the Company records the swaps either as an asset or a liability measured at its fair value at each reporting period. When hedge accounting is applied, the change in the fair value of derivatives designated and that qualify as cash flow hedges is (i) recorded in accumulated other comprehensive loss in the equity section of the Company’s Condensed Consolidated Balance Sheets and (ii) subsequently reclassified into earnings as interest expense for the period that the hedged forecasted transactions affect earnings. If specific hedge accounting criteria are not met, changes in the Company’s derivative instruments’ fair value are recognized currently as an adjustment to net income.

The Company’s interest rate swaps are not traded on an exchange. The Company’s interest rate swaps are recorded at fair value based on a variety of observable inputs including contractual terms, interest rate curves, yield curves, measure of volatility, and correlations of such inputs. The Company measures its derivatives at fair value on a recurring basis based on the expected size of future cash flows on a discounted basis and incorporating a measure of non-performance risk. The fair values are based on Level 2 inputs within the framework of ASC Topic 820, “Fair Value Measurement.” The Company considers its own credit risk, as well as the credit risk of its counterparty, when evaluating the fair value of its derivative instruments.

The fair value of the Company’s interest rate swaps was a liability of $10,399 and $3,487 as of September 30, 2019 and December 31, 2018, respectively. These amounts are included in the “Derivative Liability” line item on the Company’s Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

The table below details the components of the loss presented on the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income recognized on the Company’s interest rate swaps designated as cash flow hedges for the three and  nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Amount of loss recognized in other comprehensive loss	$	1,603	$	122	$	7,559	$	122
Amount of loss reclassified from accumulated other comprehensive loss into interest expense		(300)		(13)		(684)		(13)
Total change in accumulated other comprehensive loss	$	1,303	$	109	$	6,875	$	109

During the next twelve months, the Company estimates that an additional $2,193 will be reclassified as an increase to interest expense. Additionally, during the three and  nine months ended September 30, 2019, the Company recorded total interest expense in its Condensed Consolidated Statements of Operations of $4,549 and $12,707.

Weighted-Average Interest Rate and Term

The weighted average interest rate and term of the Company’s debt was 4.19% and 3.85 years at September 30, 2019, compared to 4.64% and 4.24 years as of December 31, 2018.

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Leases

9 Months Ended

Sep. 30, 2019

Leases

Leases

Note 8 – Leases

On January 1, 2019, the Company adopted ASC Topic 842, which supersedes Accounting Standards Codification Topic 840 “Leases” (“ASC Topic 840”). Information in this note with respect to the Company’s leases and lease-related costs as both lessee and lessor and lease-related receivables as lessor is presented under ASC Topic 842 as of and for the three and nine months ended September 30, 2019 and under ASC Topic 840 as of and for the year ended December 31, 2018.

The Company adopted ASC Topic 842 using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to accumulated deficit as of January 1, 2019 as a result of this adoption. ASC Topic 842 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Company operates as both a lessor and a lessee. As a lessor, the Company is required under ASC Topic 842 to account for leases using an approach that is substantially similar to ASC Topic 840’s guidance for operating leases and other leases such as sales-type leases and direct financing leases. In addition, ASC Topic 842 requires lessors to capitalize and amortize only incremental direct leasing costs. As a lessee, the Company is required under the new standard to apply a dual approach, classifying leases, such as ground leases, as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. ASC Topic 842 also requires lessees to record a right of use asset and a lease liability for all leases with a term of greater than a year regardless of their classification. The Company has also elected the practical expedient not to recognize right of use assets and lease liabilities for leases with a term of a year or less.

On adoption of the standard, we elected the package of practical expedients provided for in ASC Topic 842, including:

· No reassessment of whether any expired and existing contracts were or contained leases;

· No reassessment of the lease classification for any expired and existing leases; and

· No reassessment of initial direct costs for any existing leases.

The package of practical expedients was made as a single election and was consistently applied to all existing leases as of January 1, 2019. We also elected the practical expedient provided to lessors in a subsequent amendment to ASC Topic 842 that removed the requirement to separate lease and nonlease components, provided certain conditions were met.

Information as Lessor Under ASC Topic 842 (As of and for thethree and nine months ended September 30, 2019)

To generate positive cash flow, as a lessor, the Company leases its facilities to tenants in exchange for fixed monthly payments that cover rent, property taxes, insurance and certain cost recoveries, primarily common area maintenance (“CAM”). The Company’s leases were determined to be operating leases and have a portfolio average lease years remaining of approximately 10 years. Payments from the Company’s tenants for CAM are considered nonlease components that are separated from lease components and are generally accounted for in accordance with the revenue recognition standard. However, the Company qualified for and elected the practical expedient related to combining the components because the lease component is classified as an operating lease and the timing and pattern of transfer of CAM income, which is not the predominant component, is the same as the lease component. As such, consideration for CAM is accounted for as part of the overall consideration in the lease. Payments from customers for property taxes and insurance are considered noncomponents of the lease and therefore no consideration is allocated to them because they do not transfer a good or service to the customer. Fixed contractual payments from the Company’s leases are recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the tenant assumes control of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

Some of the Company’s leases are subject to annual changes in the Consumer Price Index (“CPI”). Although increases in CPI are not estimated as part of the Company’s measurement of straight-line rental revenue, for leases with base rent increases based on CPI, the amount of rent revenue recognized is adjusted in the period the changes in CPI are measured and effective. Additionally, some of the Company’s leases have extension options.

Initial direct costs, primarily commissions, related to the leasing of our facilities are capitalized when material as incurred. Capitalized leasing costs are amortized on a straight-line basis over the remaining useful life of the respective leases. All other costs to negotiate or arrange a lease are expensed as incurred.

Lease-related receivables, which include accounts receivable and accrued straight-line rents receivable, are reduced for credit losses, if applicable. To date the Company’s receivables have not had any credit losses. Such amounts would be recognized as a reduction to rental and other revenues. The Company regularly evaluates the collectability of its lease-related receivables. The Company’s evaluation of collectability primarily consists of reviewing past due account balances and considering such factors as the credit quality of our tenant, historical trends of the tenant and changes in tenant payment terms. If the Company’s assumptions regarding the collectability of lease-related receivables prove incorrect, the Company could experience credit losses in excess of what was recognized in rental and other revenues.

The Company recognized $18,117 and $50,093 of rental and other revenues related to operating lease payments for the three and nine months ended September 30, 2019, respectively. Of these amounts $1,202 and $3,597 was for variable lease payments related to expense recoveries for the three and nine months ended September 30, 2019, respectively. The aggregate annual minimum cash to be received by the Company on the noncancelable operating leases related to its portfolio as of September 30, 2019 is as follows for the subsequent years ended December 31:

2019 (three months remaining)	$	16,507
2020		66,310
2021		64,947
2022		63,461
2023		62,040
Thereafter		391,576
Total	$	664,841

Information as Lessor Under ASC Topic 840 (As of and for the year ended December 31, 2018)

The Company adopted the provisions of ASU 2014‑09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014‑09”) effective January 1, 2018 using the modified retrospective transition method. Rental income from leasing arrangements is specifically excluded from the standard. The Company analyzed its remaining revenue streams and concluded there were no changes in revenue recognition with the adoption of the new standard.

The Company’s operations consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations. These leases were accounted for as operating leases. For operating leases with contingent rental escalators, revenue was recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators were recognized on a straight-line basis over the initial lease term, subject to a collectability assessment. If the Company determined that collectability of rents was not reasonably assured, future revenue recognition was limited to amounts contractually owed and paid, and, when appropriate, an allowance for estimated losses was established.

The Company consistently assessed the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant defaults, or the inability of tenants to make contractual rent and tenant recovery payments. The Company also monitored the liquidity and creditworthiness of its tenants and operators on a continuous basis. This evaluation considered industry and economic conditions, property performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company’s assessment was based on amounts estimated to be recoverable over the term of the lease. As of December 31, 2018, no allowance was recorded as it was not deemed necessary.

The Company’s real estate assets are leased to tenants under operating leases. The minimum rental amounts under the leases were generally subject to scheduled fixed increases. The aggregate annual minimum cash to be received by the Company on its noncancelable operating leases as of December 31, 2018 were as follows:

2019	$	50,527
2020		51,450
2021		49,926
2022		48,862
2023		47,743
Thereafter		330,180
Total	$	578,688

Information as Lessee Under ASC Topic 842 (As of and for thethree and nine months ended September 30, 2019)

The Company has four facilities subject to operating ground leases with a weighted average remaining term of 24 years. Rental payments on these leases are adjusted periodically based on either the CPI or on a pre-determined schedule. The monthly payments on a pre-determined schedule are recognized on a straight-line basis over the terms of the respective leases. Changes in the CPI are not estimated as part of our measurement of straight-line rental expense. Upon initial adoption of ASC Topic 842, the Company recognized a lease liability of $2.2 million (included in “Other Liabilities”) and a related right of use asset of $2.2 million (included in “Other Assets”) on our Condensed Consolidated Balance Sheets equal to the present value of the minimum lease payments required under each ground lease. During the nine months ended September 30, 2019, the Company recorded an additional $0.1 million right of use asset and recognized an additional lease liability of $0.1 million. The Company used a weighted average discount rate of approximately 4.4%, which was derived from our assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments over appropriate tenors. Some of our ground leases contain extension options and, where we determined it was reasonably certain that an extension would occur, they were included in our calculation of the right of use asset and liability. We recognized approximately $35 and $66 of ground lease expense, which was paid in cash, during the three and nine months ended September 30, 2019 , respectively.

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases at September 30, 2019 and a reconciliation of those cash flows to the operating lease liability at September 30, 2019:

2019 (three months remaining)	$	28
2020		116
2021		116
2022		116
2023		120
Thereafter		4,476
Total		4,972
Discount		(2,593)
Lease liability	$	2,379

Information as Lessee Under ASC Topic 840 (As of and for the year ended December 31, 2018)

The Company acquired an interest, as ground lessee, in the ground lease related to the Omaha and Clermont facilities at their dates of acquisition. In connection with the acquisitions of the Moline facility the Company acquired the seller’s interest, as ground lessee, in an existing ground lease that has approximately 10 years remaining in the initial term, with 12 consecutive five-year renewal options. In connection with the acquisition of the Silvis facility the Company acquired the seller’s interest, as ground lessee, in an existing ground lease that has approximately 67 years remaining in the initial term, with no renewal options.

The aggregate minimum cash payments to be made by the Company on these land leases as of December 31, 2018, were as follows:

2019	$	109
2020		109
2021		109
2022		109
2023		113
Thereafter		2,121
Total	$	2,670

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Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Global Medial REIT Inc. Stockholders' Equity [Member]	Noncontrolling Interest [Member]	Total
Balances at Dec. 31, 2017	$ 22	$ 74,959	$ 205,788	$ (34,434)	$ 0	$ 246,335	$ 12,678	$ 259,013
Balance (in shares) at Dec. 31, 2017	21,631	3,105
Net income	$ 0	$ 0	0	4,998	0	4,998	59	5,057
Issuance of shares of common stock, net	$ 0	$ 0	3,452	0	0	3,452	0	3,452
Issuance of shares of common stock, net (in shares)	372	0
Reclassification of deferred offering costs	$ 0	$ 0	(302)	0	0	(302)	0	(302)
Change in fair value of interest rate swap agreements	0	0	0	0	(109)	(109)	0	(109)
Stock-based compensation expense	0	0	0	0	0	0	1,978	1,978
Dividends to common stockholders	0	0	0	(13,053)	0	(13,053)	0	(13,053)
Dividends to preferred stockholders	0	0	0	(4,366)	0	(4,366)	0	(4,366)
Dividends to noncontrolling interest	0	0	0	0	0	0	(1,493)	(1,493)
OP Units issued to third parties	0	0	0	0	0	0	4,742	4,742
LTIP Units redeemed for cash	0	0	0	0	0	0	(263)	(263)
Balances at Sep. 30, 2018	$ 22	$ 74,959	208,938	(46,855)	(109)	236,955	17,701	254,656
Balances (in shares) at Sep. 30, 2018	22,003	3,105
Balances at Dec. 31, 2017	$ 22	$ 74,959	205,788	(34,434)	0	246,335	12,678	259,013
Balance (in shares) at Dec. 31, 2017	21,631	3,105
Balances at Dec. 31, 2018	$ 26	$ 74,959	243,038	(45,007)	(3,721)	269,295	30,455	299,750
Balances (in shares) at Dec. 31, 2018	25,944	3,105
Balances at Jun. 30, 2018	$ 22	$ 74,959	205,798	(42,739)	0	238,030	17,483	255,513
Balance (in shares) at Jun. 30, 2018	21,631	3,105
Net income	$ 0	$ 0	0	1,741	0	1,741	32	1,773
Issuance of shares of common stock, net	$ 0	$ 0	3,452	0	0	3,452	0	3,452
Issuance of shares of common stock, net (in shares)	372	0
Reclassification of deferred offering costs	$ 0	$ 0	(302)	0	0	(302)	0	(302)
Change in fair value of interest rate swap agreements	0	0	0	0	(109)	(109)	0	(109)
Stock-based compensation expense	0	0	0	0	0	0	741	741
Dividends to common stockholders	0	0	0	(4,402)	0	(4,402)	0	(4,402)
Dividends to preferred stockholders	0	0	0	(1,455)	0	(1,455)	0	(1,455)
Dividends to noncontrolling interest	0	0	0	0	0	0	(555)	(555)
Balances at Sep. 30, 2018	$ 22	$ 74,959	208,938	(46,855)	(109)	236,955	17,701	254,656
Balances (in shares) at Sep. 30, 2018	22,003	3,105
Balances at Dec. 31, 2018	$ 26	$ 74,959	243,038	(45,007)	(3,721)	269,295	30,455	299,750
Balance (in shares) at Dec. 31, 2018	25,944	3,105
Net income	$ 0	$ 0	0	6,567	0	6,567	246	6,813
Issuance of shares of common stock, net	$ 10	$ 0	96,767	0	0	96,777	0	96,777
Issuance of shares of common stock, net (in shares)	10,284	0
LTIP Units and OP Units redeemed for common stock	$ 0	$ 0	630	0	0	630	(630)	0
LTIP Units and OP Units redeemed for common stock (in shares)	62	0
Change in fair value of interest rate swap agreements	$ 0	$ 0	0	0	(6,875)	(6,875)	0	(6,875)
Stock-based compensation expense	0	0	0	0	0	0	2,493	2,493
Dividends to common stockholders	0	0	0	(21,040)	0	(21,040)	0	(21,040)
Dividends to preferred stockholders	0	0	0	(4,366)	0	(4,366)	0	(4,366)
Dividends to noncontrolling interest	0	0	0	0	0	0	(2,615)	(2,615)
OP Units issued to third parties	0	0	0	0	0	0	506	506
Balances at Sep. 30, 2019	$ 36	$ 74,959	340,435	(63,846)	(10,596)	340,988	30,455	371,443
Balances (in shares) at Sep. 30, 2019	36,290	3,105
Balances at Jun. 30, 2019	$ 35	$ 74,959	322,872	(57,397)	(9,293)	331,176	30,427	361,603
Balance (in shares) at Jun. 30, 2019	34,653	3,105
Net income	$ 0	$ 0	0	2,225	0	2,225	83	2,308
Issuance of shares of common stock, net	$ 1	0	17,509	0	0	17,510	0	17,510
Issuance of shares of common stock, net (in shares)	1,632
LTIP Units and OP Units redeemed for common stock	$ 0	0	54	0	0	54	(54)	0
LTIP Units and OP Units redeemed for common stock (in shares)	5
Change in fair value of interest rate swap agreements	$ 0	0	0	0	(1,303)	(1,303)	0	(1,303)
Stock-based compensation expense	0	0	0	0	0	0	868	868
Dividends to common stockholders	0	0	0	(7,219)	0	(7,219)	0	(7,219)
Dividends to preferred stockholders	0	0	0	(1,455)	0	(1,455)	0	(1,455)
Dividends to noncontrolling interest	0	0	0	0	0	0	(869)	(869)
Balances at Sep. 30, 2019	$ 36	$ 74,959	$ 340,435	$ (63,846)	$ (10,596)	$ 340,988	$ 30,455	$ 371,443
Balances (in shares) at Sep. 30, 2019	36,290	3,105

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Basis of presentation

Basis of presentation

The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2018. In the opinion of management, all adjustments of a normal and recurring nature necessary for a fair presentation of the condensed consolidated financial statements for the interim periods have been made.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including the Operating Partnership and its wholly-owned subsidiaries. The Company presents the portion of any equity it does not own but controls (and thus consolidates) as noncontrolling interest. Noncontrolling interest in the Company includes the LTIP Units that have been granted to the Company’s and Advisor’s directors, officers and employees and the OP Units held by third parties. Refer to Note 5 – “Equity” and Note 7 – “Stock-Based Compensation” for additional information regarding the OP Units and LTIP Units.

The Company classifies noncontrolling interest as a component of consolidated equity on its Condensed Consolidated Balance Sheets, separate from the Company’s total equity. The Company’s net income or loss is allocated to noncontrolling interests based on the respective ownership or voting percentage in the Operating Partnership associated with such noncontrolling interests and is removed from consolidated income or loss on the Condensed Consolidated Statements of Operations in order to derive net income or loss attributable to common stockholders. The noncontrolling ownership percentage is calculated by dividing the aggregate number of LTIP Units and OP Units held by third parties by the total number of shares of common stock, LTIP Units and OP Units outstanding. Any future issuances of additional shares of common stock, LTIP Units or OP Units could change the noncontrolling ownership interest.

Use of Estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Actual results could differ from those estimates.

Investment in Real Estate

Investment in Real Estate

The Company determines when an acquisition meets the definition of a business or alternatively should be accounted for as an asset acquisition in accordance with ASU 2017-01 – “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”).  ASU 2017-01 requires that, when substantially all of the fair value of an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset or group of similar identifiable assets does not meet the definition of a business and therefore is required to be accounted for as an asset acquisition. Transaction costs are capitalized for asset acquisitions and expensed as incurred for business combinations. ASU 2017-01 results in most, if not all, of the Company’s acquisitions being accounted for as asset acquisitions because substantially all of the fair value of the gross assets the Company acquires are concentrated in a single asset or group of similar identifiable assets. For asset acquisitions that are “owner occupied” (meaning that the seller either is the tenant or controls the tenant), the purchase price, including capitalized acquisition costs, will be allocated to land and building based on their relative fair values with no value allocated to intangible assets or liabilities. For asset acquisitions where there is a lease in place but not “owner occupied,” the Company will also allocate the purchase price to tangible assets and any intangible assets acquired or liabilities assumed based on their relative fair values.

Real estate and related assets are stated net of accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the buildings, which are generally between 23 and 50 years, tenant improvements, which are generally between one and 19 years, and site improvements, which are generally between three and 14 years.

Revenue Recognition

Revenue Recognition

The Company’s operations primarily consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations. The leases have been accounted for as operating leases. For operating leases with contingent rental escalators, revenue is recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators are recognized on a straight-line basis over the initial lease term, subject to a collectability assessment, with the difference between the contractual rental receipts and the straight-line amounts recorded as a “deferred rent receivable.” Additionally, rental revenue includes expense recoveries, which represents revenue recognized related to tenant reimbursement of real estate taxes, insurance, and certain other operating expenses. The Company recognizes these reimbursements and related expenses on a gross basis in its Condensed Consolidated Statements of Operations. Expenses required to be paid directly by the tenant are not subject to reimbursement.

For all leases where rent collection has been deemed probable, the Company assesses the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant defaults, or the inability of tenants to make contractual rent and tenant recovery payments at each reporting date. The Company also monitors the liquidity and creditworthiness of its tenants and operators on a continuous basis. This evaluation considers industry and economic conditions, property performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company's assessment is based on amounts estimated to be recoverable over the term of the lease. As of September 30, 2019 and December 31, 2018, based on the Company’s assessment, no allowance was recorded as one was not deemed necessary. However, because future events may adversely affect the Company’s tenants, a valuation allowance may need to be established in the future.

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

The Company considers all demand deposits, cashier’s checks, money market accounts, and certificates of deposit with an original maturity of three months or less to be cash equivalents. Amounts included in restricted cash represent (1) certain security deposits received from tenants at the inception of their leases; (2) cash required to be held by a third-party lender as a reserve for debt service; and (3) funds held by the Company that were received from certain tenants that the Company collected to pay specific tenant expenses, such as real estate taxes and insurance, on the tenant’s behalf (“tenant reimbursements”). The following table provides a reconciliation of the Company’s cash and cash equivalents and restricted cash that sums to the total of those amounts at the end of the periods presented on the Company’s accompanying Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018:

	As of September 30,
	2019		2018
Cash and cash equivalents	$	2,815	$	3,005
Restricted cash		3,011		817
Total cash and cash equivalents and restricted cash	$	5,826	$	3,822

Escrow Deposits

Escrow Deposits

The escrow deposits balance as of September 30, 2019 and December 31, 2018 was $2,865 and $1,752, respectively. Escrow deposits include funds held in escrow to be used for the acquisition of properties in the future and for the payment of taxes, insurance, and other amounts as stipulated by the Company’s Cantor Loan, as hereinafter defined.

Deferred Assets

Deferred Assets

The deferred assets balance as of September 30, 2019 and December 31, 2018 was $13,307 and $9,352, respectively. The balance as of September 30, 2019 consisted of $13,020 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $287 of other deferred costs. The balance as of December 31, 2018 consisted of $8,706 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $646 of other deferred costs.

Other Assets

Other Assets

The other assets balance was $4,363 as of September 30, 2019, which consisted of $3,094 for a right of use asset that was recorded in connection with the implementation of ASC Topic 842 on January 1, 2019 (refer to Note 8 – “Leases” for additional details), $930 in deferred preacquisition and construction in process costs, and $339 in a prepaid asset. The other assets balance was $322 as of December 31, 2018, which consisted of $139 in capitalized costs related to property acquisitions and $183 in a prepaid asset.

Security Deposits and Other

Security Deposits and Other

The security deposits and other liability balance as of September 30, 2019 and December 31, 2018 was $6,362 and $4,152, respectively. The balance as of September 30, 2019 consisted of security deposits of $4,942 and a tenant impound liability of $1,420 related to amounts owed for specific tenant expenses. The balance as of December 31, 2018 consisted of security deposits of $3,272 and a tenant impound liability of $880 related to amounts owed for specific tenant expenses.

Derivative Instruments - Interest Rate Swaps

Derivative Instruments - Interest Rate Swaps

As of September 30, 2019 and December 31, 2018, the Company had three interest rate swaps that were designated as cash flow hedges of interest rate risk. In accordance with the Company’s risk management strategy, the purpose of the interest rate swaps is to manage interest rate risk for a portion of the Company’s variable-rate debt. The interest rate swaps involve the Company’s receipt of variable-rate amounts from three counterparties in exchange for the Company making fixed-rate payments over the life of the agreement. The Company accounts for derivative instruments in accordance with the provisions of ASC Topic 815, “Derivatives and Hedging” and ASU No. 2017‑12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” As of September 30, 2019 and December 31, 2018, the Company’s liability balance related to these interest rate swaps was $10,399 and $3,487, respectively. Refer to Note 4 – “Credit Facility, Notes Payable and Derivative Instruments” for additional details regarding these interest rate swaps. Additionally, as discussed in Note 11 - "Subsequent Events," on October 3, 2019, the Company executed two additional interest rate swaps with a combined notional amount of $130 million.

Other Liability

Other Liability

The Company adopted ASC Topic 842 on January 1, 2019, and had an other liability balance of $2,379 as of September 30, 2019, based on the provisions of that standard (refer to Note 8 – “Leases” for additional details).

Reclassification

Reclassification

The Company reclassified the line item “Expense Recoveries” on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018, of $884 and $2,610, respectively, to present this amount as a component of “Rental Revenue,” in order to conform to the current period presentation.

XML

Leases - Scheduled obligations for future minimum payments on operating ground leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Leases
2019 (three months remaining)	$ 28	$ 109
2020	116	109
2021	116	109
2022	116	109
2023	120	113
Thereafter	4,476	2,121
Total	4,972	$ 2,670
Discount	(2,593)
Lease liability	$ 2,379

XML

Credit Facility, Notes Payable and Derivative Instruments - Schedule of outstanding borrowings under the Credit Facility (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Long-term Line of Credit	$ 363,242	$ 276,353
Less: Unamortized deferred financing costs	(701)	(799)
Revolving Credit Facility [Member]
Long-term Line of Credit	67,225	180,275
Term Loan [Member]
Long-term Line of Credit	300,000	100,000
Revolving credit facility [Member]
Less: Unamortized deferred financing costs	$ (3,983)	$ (3,922)

XML

Property Portfolio - Summary of the carrying amount of intangible assets and liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cost	$ 65,498	$ 43,152
Accumulated Amortization	(11,489)	(6,864)
Net	54,009	36,288
Liabilities
Cost	3,855	2,336
Accumulated Amortization	(568)	(308)
Net	3,287	2,028
In-place leases [Member]
Assets
Cost	34,697	21,753
Accumulated Amortization	(6,599)	(4,037)
Net	28,098	17,716
Above Market Ground Lease [Member]
Assets
Cost		707
Accumulated Amortization		(28)
Net		679
Above Market Lease intangibles [Member]
Assets
Cost	12,236	8,009
Accumulated Amortization	(1,991)	(1,096)
Net	10,245	6,913
Leasing Costs [Member]
Assets
Cost	18,565	12,683
Accumulated Amortization	(2,899)	(1,703)
Net	$ 15,666	$ 10,980

XML

Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events

Subsequent Events

Note 11 – Subsequent Events

Subsequent events have been evaluated through November 7, 2019, the date the financial statements were issued.

Interest Rate Swaps

On October 3, 2019, the Company hedged its interest rate risk on the Term Loan by entering into two interest rate swaps with an aggregate notional amount of $130 million and a term of approximately five years, which effectively fixed the LIBOR component of the interest rate on a corresponding amount of the Term Loan at 1.21%.

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt Instrument, Unamortized Discount	$ 701	$ 799
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	3,105	3,105
Preferred stock, shares outstanding	3,105	3,105
Preferred Stock, Liquidation Preference, Value	$ 77,625	$ 77,625
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	500,000	500,000
Common stock, shares issued	36,290	25,944
Common stock, shares outstanding	36,290	25,944
Revolving credit facility [Member]
Debt Instrument, Unamortized Discount	$ 3,983	$ 3,922
Notes Payable [Member]
Debt Instrument, Unamortized Discount	$ 701	$ 799

XML

Property Portfolio

9 Months Ended

Sep. 30, 2019

Property Portfolio

Property Portfolio

Note 3 – Property Portfolio

Summary of Properties Acquired During the Nine Months Ended September 30, 2019

During the nine months ended September 30, 2019 the Company completed 13 acquisitions.  For each acquisition, substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, each acquisition represents an asset acquisition.  Accordingly, transaction costs for these acquisitions were capitalized. 

A rollforward of the gross investment in land, building and improvements as of September 30, 2019 resulting from these acquisitions as well as other tenant improvements and the implementation of ASC 842 is as follows:

					Site & Tenant		AcquiredLease		Gross Investment in
	Land		Building		Improvements		Intangible Assets		Real Estate
Balances as of December 31, 2018	$	63,710	$	518,451	$	22,237	$	43,152	$	647,550
Facility Acquired – Date Acquired:
Zachary – 2/28/19		—		3,336		512		835		4,683
Gilbert and Chandler – 3/19/19		4,616		11,643		—		—		16,259
Las Vegas – 4/15/19		2,479		15,277		2,449		2,297		22,502
Oklahoma Northwest – 4/15/19		2,364		19,501		3,187		3,155		28,207
Mishawaka – 4/15/19		1,924		10,084		1,872		2,223		16,103
Surprise – 4/15/19		1,738		18,737		4,347		3,860		28,682
San Marcos – 7/12/19		2,322		6,934		530		2,188		11,974
Lansing – 8/1/19		1,202		7,681		852		1,633		11,368
Bannockburn – 8/5/19		731		3,419		1,214		1,325		6,689
Aurora – 8/6/19		1,521		7,446		911		2,679		12,557
Livonia – 8/14/19		980		7,629		643		1,340		10,592
Gilbert – 8/23/19		2,408		2,027		424		733		5,592
Morgantown – 9/26/19		883		5,286		879		902		7,950
ASC 842 Reclassification		—		—		—		(824)		(824)
Site and Tenant improvements(1)		—		—		508		—		508
Capitalized costs(2)		—		54		—		—		54
Total Additions:		23,168		119,054		18,328		22,346		182,896
Balances as of September 30, 2019	$	86,878	$	637,505	$	40,565	$	65,498	$	830,446

(1)  Represents tenant improvements that were completed and placed in service during the nine months ended September 30, 2019 related to the Sherman facility that was acquired in June 2017 and the Bountiful facility that was acquired in October 2018.  Also includes site improvements at the Watertown facility that was acquired in September 2016.

(2)Represents capitalized costs incurred during the nine months ended September 30, 2019 at the Derby facility that was acquired in August 2018.

Depreciation expense was $5,006 and $13,481 for the three and nine months ended September 30, 2019, respectively, and $3,614 and $9,965 for the three and nine months ended September 30, 2018, respectively.

As of September 30, 2019, the Company had aggregate capital improvement commitments and obligations to improve, expand, and maintain the Company’s existing facilities of $19,137. Many of these amounts are subject to contingencies that make it difficult to predict when they will be utilized, if at all. In accordance with the terms of the Company’s leases, capital improvement obligations in the next 12 months could total up to approximately $10,867.

The following is a summary of the acquisitions completed during the nine months ended September 30, 2019. The purchase price allocations are preliminary and subject to revision within the measurement period, not to exceed one year from the date of the acquisition.

Zachary Facility

On February 28, 2019, the Company assumed the following leasehold interests in the real property located in Zachary, Louisiana for a purchase price of $4.6 million: (i) the interest, as ground lessee, in an existing ground lease of the facility, with approximately 46 years remaining in the initial term with no extension options; and (ii) the interest, as landlord, in an existing lease of the facility with LTAC Hospital of Feliciana, LLC, as tenant, with approximately 16 years remaining in the initial term,  exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	103
Building and tenant improvements		3,745
In-place leases		305
Above-market lease intangibles		117
Leasing costs		413
Below-market lease intangibles		(34)
Total purchase price	$	4,649

Gilbert and Chandler Facilities

On March 19, 2019, the Company purchased the following facilities located in Gilbert, Arizona and Chandler, Arizona for a total purchase price of $16.3 million: (i) a medical office building located in Gilbert, Arizona; (ii) a medical office building located in Gilbert, Arizona; (iii) a medical office suite located in Chandler, Arizona; and (iv) a medical office suite located in Chandler, Arizona (collective, the “Gilbert and Chandler Facilities”). Upon the closing of the acquisition, the Company assumed the seller’s interest, as lessor, in two existing leases and entered into three new leases, as lessor, at the Gilbert and Chandler Facilities. The Gilbert and Chandler Leases have a weighted average remaining lease term of 10.5 years, exclusive of tenant renewal options.

IRF Portfolio

On April 15, 2019, the Company purchased four in-patient rehabilitation facilities located in Las Vegas, Nevada; Surprise, Arizona; Oklahoma City, Oklahoma and Mishawaka, Indiana (collectively, the “IRF Portfolio”) for a total purchase price of approximately $94.6 million. Upon the closing of the acquisition, the Company assumed the sellers’ interest, as lessor, in four existing leases at the properties (collectively, the “IRF Portfolio Leases”) with (i) Encompass Health (Las Vegas, Nevada facility); (ii) a joint venture between Cobalt Rehabilitation and Tenet Healthcare (the Surprise, Arizona facility); (iii) a joint venture between Mercy Health and Kindred Healthcare (the Oklahoma City, Oklahoma facility); and (iv) St. Joseph’s Health System (the Mishawaka, Indiana facility). The IRF Portfolio leases have a weighted average remaining lease term of approximately 8.3 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

					Oklahoma
	Las Vegas		Surprise		Northwest		Mishawaka
Land and site improvements	$	2,723	$	1,966	$	2,507	$	1,998
Building and tenant improvements		17,482		22,856		22,545		11,882
In-place leases		1,778		1,845		1,890		1,465
Above-market lease intangibles		—		938		367		236
Leasing costs		519		1,077		898		522
Below-market lease intangibles		(863)		—		—		—
Total purchase price	$	21,639	$	28,682	$	28,207	$	16,103

San Marcos Facility

On July 12, 2019, the Company purchased a medical office building located in San Marcos, California (the “San Marcos Facility”), for a purchase price of $12.0 million. Upon closing, the Company assumed the existing lease of the San Marcos Facility with California Cancer Associates for Research and Excellence, Inc., as tenant. The lease has eight years remaining in the initial term, exclusive of tenant renewal options.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,448
Building and tenant improvements		7,338
In-place leases		698
Above-market lease intangibles		1,101
Leasing costs		389
Total purchase price	$	11,974

Lansing Facilities

On August 1, 2019, the Company purchased the following real property and buildings thereon located in Lansing, Michigan for a total purchase price of $11.1 million: (i) 3390 East Jolly Road; (ii) 3955 Patient Care Drive; and (iii) 3400 East Jolly Road (“collectively, the “Lansing Facilities”). Upon closing, the Company assumed sellers’ interest, as lessor, in four existing leases and entered into two new leases at the Lansing Facilities (the “Lansing Leases”).  The Lansing Leases have a weighted-average remaining term of 8.5 years, exclusive of tenant renewal options.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,387
Building and tenant improvements		8,348
In-place leases		953
Above-market lease intangibles		130
Leasing costs		550
Below-market lease intangibles		(248)
Total purchase price	$	11,120

Bannockburn Facility

On August 5, 2019, the Company purchased an office building located in Bannockburn, Illinois (the “Bannockburn Facility”), for a purchase price of $6.6 million. Upon closing, the Company assumed seller’s interest, as lessor, in 14 existing leases at the Bannockburn Facility (the “Bannockburn Leases”).  The Bannockburn Leases have a weighted-average remaining term of 6.3 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	858
Building and tenant improvements		4,506
In-place leases		763
Above-market lease intangibles		240
Leasing costs		322
Below-market lease intangibles		(138)
Total purchase price	$	6,551

Aurora Facility

On August 6, 2019, the Company purchased a medical office building located in Aurora, Illinois (the “Aurora Facility”), for a purchase price of $12.6 million. Upon closing, the Company assumed the existing lease of the Aurora Facility with Dreyer Clinic Inc., as tenant (the “Dreyer Lease”). The Dreyer Lease has approximately six years remaining in the initial term, exclusive of tenant renewal options.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,829
Building and tenant improvements		8,049
In-place leases		1,417
Above-market lease intangibles		861
Leasing costs		401
Total purchase price	$	12,557

Livonia Facility

On August 14, 2019, the Company purchased a medical office building located in Livonia, Michigan (the “Livonia Facility”) for a purchase price of $10.4 million. Upon closing, the Company assumed 10 existing leases at the Livonia Facility (the “Livonia Leases”).  The Livonia Leases have a weighted-average remaining term of 3.2 years, exclusive of tenant renewal options.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,181
Building and tenant improvements		8,071
In-place leases		1,252
Above-market lease intangibles		53
Leasing costs		35
Below-market lease intangibles		(236)
Total purchase price	$	10,356

Gilbert Facility

On August 23, 2019, the Company purchased certain condominium units within two medical office buildings located in Gilbert, Arizona (the “Gilbert Facility”) for a total purchase price of $5.6 million. Upon closing, the Company leased the Gilbert Facility to Covenant Surgical Partners, Inc., a Delaware corporation (the “Covenant Lease”). The Covenant Lease has approximately ten (10) years remaining in the initial term, exclusive of tenant renewal options.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,470
Building and tenant improvements		2,389
In-place leases		121
Above-market lease intangibles		300
Leasing costs		312
Total purchase price	$	5,592

Morgantown Facility

On September 26, 2019, the Company purchased a parcel of land and an office building that is being constructed thereon, located in Morgantown, West Virginia (the “Morgantown Facility”) for a total purchase price of $8.0 million. Upon closing, the Company assumed the existing lease of the Morgantown Facility with Urgent Care MSO, LLC, as tenant (the “Urgent Care Lease”). The Urgent Care Lease has approximately ten years remaining in the initial term, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,256
Building and tenant improvements		5,792
In-place leases		457
Leasing costs		445
Total purchase price	$	7,950

Summary of Properties Acquired During the Nine Months Ended September 30, 2018

During the nine months ended September 30, 2018, the Company completed eight acquisitions.  For all eight acquisitions, substantially all of the fair value of the acquisitions was concentrated in a single identifiable asset or group of similar identifiable assets and, therefore, all of the acquisitions represent asset acquisitions under the guidance provided by ASU 2017-01.  Accordingly, transaction costs for these acquisitions were capitalized. 

A rollforward of the gross investment in land, building and improvements as of September 30, 2018, resulting from these acquisitions is as follows:

					Site & Tenant		Acquired Lease		Gross Investment in
	Land		Building		Improvements		Intangibles		Real Estate
Balances as of January 1, 2018	$	42,701	$	384,338	$	12,818	$	31,650	$	471,507
Facility Acquired – Date Acquired:
Moline / Silvis – 1/24/18		-		4,895		1,216		989		7,100
Freemont – 2/9/18		162		8,335		—		—		8,497
Gainesville – 2/23/18		625		9,885		—		—		10,510
Dallas – 3/1/18		6,272		17,012		—		—		23,284
Orlando – 3/22/18		2,543		11,720		756		1,395		16,414
Belpre – 4/19/18		3,025		50,526		3,966		7,166		64,683
McAllen – 7/3/18		1,099		4,296						5,395
Derby – 8/3/18		412		2,496		243		453		3,604
Tenant improvements(1)		—		—		2,043		—		2,043
Total Additions:		14,138		109,165		8,224		10,003		141,530
Balances as of September 30, 2018	$	56,839	$	493,503	$	21,042	$	41,653	$	613,037

(1)Represents tenant improvements that were completed and placed in service during the three months ended September 30, 2018 related to the Silvis and Sherman facilities that were acquired in January 2018 and June 2017, respectively.  These amounts were recorded as construction-in-process within the “Other Assets” line item in the Company’s Consolidated Balance Sheet as of September 30, 2018, and reclassified to investment in real estate once completed.

The following is a summary of the acquisitions completed during the nine months ended September 30, 2018.

Moline / Silvis Facilities

Moline Facility -  On January 24, 2018, the Company purchased a medical office building located in Moline, Illinois, which included the seller’s interest, as ground lessee, in an existing ground lease.  The ground lease has approximately 10 years remaining in the initial term, with 12 consecutive five-year renewal options.  Upon the closing of this acquisition, the Company assumed two subleases: one sublease with Fresenius Medical Care Quad Cities, LLC (“Fresenius”) with approximately 13 years remaining in the initial term, exclusive of tenant renewal options; and one sublease with Quad Cities Nephrology Associates, P.L.C. with approximately 15 years remaining in the initial term, exclusive of tenant renewal options. 

Silvis Facility - On January 24, 2018, the Company purchased a medical office building located in Silvis, Illinois from the same seller as the Moline facility, which included the seller’s interest, as ground lessee, in an existing ground lease.  The ground lease has approximately 67 years remaining in the initial term, with no renewal options. Upon the closing of this acquisition, the Company assumed one sublease with Fresenius with approximately 13 years remaining in the initial term, exclusive of tenant renewal options. 

The aggregate purchase price for the Moline/Silvis facilities was $6.9 million.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed for this acquisition:

Site improvements	$	249
Building and tenant improvements		5,862
In-place leases		343
Above market ground lease intangibles		219
Leasing costs		427
Below market lease intangibles		(229)
Total purchase price	$	6,871

Fremont Facility - On February 9, 2018, the Company purchased a medical office building located in Fremont, Ohio for a purchase price of approximately $8.5 million.  Upon the closing of this acquisition, the Company entered into a new 12-year lease with Northern Ohio Medical Specialists, LLC (NOMS), exclusive of tenant renewal options.

Gainesville Facility - On February 23, 2018, the Company purchased a medical office building and ambulatory surgery center located in Gainesville, Georgia for a purchase price of approximately $10.5 million.  Upon the closing of this acquisition, the Company entered into a new 12-year lease with SCP Eye Care Services, LLC,  exclusive of tenant renewal options.

Dallas Facility - On March 1, 2018, the Company purchased a hospital, a three-story parking garage, and land all located in Dallas, Texas for an aggregate purchase price of $23.3 million.  In addition to the hospital and the parking garage, the land underlays two medical office buildings that are not owned by the Company, each of which is ground leased to the hospital.  Upon the closing of this acquisition, the Company entered into two leases with Pipeline East Dallas, LLC, with one lease relating to the hospital and the other lease relating to the underlying land and parking garage.

Orlando Facilities - On March 22, 2018, the Company purchased five medical office buildings from five affiliated sellers for an aggregate purchase price of $16.4 million.  Upon the closing of this acquisition, the Company assumed five existing leases with Orlando Health, Inc. (the “Orlando Leases”)  The Orlando Leases have a weighted average remaining term of 4.5 years,  exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,075
Building and tenant improvements		11,944
In-place leases		808
Above market lease intangibles		229
Leasing costs		358
Below market lease intangibles		(10)
Total purchase price	$	16,404

Belpre Portfolio -On April 19, 2018, the Company purchased a portfolio of four medical office buildings and a right of first refusal to purchase a fifth, yet to be built, medical office building on the same campus, for an aggregate purchase price of $64.1 million. Upon the closing of the acquisition the Company assumed the existing leases with Marietta Memorial Hospital, a subsidiary of Memorial Health System and such leases had a weighted average remaining lease term of approximately 11.35 years, exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,997
Building and tenant improvements		53,520
In-place leases		2,660
Above market lease intangibles		2,527
Leasing costs		1,979
Below market lease intangibles		(632)
Total purchase price	$	64,051

McAllen Facility -On July 3, 2018, the Company purchased a medical office building (and adjacent condominium) located in McAllen, Texas for a purchase price of $5.4 million.  Upon the closing of this acquisition, the Company entered into a new 11-year lease with Valley Ear, Nose, and Throat Specialists, PA, exclusive of tenant renewal options.

Derby Facility -On August 3, 2018, the Company purchased a medical office building located in Derby, Kansas for a purchase price of $3.6 million.  Upon the closing of this acquisition, the Company assumed the existing lease with Rock Surgery Center, LLC. The lease has approximately nine years remaining in its initial term, exclusive of a tenant renewal option.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	566
Building and tenant improvements		2,585
In-place leases		299
Above market lease intangibles
Leasing costs		154
Below market lease intangibles		(23)
Total purchase price	$	3,581

Intangible Assets and Liabilities

The following is a summary of the carrying amount of intangible assets and liabilities as of the dates presented:

	As of September 30, 2019
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	34,697	$	(6,599)	$	28,098
Above market leases		12,236		(1,991)		10,245
Leasing costs		18,565		(2,899)		15,666
	$	65,498	$	(11,489)	$	54,009
Liabilities
Below market leases	$	3,855	$	(568)	$	3,287

	As of December 31, 2018
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	21,753	$	(4,037)	$	17,716
Above market ground lease		707		(28)		679
Above market leases		8,009		(1,096)		6,913
Leasing costs		12,683		(1,703)		10,980
	$	43,152	$	(6,864)	$	36,288
Liability
Below market leases	$	2,336	$	(308)	$	2,028

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Amortization expense related to in-place leases	$	1,033	$	647	$	2,562	$	1,797
Amortization expense related to leasing costs	$	467	$	307	$	1,195	$	848
Decrease in rental revenue related to above market leases	$	343	$	240	$	895	$	620
Increase in rental revenue related to below market leases	$	114	$	56	$	261	$	152

The following is a summary of the acquired lease intangible amortization:

As of September 30, 2019, scheduled future aggregate net amortization of the acquired lease intangible assets and liabilities for each fiscal year ended December 31 is listed below:

	Net Decrease		Net Increase
	in Revenue		in Expenses
2019 (three months remaining)	$	(246)	$	1,655
2020		(986)		6,601
2021		(988)		5,987
2022		(998)		5,620
2023		(1,024)		5,004
Thereafter		(2,716)		18,897
Total	$	(6,958)	$	43,764

As of September 30, 2019, the weighted average amortization periods for asset lease intangibles and liability lease intangibles were 6.42 years and 6.41 years, respectively.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Stock-Based Compensation

Stock-Based Compensation

Note 7 – Stock-Based Compensation

2016 Equity Incentive Plan

The 2016 Equity Incentive Plan, as amended (the “Plan”) is intended to assist the Company and its affiliates in recruiting and retaining employees of the Manager, members of the Board, executive officers of the Company, and individuals who provide services to those entities or affiliates of those entities.

The Plan is intended to permit the grant of both qualifying and non-qualified options and the grant of stock appreciation rights, restricted stock, unrestricted stock, awards of restricted stock units, performance awards and other equity-based awards (including LTIP Units) for up to an aggregate of 2,232 shares of common stock, subject to increase under certain provisions of the Plan. On May 29, 2019, the Company's stockholders approved an amendment to the Plan to increase the number of authorized shares available for issuance under the Plan by 1,000 shares from 1,232 to 2,232.  Based on the grants outstanding as of September 30, 2019, there are 1,020 units that remain available to be granted under the Plan. Units subject to awards under the Plan that are forfeited, cancelled, lapsed, settled in cash or otherwise expired (excluding shares withheld to satisfy exercise prices or tax withholding obligations) are available for grant.

Time-Based Grants

The time-based vesting LTIP unit activity under the Plan during the nine months ended September 30, 2019 was as follows:

LTIP Units outstanding as of December 31, 2018	588
LTIP Units earned and granted via the 2018 performance program – Annual Awards (1)	108
LTIP Units granted on a discretionary basis related to the Annual Awards (2)	28
LTIP Units granted as 2019 long-term time based awards (3)	54
LTIP Units granted to independent directors of the Board (4)	22
LTIP Units – other grant and forfeitures, net (5)	(9)
LTIP Units outstanding as of September 30, 2019	791

⁽¹⁾ The 108 LTIP Units represents earned and granted units from the previously disclosed 2018 annual awards (the “Annual Awards”). On March 5, 2019 the Compensation Committee of the Board (the “Compensation Committee”) determined the extent to which the Company achieved the performance goals related to the 2018 Annual Awards and determined the number of LTIP Units that each grantee was entitled to receive. These grants vested 50% on March 5, 2019, the determination date, and 50% vest on March 5, 2020.

⁽²⁾ The 28 LTIP Units represents a discretionary grant by the Board. These grants vested 50% on March 5, 2019, the grant date, and 50% vest on March 5, 2020.

⁽³⁾ The 54 LTIP Units represent grants approved by the Board on March 5, 2019 pursuant to the Company' 2019 Long-Term Incentive Plan. These grants are valued based on the Company’s share price at the date of grant of $10.07 and vest in equal one-third increments on each of March 5, 2020, March 5, 2021, and March 5, 2022.

⁽⁴⁾ The 22 LTIP Units represent a grant to the independent directors of the Board made on May 29, 2019, which vest on May 29, 2020.

⁽⁵⁾ The decrease of nine LTIP Units net represents 11 LTIP Units redeemed for the Company’s common stock with a value of $110 and one LTIP Unit that was forfeited, partially offset by three LTIP Units that were granted on March 15, 2019 related to a new hire. These three LTIP Units vest in equal one-third increments on each of March 15, 2020, March 15, 2021, and March 5, 2022.

A detail of the vested and unvested LTIP units outstanding as of September 30, 2019 is as follows:

Total vested units	483
Unvested units:
Granted to employees of the Advisor	286
Granted to the Company’s independent directors	22
Total unvested units	308
LTIP Units outstanding as of September 30, 2019	791

Performance Based Awards

For each of the past three years the Company’s Board has approved annual performance-based LTIP awards (“Annual Awards”)  and long-term performance-based LTIP awards (“Long-Term Awards”) to the executive officers of the Company and other employees of the Advisor who perform services for the Company.  As described in detail below the Annual Awards have one-year performance periods and the Long-Term Awards have three-year performance periods. In addition to meeting specified performance metrics, vesting in both the Annual Awards and the Long-Term Awards is subject to service requirements.

A detail of the Annual Awards and Long-Term Awards under the 2017, 2018, and 2019 programs as of September 30, 2019 is as follows:

	2017 Program	2018 Program		2019 Program
	Long-Term	Annual	Long-Term	Annual	Long-Term	Total
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	96	161	110	—	—	367
LTIP Unit target grants via the 2019 Performance Program – Annual Awards and Long-Term Awards (1)	—	—	—	133	82	215
LTIP Units earned and granted via the 2018 Performance Program – Annual Awards (2)	—	(108)	—	—	—	(108)
LTIP Units granted on a discretionary basis via the 2018 Performance Program – Annual Awards (2)	—	(28)	—	—	—	(28)
LTIP Units not earned under the 2018 Performance Program – Annual Awards (3)	—	(25)	—	—	—	(25)
Net annual and long-term LTIP awards as of September 30, 2019 (at target)	96	—	110	133	82	421

⁽¹⁾ These target Annual Awards and Long-Term Awards were approved by the Board on March 5, 2019.

⁽²⁾ These amounts represent grants from the 2018 program Annual Awards. Refer to the “Time-Based Grants” table above which presents these grants as earned and time-based.

⁽³⁾ On March 5, 2019 the Compensation Committee determined the extent to which the Company achieved the performance goals and concluded that these target awards were not achieved.

The number of target LTIP Units comprising each 2019 program Annual Award target grant was based on the closing price of the Company’s common stock reported on the New York Stock Exchange (“NYSE”) on the date of grant. The number of target LTIP Units comprising each Long-Term Award target grant was based on the fair value of the Long-Term Awards as determined by an independent valuation consultant, in each case rounded to the nearest whole LTIP unit in order to eliminate fractional units.

Annual Awards. The Annual Awards are subject to the terms and conditions of LTIP Annual Award Agreements (“LTIP Annual Award Agreements”) between the Company and each grantee.

The Compensation Committee and Board established performance goals for fiscal year 2019, as set forth in Exhibit A to the 2019 LTIP Annual Award Agreements (the “Performance Goals”) that will be used to determine the number of LTIP Units earned by each grantee. As of September 30, 2019, management estimated that the Performance Goals would be met at a 100% level, and accordingly, applied 100% to the net target 2019 program Annual Awards to estimate the 2019 program Annual Awards expected to be earned at the end of the performance period. Cumulative stock-based compensation expense during the nine months ended September 30, 2019 reflects management’s estimate that 100% of these awards will be earned. As soon as reasonably practicable following the last day of the 2019 fiscal year, the Compensation Committee and Board will determine the extent to which the Company has achieved each of the Performance Goals (expressed as a percentage) and, based on such determination, will calculate the number of LTIP Units that each grantee is entitled to receive. Each grantee may earn up to 150% of the number of his/her target LTIP Units. Any 2019 Annual Award LTIP Units that are not earned will be forfeited and cancelled.

Vesting. LTIP Units that are earned as of the end of the applicable performance period will be subject to vesting, subject to continued employment through each vesting date, in two installments as follows: 50% of the earned LTIP Units will become vested on the date in 2020 that the Board approves the number of LTIP Units to be awarded pursuant to the performance components set forth in the 2019 LTIP Annual Award Agreements and 50% of the earned LTIP Units become vested on the one year anniversary of the initial vesting date. Vesting may be accelerated under certain circumstances such as a “change-in-control” transaction or a “qualified termination” event.

Distributions. Distributions equal to the dividends declared and paid by the Company will accrue during the applicable performance period on the maximum number of LTIP Units that the grantee could earn and will be paid with respect to all of the earned LTIP Units at the conclusion of the applicable performance period, in cash or by the issuance of additional LTIP Units at the discretion of the Compensation Committee.

Long-Term Awards. The Long-Term Awards are subject to the terms and conditions of 2017, 2018 and 2019 LTIP Long-Term Award Agreements (collectively the “LTIP Long-Term Award Agreements”) between the Company and each grantee. The number of LTIP Units that each grantee is entitled to earn under the LTIP Long-Term Award Agreements will be determined following the conclusion of a three-year performance period based on the Company’s total stockholder return (“TSR”), which is determined based on a combination of appreciation in stock price and dividends paid during the performance period. Each grantee may earn up to 200% of the number of target LTIP Units covered by the grantee’s Long-Term Award. Any target LTIP Units that are not earned will be forfeited and cancelled. The number of LTIP Units earned under the Long-Term Awards will be determined as soon as reasonably practicable following the end of the applicable three-year performance period (2020, 2021, or 2022 depending on the program) based on the Company’s TSR on an absolute basis (as to 75% of the Long-Term Award) and relative to the SNL Healthcare REIT Index (as to 25% of the Long-Term Award).

Vesting. LTIP Units that are earned as of the end of the applicable three year performance period will be subject to forfeiture restrictions that will lapse (“vesting”), subject to continued employment through each vesting date as follows; 50% of the earned LTIP Units will vest upon the third anniversary of the respective grant dates and the remaining 50% will vest on the fourth anniversary of the respective grant dates. Vesting may be accelerated under certain circumstances such as a “change-in-control” transaction or a “qualified termination” event.

Distributions. Pursuant to the LTIP Long-Term Award Agreements, distributions equal to the dividends declared and paid by the Company will accrue during the applicable performance period on the maximum number of LTIP Units that the grantee could earn and will be paid with respect to all of the earned LTIP Units at the conclusion of the applicable performance period, in cash or by the issuance of additional LTIP Units at the discretion of the Compensation Committee.

Stock-Based Compensation Expense

In July 2018, the Company implemented the provisions of ASU 2018‑07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018‑07”). This standard simplifies several aspects of the accounting for non-employee transactions by stipulating that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, “Compensation-Stock Compensation”) will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, “Equity”). Under the provisions of ASU 2018‑07, the Company’s prospective compensation expense for all unvested LTIP Units, Annual Awards, and Long-Term Awards is recognized using the adoption date fair value of the awards, with no remeasurement required. Compensation expense for future LTIP Unit grants, Annual Awards, and Long-Term Awards is based on the grant date fair value of the units/awards, with no subsequent remeasurement required.

As the Long-Term Awards involve market-based performance conditions, the Company utilizes a Monte Carlo simulation to provide a grant date fair value for expense recognition. The Monte Carlo simulation is a generally accepted statistical technique used, in this instance, to simulate a range of possible future stock prices for the Company and the members of the SNL Healthcare REIT Index (the “Index”) over the Performance Periods. The purpose of this modeling is to use a probabilistic approach for estimating the fair value of the performance share award for purposes of accounting under ASC Topic 718.

The assumptions used in the Monte Carlo simulation include beginning average stock price, valuation date stock price, expected volatilities, correlation coefficients, risk-free rate of interest, and expected dividend yield. The beginning average stock price is the beginning average stock price for the Company and each member of the Index for the five trading days leading up to the grant date of the Long-Term Award. The valuation date stock price is the closing stock price of the Company and each of the peer companies in the Index on the grant dates of the Long-Term Awards. The expected volatilities are modeled using the historical volatilities for the Company and the members of the Index. The correlation coefficients are calculated using the same data as the historical volatilities. The risk-free rate of interest is taken from the U.S. Treasury website and relates to the expected life of the remaining performance period on valuation or revaluation. Lastly, the dividend yield assumption is 0.0%, which is mathematically equivalent to reinvesting dividends in the issuing entity, which is part of the Company’s award agreement assumptions.

Below are details regarding certain of the assumptions for the Long-Term Awards using Monte Carlo simulations:

	2019 Long-Term			2018 Long-Term			2017 Long-Term
	Awards			Awards			Awards
Share price	$	10.07		$	8.86		$	8.86
Target awards		82			110			96
Volatility		31.7	%		33.8	%		33.8% - 35.4%
Risk-free rate		2.5	%		2.6	%		2.4% - 2.6%
Dividend assumption		reinvested			reinvested			reinvested
Expected term in years		3			2.7			1.7 – 2.7

The Company incurred stock compensation expense of $868 and $2,493, for the three and nine months ended September 30, 2019 , respectively, and $741 and $1,978, for the three and nine months ended September 30,2018, respectively, related to the grants awarded under the Plan. Compensation expense is included within “General and Administrative” expense in the Company’s Condensed Consolidated Statements of Operations.

As of September 30, 2019, total unamortized compensation expense related to these awards of approximately $3.5 million is expected to be recognized over a weighted average remaining period of 1.5 years.

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating activities
Net income	$ 6,813	$ 5,057
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	13,481	9,965
Amortization of acquired lease intangible assets	3,757	2,645
Amortization of above market leases, net	634	484
Amortization of deferred financing costs and other	1,000	1,327
Stock-based compensation expense	2,493	1,978
Capitalized preacquisition costs charged to expense	162	132
Other	82
Changes in operating assets and liabilities:
Tenant receivables	(1,232)	(1,040)
Deferred assets	(3,955)	(4,597)
Other assets	(154)	(126)
Accounts payable and accrued expenses	911	1,434
Security deposits and other	2,210	1,800
Accrued management fees due to related party	479	41
Net cash provided by operating activities	26,681	19,100
Investing activities
Purchase of land, buildings, and other tangible and intangible assets and liabilities	(181,440)	(133,851)
Escrow deposits for purchase of properties	(897)	(774)
Loans to related parties		(49)
Capital expenditures on existing real estate investments	(337)	(2,014)
Preacquisition costs		257
Net cash used in investing activities	(182,674)	(136,431)
Financing activities
Net proceeds received from common equity offerings	96,799	3,209
Escrow deposits required by third party lenders	(216)	(216)
Repayment of note payable	(101)
Proceeds from Credit Facility	164,450	142,900
Repayment of Credit Facility	(77,500)	(10,400)
Payments of deferred financing costs	(924)	(2,750)
Redemption of LTIP Units		(263)
Dividends paid to common stockholders, and OP Unit and LTIP Unit holders	(21,167)	(14,075)
Dividends paid to preferred stockholders	(4,365)	(4,366)
Net cash provided by financing activities	156,976	114,039
Net increase (decrease) in cash and cash equivalents and restricted cash	983	(3,292)
Cash and cash equivalents and restricted cash-beginning of period	4,843	7,114
Cash and cash equivalents and restricted cash-end of period	5,826	3,822
Supplemental cash flow information:
Cash payments for interest	11,687	9,106
Noncash financing and investing activities:
Accrued dividends payable	9,470	5,995
Initial recognition of lease liability related to right of use asset	3,143
OP Units issued for property acquisition	506	4,742
Accrued common stock offering costs	22	302
LTIP Units and OP Units redeemed for common stock	630
Accrued pre acquisition costs for purchase of properties and tenant improvements	901	774
Construction in Progress [Member]
Noncash financing and investing activities:
Construction-in-process completed and transferred to real estate investments	100	2,043
Interest Rate Swap [Member]
Noncash financing and investing activities:
Interest rate swap agreements fair value change recognized in other comprehensive loss	$ 6,875	$ 109

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Leases - Aggregate annual minimum cash to be received by the Company on the noncancelable operating leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Leases
2019 (three months remaining)	$ 16,507	$ 50,527
2020	66,310	51,450
2021	64,947	49,926
2022	63,461	48,862
2023	62,040	47,743
Thereafter	391,576	330,180
Total	$ 664,841	$ 578,688

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Subsequent Events (Details) - Subsequent Event [Member] - The Term loan [Member] - Interest Rate Swap [Member] $ in Millions	Oct. 03, 2019 USD ($) item
Subsequent Event [Line Items]
Number of interest rate swaps entered | item	2
Aggregate notional amount | $	$ 130
Term of the instrument	5 years
Interest rate (as a percent)	1.21%

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Stock-Based Compensation - Time-based vesting (Details) - shares			1 Months Ended	9 Months Ended
		Mar. 05, 2019	Apr. 15, 2019	Sep. 30, 2019
LTIP Units outstanding as of June 30, 2019				791,000
Long Tem Incentives Plan Units [Member]
LTIP units granted		28	3
Long Tem Incentives Plan Units [Member] | Equity Incentive Plan 2016 [Member]
LTIP units outstanding as of December 31, 2018				588,000
LTIP units redeemed in cash or forfeited	[1]			(9,000)
LTIP Units outstanding as of June 30, 2019				791,000
Long Tem Incentives Plan Units [Member] | 2018 Performance Program [Member]
LTIP units granted	[2]			108,000
Long Tem Incentives Plan Units [Member] | Discretionary [Member]
LTIP units granted	[3]			28,000
Long Tem Incentives Plan Units [Member] | 2019 Time Based
LTIP units granted	[4]			54,000
Long Tem Incentives Plan Units [Member] | Independent directors [Member]
LTIP units granted	[5]			22,000

[1] The decrease of nine LTIP Units net represents 11 LTIP Units redeemed for the Company’s common stock with a value of $110 and one LTIP Unit that was forfeited, partially offset by three LTIP Units that were granted on March 15, 2019 related to a new hire. These three LTIP Units vest in equal one-third increments on each of March 15, 2020, March 15, 2021, and March 5, 2022.

[2] The 108 LTIP Units represents earned and granted units from the previously disclosed 2018 annual awards (the “Annual Awards”). On March 5, 2019 the Compensation Committee of the Board (the “Compensation Committee”) determined the extent to which the Company achieved the performance goals related to the 2018 Annual Awards and determined the number of LTIP Units that each grantee was entitled to receive. These grants vested 50% on March 5, 2019, the determination date, and 50% vest on March 5, 2020.

[3] The 28 LTIP Units represents a discretionary grant by the Board. These grants vested 50% on March 5, 2019, the grant date, and 50% vest on March 5, 2020.

[4] The 54 LTIP Units represent grants approved by the Board on March 5, 2019 pursuant to the Company' 2019 Long-Term Incentive Plan. These grants are valued based on the Company’s share price at the date of grant of $10.07 and vest in equal one-third increments on each of March 5, 2020, March 5, 2021, and March 5, 2022.The 22 LTIP Units represent a grant to the independent directors of the Board made on May 29, 2019, which vest on May 29, 2020.

[5] The 22 LTIP Units represent a grant to the independent directors of the Board made on May 29, 2019, which vest on May 29, 2020.

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Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Dividend Amount	$ 9,470	$ 6,981
Preferred Stock [Member] | Dividend Declared On 13 12 18 [Member]
Dividend Amount	$ 1,455
Dividends per Share	$ 0.46875
Preferred Stock [Member] | Dividend Declared On 03 06 19 [Member]
Dividend Amount	$ 1,455
Dividends per Share	$ 0.46875
Preferred Stock [Member] | Dividend Declared On June142019 [Member]
Dividend Amount	$ 1,455
Dividends per Share	$ 0.46875
Preferred Stock [Member] | Dividend Declared On 13 09 19 [Member]
Dividend Amount	$ 1,455
Dividends per Share	$ 0.46875
Common Stock [Member] | Dividend Declared On 13 12 18 [Member]
Dividend Amount	$ 5,695
Dividends per Share	$ 0.20
Common Stock [Member] | Dividend Declared On 03 06 19 [Member]
Dividend Amount	$ 7,688
Dividends per Share	$ 0.20
Common Stock [Member] | Dividend Declared On June142019 [Member]
Dividend Amount	$ 7,699
Dividends per Share	$ 0.20
Common Stock [Member] | Dividend Declared On 13 09 19 [Member]
Dividend Amount	$ 8,004
Dividends per Share	$ 0.20

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Credit Facility, Notes Payable and Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2019

Debt Instrument [Line Items]

Schedule of Outstanding borrowings

As of September 30, 2019 and December 31, 2018, the Company had the following outstanding borrowings under the Credit Facility:

	September 30, 2019		December 31, 2018
Revolver	$	67,225	$	180,275
Term Loan		300,000		100,000
Less: Unamortized deferred financing costs		(3,983)		(3,922)
Credit Facility, net	$	363,242	$	276,353

Schedule of Aggregate balances of loans payable

The Company’s notes payable, net, includes two loans: (1) the Cantor Loan and (2) the West Mifflin Note, described in detail below. The following table sets forth the aggregate balances of these loans as of September 30, 2019 and December 31, 2018.

	September 30, 2019		December 31, 2018
Notes payable, gross	$	39,475	$	39,475
Less: Unamortized debt discount		(701)		(799)
Cumulative principal repayments		(123)		(22)
Notes payable, net	$	38,651	$	38,654

Schedule of comprehensive (Loss) income

The table below details the components of the loss presented on the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income recognized on the Company’s interest rate swaps designated as cash flow hedges for the three and  nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Amount of loss recognized in other comprehensive loss	$	1,603	$	122	$	7,559	$	122
Amount of loss reclassified from accumulated other comprehensive loss into interest expense		(300)		(13)		(684)		(13)
Total change in accumulated other comprehensive loss	$	1,303	$	109	$	6,875	$	109

Cantor Loan [Member]

Debt Instrument [Line Items]

Schedule of Maturities of Long-term Debt

As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019	$	—
2020		—
2021		282
2022		447
2023		471
Thereafter		30,897
Total	$	32,097

West Mifflin Note Payable [Member]

Debt Instrument [Line Items]

Schedule of Maturities of Long-term Debt

As of September 30, 2019, scheduled principal payments due for each fiscal year ended December 31 are listed below as follows:

2019 (three months remaining)	$	35
2020		7,220
Total	$	7,255

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases

Schedule of aggregate annual minimum cash to be received by the Company

The aggregate annual minimum cash to be received by the Company on the noncancelable operating leases related to its portfolio as of June 30, 2019 is as follows for the subsequent years ended December 31:

2019 (three months remaining)	$	16,507
2020		66,310
2021		64,947
2022		63,461
2023		62,040
Thereafter		391,576
Total	$	664,841

The Company’s real estate assets are leased to tenants under operating leases. The minimum rental amounts under the leases were generally subject to scheduled fixed increases. The aggregate annual minimum cash to be received by the Company on its noncancelable operating leases as of December 31, 2018 were as follows:

2019	$	50,527
2020		51,450
2021		49,926
2022		48,862
2023		47,743
Thereafter		330,180
Total	$	578,688

Schedule of aggregate minimum cash payments to be made by the Company

The following table sets forth the undiscounted cash flows of our scheduled obligations for future minimum payments on operating ground leases at June 30, 2019 and a reconciliation of those cash flows to the operating lease liability at June 30, 2019:

2019 (three months remaining)	$	28
2020		116
2021		116
2022		116
2023		120
Thereafter		4,476
Total		4,972
Discount		(2,593)
Lease liability	$	2,379

The aggregate minimum cash payments to be made by the Company on these land leases as of December 31, 2018, were as follows:

2019	$	109
2020		109
2021		109
2022		109
2023		113
Thereafter		2,121
Total	$	2,670

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of presentation

The accompanying condensed consolidated financial statements are unaudited and include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries. The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual consolidated financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the accompanying consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2018. In the opinion of management, all adjustments of a normal and recurring nature necessary for a fair presentation of the condensed consolidated financial statements for the interim periods have been made.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, including the Operating Partnership and its wholly-owned subsidiaries. The Company presents the portion of any equity it does not own but controls (and thus consolidates) as noncontrolling interest. Noncontrolling interest in the Company includes the LTIP Units that have been granted to the Company’s and Advisor’s directors, officers and employees and the OP Units held by third parties. Refer to Note 5 – “Equity” and Note 7 – “Stock-Based Compensation” for additional information regarding the OP Units and LTIP Units.

The Company classifies noncontrolling interest as a component of consolidated equity on its Condensed Consolidated Balance Sheets, separate from the Company’s total equity. The Company’s net income or loss is allocated to noncontrolling interests based on the respective ownership or voting percentage in the Operating Partnership associated with such noncontrolling interests and is removed from consolidated income or loss on the Condensed Consolidated Statements of Operations in order to derive net income or loss attributable to common stockholders. The noncontrolling ownership percentage is calculated by dividing the aggregate number of LTIP Units and OP Units held by third parties by the total number of shares of common stock, LTIP Units and OP Units outstanding. Any future issuances of additional shares of common stock, LTIP Units or OP Units could change the noncontrolling ownership interest.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Actual results could differ from those estimates.

Investment in Real Estate

The Company determines when an acquisition meets the definition of a business or alternatively should be accounted for as an asset acquisition in accordance with ASU 2017-01 – “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”).  ASU 2017-01 requires that, when substantially all of the fair value of an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset or group of similar identifiable assets does not meet the definition of a business and therefore is required to be accounted for as an asset acquisition. Transaction costs are capitalized for asset acquisitions and expensed as incurred for business combinations. ASU 2017-01 results in most, if not all, of the Company’s acquisitions being accounted for as asset acquisitions because substantially all of the fair value of the gross assets the Company acquires are concentrated in a single asset or group of similar identifiable assets. For asset acquisitions that are “owner occupied” (meaning that the seller either is the tenant or controls the tenant), the purchase price, including capitalized acquisition costs, will be allocated to land and building based on their relative fair values with no value allocated to intangible assets or liabilities. For asset acquisitions where there is a lease in place but not “owner occupied,” the Company will also allocate the purchase price to tangible assets and any intangible assets acquired or liabilities assumed based on their relative fair values.

Real estate and related assets are stated net of accumulated depreciation. Renovations, replacements and other expenditures that improve or extend the life of assets are capitalized and depreciated over their estimated useful lives. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the buildings, which are generally between 23 and 50 years, tenant improvements, which are generally between one and 19 years, and site improvements, which are generally between three and 14 years.

Revenue Recognition

The Company’s operations primarily consist of rental revenue earned from tenants under leasing arrangements which provide for minimum rent and escalations. The leases have been accounted for as operating leases. For operating leases with contingent rental escalators, revenue is recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators are recognized on a straight-line basis over the initial lease term, subject to a collectability assessment, with the difference between the contractual rental receipts and the straight-line amounts recorded as a “deferred rent receivable.” Additionally, rental revenue includes expense recoveries, which represents revenue recognized related to tenant reimbursement of real estate taxes, insurance, and certain other operating expenses. The Company recognizes these reimbursements and related expenses on a gross basis in its Condensed Consolidated Statements of Operations. Expenses required to be paid directly by the tenant are not subject to reimbursement.

For all leases where rent collection has been deemed probable, the Company assesses the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant defaults, or the inability of tenants to make contractual rent and tenant recovery payments at each reporting date. The Company also monitors the liquidity and creditworthiness of its tenants and operators on a continuous basis. This evaluation considers industry and economic conditions, property performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company's assessment is based on amounts estimated to be recoverable over the term of the lease. As of September 30, 2019 and December 31, 2018, based on the Company’s assessment, no allowance was recorded as one was not deemed necessary. However, because future events may adversely affect the Company’s tenants, a valuation allowance may need to be established in the future.

Cash and Cash Equivalents and Restricted Cash

The Company considers all demand deposits, cashier’s checks, money market accounts, and certificates of deposit with an original maturity of three months or less to be cash equivalents. Amounts included in restricted cash represent (1) certain security deposits received from tenants at the inception of their leases; (2) cash required to be held by a third-party lender as a reserve for debt service; and (3) funds held by the Company that were received from certain tenants that the Company collected to pay specific tenant expenses, such as real estate taxes and insurance, on the tenant’s behalf (“tenant reimbursements”). The following table provides a reconciliation of the Company’s cash and cash equivalents and restricted cash that sums to the total of those amounts at the end of the periods presented on the Company’s accompanying Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018:

	As of September 30,
	2019		2018
Cash and cash equivalents	$	2,815	$	3,005
Restricted cash		3,011		817
Total cash and cash equivalents and restricted cash	$	5,826	$	3,822

Escrow Deposits

The escrow deposits balance as of September 30, 2019 and December 31, 2018 was $2,865 and $1,752, respectively. Escrow deposits include funds held in escrow to be used for the acquisition of properties in the future and for the payment of taxes, insurance, and other amounts as stipulated by the Company’s Cantor Loan, as hereinafter defined.

Deferred Assets

The deferred assets balance as of September 30, 2019 and December 31, 2018 was $13,307 and $9,352, respectively. The balance as of September 30, 2019 consisted of $13,020 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $287 of other deferred costs. The balance as of December 31, 2018 consisted of $8,706 in deferred rent receivables resulting from the recognition of revenue from leases with fixed annual rental escalations on a straight-line basis and $646 of other deferred costs.

Other Assets

The other assets balance was $4,363 as of September 30, 2019, which consisted of $3,094 for a right of use asset that was recorded in connection with the implementation of ASC Topic 842 on January 1, 2019 (refer to Note 8 – “Leases” for additional details), $930 in deferred preacquisition and construction in process costs, and $339 in a prepaid asset. The other assets balance was $322 as of December 31, 2018, which consisted of $139 in capitalized costs related to property acquisitions and $183 in a prepaid asset.

Security Deposits and Other

The security deposits and other liability balance as of September 30, 2019 and December 31, 2018 was $6,362 and $4,152, respectively. The balance as of September 30, 2019 consisted of security deposits of $4,942 and a tenant impound liability of $1,420 related to amounts owed for specific tenant expenses. The balance as of December 31, 2018 consisted of security deposits of $3,272 and a tenant impound liability of $880 related to amounts owed for specific tenant expenses.

Derivative Instruments - Interest Rate Swaps

As of September 30, 2019 and December 31, 2018, the Company had three interest rate swaps that were designated as cash flow hedges of interest rate risk. In accordance with the Company’s risk management strategy, the purpose of the interest rate swaps is to manage interest rate risk for a portion of the Company’s variable-rate debt. The interest rate swaps involve the Company’s receipt of variable-rate amounts from three counterparties in exchange for the Company making fixed-rate payments over the life of the agreement. The Company accounts for derivative instruments in accordance with the provisions of ASC Topic 815, “Derivatives and Hedging” and ASU No. 2017‑12, “Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities.” As of September 30, 2019 and December 31, 2018, the Company’s liability balance related to these interest rate swaps was $10,399 and $3,487, respectively. Refer to Note 4 – “Credit Facility, Notes Payable and Derivative Instruments” for additional details regarding these interest rate swaps. Additionally, as discussed in Note 11 - "Subsequent Events," on October 3, 2019, the Company executed two additional interest rate swaps with a combined notional amount of $130 million.

Other Liability

The Company adopted ASC Topic 842 on January 1, 2019, and had an other liability balance of $2,379 as of September 30, 2019, based on the provisions of that standard (refer to Note 8 – “Leases” for additional details).

Reclassification

The Company reclassified the line item “Expense Recoveries” on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018, of $884 and $2,610, respectively, to present this amount as a component of “Rental Revenue,” in order to conform to the current period presentation.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	Global Medical REIT Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Central Index Key	0001533615
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	GMRE
Entity Common Stock, Shares Outstanding		36,371,564
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	true

XML

Equity

9 Months Ended

Sep. 30, 2019

Equity

Equity

Note 5 – Equity

Preferred Stock

The Company’s charter authorizes the issuance of 10,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2019 and December 31, 2018, there were 3,105 shares of Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”), issued and outstanding. The Series A Preferred Stock has a liquidation preference of $25 per share.

Preferred stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Quarterly			Dividends
Date Announced	Record Date	Quarter	Payment Date	Dividend			per Share
December 13, 2018	January 15, 2019	Q4 2018	January 31, 2019	$	1,455		$	0.46875
March 6, 2019	April 15, 2019	Q1 2019	April 30, 2019	$	1,455		$	0.46875
June 14, 2019	July 15, 2019	Q2 2019	July 31, 2019	$	1,455		$	0.46875
September 13, 2019	October 15, 2019	Q3 2019	October 31, 2019	$	1,455	(1)	$	0.46875

(1)Two months of this amount, equal to $970, was accrued at September 30, 2019.

The holders of the Series A Preferred Stock are entitled to receive dividend payments only when, as and if declared by the Board (or a duly authorized committee of the Board). Dividends will accrue or be payable in cash from the original issue date, on a cumulative basis, quarterly in arrears on each dividend payment date at a fixed rate per annum equal to 7.50% of the liquidation preference of $25.00 per share (equivalent to $1.875 per share on an annual basis). Dividends on the Series A Preferred Stock will be cumulative and will accrue whether or not (i) funds are legally available for the payment of those dividends, (ii) the Company has earnings or (iii) those dividends are declared by the Board. The quarterly dividend payment dates on the Series A Preferred Stock are January 31, April 30, July 31 and October 31 of each year. During the nine month periods ended September 30, 2019 and 2018, the Company paid preferred dividends of $4,365 and $4,366, respectively. The Company may, at its option, redeem the Serial A Preferred Stock for cash in whole or in part, from time-to-time, on or after September 15, 2022 at a cash redemption price of $25.00 per share, plus any accrued and unpaid dividends up to, but not including, the date of redemption.

Common Stock

The Company has 500,000 authorized shares of common stock, $0.001 par value. As of September 30, 2019 and December 31, 2018, there were 36,290 and 25,944 outstanding shares of common stock, respectively.

On March 18, 2019, the Company closed an underwritten public offering of its common stock and on March 25, 2019 the Company closed on part of the related over-allotment option granted to the underwriters, resulting in $75,191 in net proceeds.

On August 17, 2018, the Company, its Advisor, and the Operating Partnership entered into a Sales Agreement, as amended on June 21, 2019, with a number of financial institutions, pursuant to which the Company may offer and sell, from time to time, up to $50 million of its common stock (the “ATM Program”). During the nine months ended September 30, 2019, pursuant to the ATM Program, the Company sold and issued 2,051 shares of its common stock at an average price of $10.73 per share, receiving net proceeds of $21,608.

Common stock dividend activity for the nine months ended September 30, 2019 is summarized in the following table:

		Applicable		Dividend		Dividends
Date Announced	Record Date	Quarter	Payment Date	Amount(1)		per Share
December 13, 2018	December 26, 2018	Q4 2018	January 10, 2019	$	5,695	$	0.20
March 6, 2019	March 26, 2019	Q1 2019	April 10, 2019	$	7,688	$	0.20
June 14, 2019	June 26, 2019	Q2 2019	July 11, 2019	$	7,699	$	0.20
September 13, 2019	September 25, 2019	Q3 2019	October 10, 2019	$	8,004	$	0.20

(1)Includes distributions on LTIP Units and OP Units.

During the nine months ended September 30, 2019 and 2018, the Company paid total dividends on its common stock, LTIP Units and OP Units in the aggregate amount of $21,167 and $14,075, respectively.

As of September 30, 2019 and December 31, 2018, the Company had an accrued dividend balance of $496 and $316 for dividends payable on the aggregate annual and long-term LTIP Units that are subject to retroactive receipt of dividends on the amount of LTIP Units ultimately earned. During the nine months ended September 30, 2019, $265 of dividends were accrued and $85 of dividends were paid related to these units. During the nine months ended September 30, 2018, $180 of dividends were accrued and $46 of dividends were paid.

The amount of the dividends paid to the Company’s stockholders is determined by the Company’s Board and is dependent on a number of factors, including funds available for payment of dividends, the Company’s financial condition and capital expenditure requirements except that, in accordance with the Company’s organizational documents and Maryland law, the Company may not make dividend distributions that would: (i) cause it to be unable to pay its debts as they become due in the usual course of business; (ii) cause its total assets to be less than the sum of its total liabilities plus senior liquidation preferences; or (iii) jeopardize its ability to maintain its qualification as a REIT.

OP Units

OP Units are limited partnership interests in the Company's Operating Partnership. OP Units are redeemable by the holder for cash or, at the Company's option, an equivalent number of shares of the Company's common stock. During the nine months ended September 30, 2019, the Company issued an aggregate of 49 OP Units with a value of $506 in connection with a facility acquisition. Additionally, during the nine months ended September 30, 2019, two OP Unit holders redeemed an aggregate of 51 OP Units that were issued during 2017 in connection with a facility acquisition. The Company redeemed such OP Units for shares of its common stock with a value of $519. During the year ended December 31, 2018, the Company issued an aggregate of 1,899 OP Units with a value of $16,363 in connection with three facility acquisitions. As of September 30, 2019 and December 31, 2018, there were 3,143 and 3,145 OP Units issued and outstanding, respectively, with an aggregate value of $27,881 and $27,894, respectively. The OP Unit value is based on the Company’s closing share price on the date of the respective transaction and is included as a component of noncontrolling interest equity in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018.

XML

Rent Concentration

9 Months Ended

Sep. 30, 2019

Rent Concentration

Rent Concentration

Note 9 – Rent Concentration

The Company’s facilities with a concentration of rental revenue of 5% or greater is as follows for the periods below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Facility	2019		2018		2019		2018
Encompass (four facilities and four locations)	10	%	11	%	10	%	12	%
Belpre	8		11		8		7
OCOM	7		9		6		10
Sherman	5		6		5		6
Austin	5		6		5		7
Aggregate of all other facilities	65		57		66		58
Total	100	%	100	%	100	%	100	%

XML

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Comprehensive (Loss) Income
Net income	$ 2,308	$ 1,773	$ 6,813	$ 5,057
Other comprehensive loss:
Decrease in fair value of interest rate swap agreement	(1,303)	(109)	(6,875)	(109)
Total other comprehensive loss	(1,303)	(109)	(6,875)	(109)
Comprehensive income (loss)	1,005	1,664	(62)	4,948
Less: Preferred stock dividends	(1,455)	(1,455)	(4,366)	(4,366)
Less: Comprehensive loss (income) attributable to noncontrolling interest	44	(21)	442	(48)
Comprehensive (loss) income attributable to common stockholders	$ (406)	$ 188	$ (3,986)	$ 534

XML

Credit Facility, Notes Payable and Derivative Instruments - Scheduled Principal Payments Due On Cantor Loan Note Payable (Details) - Cantor Loan [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2016
Debt Instrument [Line Items]
2019 (six months remaining)	$ 0
2020	0
2021	282
2022	447
2023	471
Thereafter	30,897
Total	$ 32,097	$ 32,097

XML

Property Portfolio - Net amortization of the acquired lease intangible (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Net Decrease in Revenue
2019 (three months remaining)	$ (246)
2020	(986)
2021	(988)
2022	(998)
2023	(1,024)
Thereafter	(2,716)
Total	(6,958)
Net Increase in Expenses
2019 (three months remaining)	1,655
2020	6,601
2021	5,987
2022	5,620
2023	5,004
Thereafter	18,897
Total	$ 43,764

XML

Property Portfolio - Gross Investment (Details) - USD ($) $ in Thousands													9 Months Ended
	Sep. 26, 2019	Aug. 23, 2019	Aug. 14, 2019	Aug. 06, 2019	Aug. 05, 2019	Aug. 01, 2019	Jul. 12, 2019	Aug. 03, 2018	Jul. 03, 2018	Mar. 01, 2018	Feb. 23, 2018	Feb. 09, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Beginning Balance													$ 647,550	$ 471,507
Site and tenant improvements													508	2,043
Capitalized costs													54		$ 139
Acquisitions													182,896	141,530
Ending Balance													830,446	613,037
Zachary [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													4,683
Gilbert and Chandler [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													16,259
Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													22,502
Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													28,207
Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													16,103
Surprise [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													28,682
San Marcos [Member]
Property, Plant and Equipment [Line Items]
Acquisitions							$ 12,000						11,974
Lansing [Member]
Property, Plant and Equipment [Line Items]
Acquisitions						$ 11,100							11,368
Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Acquisitions					$ 6,600								6,689
Aurora [Member]
Property, Plant and Equipment [Line Items]
Acquisitions				$ 12,600									12,557
Livonia [Member]
Property, Plant and Equipment [Line Items]
Acquisitions			$ 10,400										10,592
Gilbert [Member]
Property, Plant and Equipment [Line Items]
Acquisitions		$ 5,600											5,592
Morgantown [Member]
Property, Plant and Equipment [Line Items]
Acquisitions	$ 8,000												7,950
ASC 842 Reclassification [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													(824)
Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														7,100
Freemont [Member]
Property, Plant and Equipment [Line Items]
Acquisitions												$ 8,500		8,497
Gainesville [Member]
Property, Plant and Equipment [Line Items]
Acquisitions											$ 10,500			10,510
Dallas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions										$ 23,300				23,284
Orlando [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														16,414
Belpre [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														64,683
McAllen [Member]
Property, Plant and Equipment [Line Items]
Acquisitions									$ 5,400					5,395
Derby [Member]
Property, Plant and Equipment [Line Items]
Acquisitions								$ 3,600						3,604
Land [Member]
Property, Plant and Equipment [Line Items]
Beginning Balance													63,710	42,701
Site and tenant improvements													0	0
Capitalized costs													0
Acquisitions													23,168	14,138
Ending Balance													86,878	56,839
Land [Member] | Zachary [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Land [Member] | Gilbert and Chandler [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													4,616
Land [Member] | Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,479
Land [Member] | Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,364
Land [Member] | Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,924
Land [Member] | Surprise [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,738
Land [Member] | San Marcos [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,322
Land [Member] | Lansing [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,202
Land [Member] | Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													731
Land [Member] | Aurora [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,521
Land [Member] | Livonia [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													980
Land [Member] | Gilbert [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,408
Land [Member] | Morgantown [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													883
Land [Member] | ASC 842 Reclassification [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Land [Member] | Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Land [Member] | Freemont [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														162
Land [Member] | Gainesville [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														625
Land [Member] | Dallas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														6,272
Land [Member] | Orlando [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														2,543
Land [Member] | Belpre [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														3,025
Land [Member] | McAllen [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														1,099
Land [Member] | Derby [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														412
Building [Member]
Property, Plant and Equipment [Line Items]
Beginning Balance													518,451	384,338
Site and tenant improvements													0
Capitalized costs													54
Acquisitions													119,054	109,165
Ending Balance													637,505	493,503
Building [Member] | Zachary [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													3,336
Building [Member] | Gilbert and Chandler [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													11,643
Building [Member] | Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													15,277
Building [Member] | Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													19,501
Building [Member] | Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													10,084
Building [Member] | Surprise [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													18,737
Building [Member] | San Marcos [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													6,934
Building [Member] | Lansing [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													7,681
Building [Member] | Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													3,419
Building [Member] | Aurora [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													7,446
Building [Member] | Livonia [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													7,629
Building [Member] | Gilbert [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,027
Building [Member] | Morgantown [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													5,286
Building [Member] | ASC 842 Reclassification [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Building [Member] | Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														4,895
Building [Member] | Freemont [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														8,335
Building [Member] | Gainesville [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														9,885
Building [Member] | Dallas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														17,012
Building [Member] | Orlando [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														11,720
Building [Member] | Belpre [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														50,526
Building [Member] | McAllen [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														4,296
Building [Member] | Derby [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														2,496
Building And Tenant Improvements [Member]
Property, Plant and Equipment [Line Items]
Beginning Balance													22,237	12,818
Site and tenant improvements													508	2,043
Capitalized costs													0
Acquisitions													18,328	8,224
Ending Balance													40,565	21,042
Building And Tenant Improvements [Member] | Zachary [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													512
Building And Tenant Improvements [Member] | Gilbert and Chandler [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Building And Tenant Improvements [Member] | Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,449
Building And Tenant Improvements [Member] | Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													3,187
Building And Tenant Improvements [Member] | Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,872
Building And Tenant Improvements [Member] | Surprise [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													4,347
Building And Tenant Improvements [Member] | San Marcos [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													530
Building And Tenant Improvements [Member] | Lansing [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													852
Building And Tenant Improvements [Member] | Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,214
Building And Tenant Improvements [Member] | Aurora [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													911
Building And Tenant Improvements [Member] | Livonia [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													643
Building And Tenant Improvements [Member] | Gilbert [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													424
Building And Tenant Improvements [Member] | Morgantown [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													879
Building And Tenant Improvements [Member] | ASC 842 Reclassification [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Building And Tenant Improvements [Member] | Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														1,216
Building And Tenant Improvements [Member] | Freemont [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Building And Tenant Improvements [Member] | Gainesville [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Building And Tenant Improvements [Member] | Dallas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Building And Tenant Improvements [Member] | Orlando [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														756
Building And Tenant Improvements [Member] | Belpre [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														3,966
Building And Tenant Improvements [Member] | McAllen [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Building And Tenant Improvements [Member] | Derby [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														243
Intangibles [Member]
Property, Plant and Equipment [Line Items]
Beginning Balance													43,152	31,650
Site and tenant improvements													0	0
Capitalized costs													0
Acquisitions													22,346	10,003
Ending Balance													65,498	41,653
Intangibles [Member] | Zachary [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													835
Intangibles [Member] | Gilbert and Chandler [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													0
Intangibles [Member] | Las Vegas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,297
Intangibles [Member] | Oklahoma Northwest [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													3,155
Intangibles [Member] | Mishawaka [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,223
Intangibles [Member] | Surprise [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													3,860
Intangibles [Member] | San Marcos [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,188
Intangibles [Member] | Lansing [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,633
Intangibles [Member] | Bannockburn [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,325
Intangibles [Member] | Aurora [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													2,679
Intangibles [Member] | Livonia [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													1,340
Intangibles [Member] | Gilbert [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													733
Intangibles [Member] | Morgantown [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													902
Intangibles [Member] | ASC 842 Reclassification [Member]
Property, Plant and Equipment [Line Items]
Acquisitions													$ (824)
Intangibles [Member] | Moline / Silvis Facility [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														989
Intangibles [Member] | Freemont [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Intangibles [Member] | Gainesville [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Intangibles [Member] | Dallas [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Intangibles [Member] | Orlando [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														1,395
Intangibles [Member] | Belpre [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														7,166
Intangibles [Member] | McAllen [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														0
Intangibles [Member] | Derby [Member]
Property, Plant and Equipment [Line Items]
Acquisitions														$ 453

XML

Stock-Based Compensation - Assumptions Long-Term Awards (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2019 $ / shares shares
Target awards | shares	110
2019 Long-Term Awards
Adoption date price | $ / shares	$ 10.07
Target awards | shares	82
Volatility	31.70%
Risk-free rate	2.50%
Dividend assumption	reinvested
Expected term in years	3 years
2018 Long-Term Awards
Adoption date price | $ / shares	$ 8.86
Volatility	33.80%
Risk-free rate	2.60%
Dividend assumption	reinvested
Expected term in years	2 years 8 months 12 days
2017 Long-Term Awards
Adoption date price | $ / shares	$ 8.86
Target awards | shares	96
Dividend assumption	reinvested
2017 Long-Term Awards | Maximum [Member]
Volatility	35.40%
Risk-free rate	2.60%
Expected term in years	2 years 8 months 12 days
2017 Long-Term Awards | Minimum [Member]
Volatility	33.80%
Risk-free rate	2.40%
Expected term in years	1 year 8 months 12 days

XML

Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Jan. 24, 2018
Operating Lease Average Remaining Lease Term			10 years
Operating Lease, Lease Income	$ 18,117	$ 13,995	$ 50,093	$ 38,790
Operating Lease, Variable Lease Income	$ 1,202		$ 3,597
Operating Lease, Weighted Average Remaining Lease Term	24 years		24 years
Operating Lease, Right-of-Use Asset	$ 3,094		$ 3,094
Operating Lease, Weighted Average Discount Rate, Percent	4.40%		4.40%
Operating Lease, Expense	$ 35		$ 66
Other Liabilities	$ 2,379		2,379
Increase In Operating Lease Right Of Use Assets			100
Increase In Operating Lease Liabilities			$ 100
Moline Facility [Member]
Operating Lease, Weighted Average Remaining Lease Term						10 years
Lessee Operating Lease Remaining Term Of Contract					10 years
Lessor, Operating Lease, Renewal Term					12 years
Silvis facility [Member]
Operating Lease, Weighted Average Remaining Lease Term						67 years
Lessee Operating Lease Remaining Term Of Contract					67 years

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Stock-Based Compensation - Long-Term Awards (Details)	9 Months Ended
	Sep. 30, 2019 shares
Net annual and long-term LTIP awards as of March 31, 2019 (at target)	421
Total Annual Long term Awards [Member]
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	367
2017 Long-Term Awards | Long-Term Awards [Member]
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	96
Net annual and long-term LTIP awards as of March 31, 2019 (at target)	96
2018 Long-Term Awards | Annual Awards [Member]
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	161
LTIP Units earned and granted under the 2018 Performance Program - Annual Awards	(108)	[1]
LTIP unit forfeitures	(25)	[2]
2018 Long-Term Awards | Long-Term Awards [Member]
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	110
Net annual and long-term LTIP awards as of March 31, 2019 (at target)	110
2018 Long-Term Awards | Total Annual Long term Awards [Member]
LTIP Units earned and granted under the 2018 Performance Program - Annual Awards	(108)	[1],[3]
LTIP unit forfeitures	(25)	[2]
2018 Long-Term Awards | Discretionary [Member] | Annual Awards [Member]
LTIP Units earned and granted under the 2018 Performance Program - Annual Awards	(28)	[1]
2018 Long-Term Awards | Discretionary [Member] | Total Annual Long term Awards [Member]
LTIP Units earned and granted under the 2018 Performance Program - Annual Awards	(28)	[1]
2019 Program [Member] | Annual Awards [Member]
LTIP Unit target grants via the 2019 Performance Program	133	[3]
Net annual and long-term LTIP awards as of March 31, 2019 (at target)	133
2019 Program [Member] | Long-Term Awards [Member]
LTIP Unit target grants via the 2019 Performance Program	82	[3]
Net annual and long-term LTIP awards as of March 31, 2019 (at target)	82
2019 Program [Member] | Total Annual Long term Awards [Member]
LTIP Unit target grants via the 2019 Performance Program	215	[3]

[1] These amounts represent grants from the 2018 program Annual Awards. Refer to the “Time-Based Grants” table above which presents these grants as earned and time-based.

[2] On March 5, 2019 the Compensation Committee determined the extent to which the Company achieved the performance goals and concluded that these target awards were not achieved.

[3] These target Annual Awards and Long-Term Awards were approved by the Board on March 5, 2019.

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Related Party Transactions - Related Party Balances (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Related Party Transaction [Line Items]
Balance, Beginning			$ 1,091
Balance, Beginning			(1,030)
Management fee expense incurred	$ (1,621)	$ (1,104)	(4,539)	$ (3,280)
Management fees paid to Advisor			4,060
Loans to other related parties				$ 49
Balance, Ending	(1,584)		(1,584)
Balance, Ending	1,584		1,584
Advisor [Member]
Related Party Transaction [Line Items]
Loans to Advisor			(14)
Funds for Various Purposes [Member]
Related Party Transaction [Line Items]
Balance, Beginning			(61)
Balance, Ending	(75)		(75)
Funds for Various Purposes [Member] | Other related parties [Member]
Related Party Transaction [Line Items]
Loans to other related parties			14
Mgmt Fees Due To Advisor [Member]
Related Party Transaction [Line Items]
Balance, Beginning			1,143
Balance, Beginning			(1,143)
Management fee expense incurred	(1,621)		(4,539)
Management fees paid to Advisor			4,060
Balance, Ending	(1,622)		(1,622)
Balance, Ending	1,622		1,622
Funds Due from Advisor [Member]
Related Party Transaction [Line Items]
Balance, Beginning			(52)
Loans to Advisor			(14)
Balance, Ending	$ (38)		$ (38)

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Credit Facility, Notes Payable and Derivative Instruments - Schedule of interest rate swap agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Credit Facility, Notes Payable and Derivative Instruments
Amount of loss recognized in other comprehensive loss	$ 1,603	$ 122	$ 7,559	$ 122
Amount of loss reclassified from accumulated other comprehensive loss into interest expense	(300)	(13)	(684)	(13)
Total change in accumulated other comprehensive loss	$ 1,303	$ 109	$ 6,875	$ 109

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Schedule of Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the Company’s cash and cash equivalents and restricted cash that sums to the total of those amounts at the end of the periods presented on the Company’s accompanying Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018:

	As of September 30,
	2019		2018
Cash and cash equivalents	$	2,815	$	3,005
Restricted cash		3,011		817
Total cash and cash equivalents and restricted cash	$	5,826	$	3,822

XML

Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2019

Related Party Transactions

Schedule of due to related party, net

A rollforward of the due from related parties and due to related party balance, net, as of September 30, 2019 is as follows:

	Due From
	Related Parties		Due to Related Party,Net
			Other
	Funds for		Mgmt.Fees		Funds due		Due to
	Various		due to		from		Related
	Purposes		Advisor		Advisor		Party, net
Balance as of January 1, 2019	$	61	$	(1,143)		52	$	(1,091)
Management fee expense incurred		—		(4,539)		—		(4,539)
Management fees paid to Advisor		—		4,060		—		4,060
Loans to Advisor		—		—		(14)		(14)
Loans to other related parties		14		—		—		—
Balance as of September 30, 2019	$	75	$	(1,622)		38	$	(1,584)

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Organization (Details)	9 Months Ended
	Sep. 30, 2019
long-term incentive plan LTIP [Member]
Limited Liability Company (LLC) or Limited Partnership (LP), Members or Limited Partners, Ownership Interest	9.78%
Global Medical REIT GP LLC [Member]
Equity Method Investment, Ownership Percentage	90.22%

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Equity - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands	1 Months Ended		3 Months Ended	9 Months Ended		12 Months Ended
	Mar. 18, 2019	Aug. 17, 2018	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Preferred Stock, Shares Authorized				10,000		10,000
Preferred Stock, Par or Stated Value Per Share				$ 0.001		$ 0.001
Preferred Stock, Shares Issued				3,105		3,105
Common Stock, Shares Authorized				500,000		500,000
Common Stock, Par or Stated Value Per Share				$ 0.001		$ 0.001
Preferred Stock, Redemption Price Per Share				$ 25.00
Common Stock, Shares, Outstanding				36,290		25,944
Dividends Payable				$ 9,470,000		$ 6,981,000
Preferred Stock, Liquidation Preference Per Share				$ 25.00
Limited Partners' Capital Account, Units Issued						1,899
Payments of dividens, Common Stock, OP and LTIP Units				$ (21,167,000)	$ (14,075,000)
Partners' Capital Account, Units, Sale of Units				49
Limited Partners' Capital Account				$ 27,881,000		$ 27,894,000
Proceeds from Issuance of Common Stock	$ 75,191,000			$ 96,799,000	3,209,000
Shares Issued, Price Per Share				$ 10.73
Payments of Dividends, Total				$ 4,365,000	4,366,000
Noncontrolling Interest, Increase from Subsidiary Equity Issuance				506,000	4,742,000
Stock To Be Issued During Period Value ATM Offering		$ 50,000,000		$ 3,143,000		3,145,000
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs			$ 302,000		302,000
Partners' Capital Account, Units, Treasury Units Purchased				51
Partners' Capital Account, Treasury Units, Purchased				$ 519,000
Dividend Accrued				970,000
IPO [Member]
Noncontrolling Interest, Increase from Subsidiary Equity Issuance				$ 506		16,363,000
At The Market [Member]
Stock Issued During Period, Shares, New Issues				2,051
Common Stock [Member]
Dividends Payable			180,000	$ 265,000	180,000
Proceeds from Issuance of Common Stock				21,608,000
Payments of Dividends, Total				85,000	46,000
Noncontrolling Interest, Increase from Subsidiary Equity Issuance				$ 0	0
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs			$ 0		$ 0
Series A Preferred Stock [Member]
Common Stock, Shares, Outstanding				3,105
Dividends Payable, Amount Per Share				$ 1.875
Preferred Stock, Liquidation Preference Per Share				$ 25
Preferred Stock, Dividend Rate, Percentage				7.50%
Long Tem Incentives Plan Units [Member]
Dividends Payable				$ 496,000		$ 316,000

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Credit Facility, Notes Payable and Derivative Instruments - Scheduled Principal Payments Due On West Mifflin Note Payable (Details) - West Mifflin Note Payable [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 25, 2015
Debt Instrument [Line Items]
2019 (six months remaining)	$ 35
2020	7,220
Total	$ 7,255	$ 7,356	$ 7,378

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Stock-Based Compensation - Vested and unvested LTIP units (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2019 shares
Total vested units	483
Unvested units:
Total unvested units	308
LTIP units outstanding as of December 31, 2018	791
Advisor [Member]
Unvested units:
Granted	286
Independent directors [Member]
Unvested units:
Granted	22

XML

Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 2,815	$ 3,631	$ 3,005
Restricted cash	3,011	1,212	817
Total cash and cash equivalents and restricted cash	$ 5,826	$ 4,843	$ 3,822	$ 7,114

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Property Portfolio (Tables)

9 Months Ended

Sep. 30, 2019

Schedule of Properties Acquired

A rollforward of the gross investment in land, building and improvements as of September 30, 2019 resulting from these acquisitions as well as other tenant improvements and the implementation of ASC 842 is as follows:

					Site & Tenant		AcquiredLease		Gross Investment in
	Land		Building		Improvements		Intangible Assets		Real Estate
Balances as of December 31, 2018	$	63,710	$	518,451	$	22,237	$	43,152	$	647,550
Facility Acquired – Date Acquired:
Zachary – 2/28/19		—		3,336		512		835		4,683
Gilbert and Chandler – 3/19/19		4,616		11,643		—		—		16,259
Las Vegas – 4/15/19		2,479		15,277		2,449		2,297		22,502
Oklahoma Northwest – 4/15/19		2,364		19,501		3,187		3,155		28,207
Mishawaka – 4/15/19		1,924		10,084		1,872		2,223		16,103
Surprise – 4/15/19		1,738		18,737		4,347		3,860		28,682
San Marcos – 7/12/19		2,322		6,934		530		2,188		11,974
Lansing – 8/1/19		1,202		7,681		852		1,633		11,368
Bannockburn – 8/5/19		731		3,419		1,214		1,325		6,689
Aurora – 8/6/19		1,521		7,446		911		2,679		12,557
Livonia – 8/14/19		980		7,629		643		1,340		10,592
Gilbert – 8/23/19		2,408		2,027		424		733		5,592
Morgantown – 9/26/19		883		5,286		879		902		7,950
ASC 842 Reclassification		—		—		—		(824)		(824)
Site and Tenant improvements(1)		—		—		508		—		508
Capitalized costs(2)		—		54		—		—		54
Total Additions:		23,168		119,054		18,328		22,346		182,896
Balances as of September 30, 2019	$	86,878	$	637,505	$	40,565	$	65,498	$	830,446

(1)  Represents tenant improvements that were completed and placed in service during the nine months ended September 30, 2019 related to the Sherman facility that was acquired in June 2017 and the Bountiful facility that was acquired in October 2018.  Also includes site improvements at the Watertown facility that was acquired in September 2016.

(2)Represents capitalized costs incurred during the nine months ended September 30, 2019 at the Derby facility that was acquired in August 2018.

A rollforward of the gross investment in land, building and improvements as of September 30, 2018, resulting from these acquisitions is as follows:

					Site & Tenant		Acquired Lease		Gross Investment in
	Land		Building		Improvements		Intangibles		Real Estate
Balances as of January 1, 2018	$	42,701	$	384,338	$	12,818	$	31,650	$	471,507
Facility Acquired – Date Acquired:
Moline / Silvis – 1/24/18		-		4,895		1,216		989		7,100
Freemont – 2/9/18		162		8,335		—		—		8,497
Gainesville – 2/23/18		625		9,885		—		—		10,510
Dallas – 3/1/18		6,272		17,012		—		—		23,284
Orlando – 3/22/18		2,543		11,720		756		1,395		16,414
Belpre – 4/19/18		3,025		50,526		3,966		7,166		64,683
McAllen – 7/3/18		1,099		4,296						5,395
Derby – 8/3/18		412		2,496		243		453		3,604
Tenant improvements(1)		—		—		2,043		—		2,043
Total Additions:		14,138		109,165		8,224		10,003		141,530
Balances as of September 30, 2018	$	56,839	$	493,503	$	21,042	$	41,653	$	613,037

(1)Represents tenant improvements that were completed and placed in service during the three months ended September 30, 2018 related to the Silvis and Sherman facilities that were acquired in January 2018 and June 2017, respectively.  These amounts were recorded as construction-in-process within the “Other Assets” line item in the Company’s Consolidated Balance Sheet as of September 30, 2018, and reclassified to investment in real estate once completed.

Summary of Carrying amount of intangible assets and liabilities

The following is a summary of the carrying amount of intangible assets and liabilities as of the dates presented:

	As of September 30, 2019
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	34,697	$	(6,599)	$	28,098
Above market leases		12,236		(1,991)		10,245
Leasing costs		18,565		(2,899)		15,666
	$	65,498	$	(11,489)	$	54,009
Liabilities
Below market leases	$	3,855	$	(568)	$	3,287

	As of December 31, 2018
			Accumulated
	Cost		Amortization		Net
Assets
In-place leases	$	21,753	$	(4,037)	$	17,716
Above market ground lease		707		(28)		679
Above market leases		8,009		(1,096)		6,913
Leasing costs		12,683		(1,703)		10,980
	$	43,152	$	(6,864)	$	36,288
Liability
Below market leases	$	2,336	$	(308)	$	2,028

Summary of the acquired lease intangible amortization

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Amortization expense related to in-place leases	$	1,033	$	647	$	2,562	$	1,797
Amortization expense related to leasing costs	$	467	$	307	$	1,195	$	848
Decrease in rental revenue related to above market leases	$	343	$	240	$	895	$	620
Increase in rental revenue related to below market leases	$	114	$	56	$	261	$	152

Schedule of net amortization acquired lease intangible assets and liabilities

As of September 30, 2019, scheduled future aggregate net amortization of the acquired lease intangible assets and liabilities for each fiscal year ended December 31 is listed below:

	Net Decrease		Net Increase
	in Revenue		in Expenses
2019 (three months remaining)	$	(246)	$	1,655
2020		(986)		6,601
2021		(988)		5,987
2022		(998)		5,620
2023		(1,024)		5,004
Thereafter		(2,716)		18,897
Total	$	(6,958)	$	43,764

Zachary Facility [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	103
Building and tenant improvements		3,745
In-place leases		305
Above-market lease intangibles		117
Leasing costs		413
Below-market lease intangibles		(34)
Total purchase price	$	4,649

IRF Portfolio [Member]

Schedule of tangible and intangible assets

exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

					Oklahoma
	Las Vegas		Surprise		Northwest		Mishawaka
Land and site improvements	$	2,723	$	1,966	$	2,507	$	1,998
Building and tenant improvements		17,482		22,856		22,545		11,882
In-place leases		1,778		1,845		1,890		1,465
Above-market lease intangibles		—		938		367		236
Leasing costs		519		1,077		898		522
Below-market lease intangibles		(863)		—		—		—
Total purchase price	$	21,639	$	28,682	$	28,207	$	16,103

San Marcos [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,448
Building and tenant improvements		7,338
In-place leases		698
Above-market lease intangibles		1,101
Leasing costs		389
Total purchase price	$	11,974

Lansing [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,387
Building and tenant improvements		8,348
In-place leases		953
Above-market lease intangibles		130
Leasing costs		550
Below-market lease intangibles		(248)
Total purchase price	$	11,120

Bannockburn [Member]

Schedule of tangible and intangible assets

Land and site improvements	$	858
Building and tenant improvements		4,506
In-place leases		763
Above-market lease intangibles		240
Leasing costs		322
Below-market lease intangibles		(138)
Total purchase price	$	6,551

Aurora [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,829
Building and tenant improvements		8,049
In-place leases		1,417
Above-market lease intangibles		861
Leasing costs		401
Total purchase price	$	12,557

Livonia [Member]

Schedule of tangible and intangible assets

Land and site improvements	$	1,181
Building and tenant improvements		8,071
In-place leases		1,252
Above-market lease intangibles		53
Leasing costs		35
Below-market lease intangibles		(236)
Total purchase price	$	10,356

Gilbert [Member]

Schedule of tangible and intangible assets

.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	2,470
Building and tenant improvements		2,389
In-place leases		121
Above-market lease intangibles		300
Leasing costs		312
Total purchase price	$	5,592

Morgantown [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	1,256
Building and tenant improvements		5,792
In-place leases		457
Leasing costs		445
Total purchase price	$	7,950

Silvis facility [Member]

Schedule of tangible and intangible assets

The aggregate purchase price for the Moline/Silvis facilities was $6.9 million.  The following table presents the details of the tangible and intangible assets acquired and liabilities assumed for this acquisition:

Site improvements	$	249
Building and tenant improvements		5,862
In-place leases		343
Above market ground lease intangibles		219
Leasing costs		427
Below market lease intangibles		(229)
Total purchase price	$	6,871

Orlando Facilities [Member]

Schedule of tangible and intangible assets

exclusive of tenant renewal options. The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,075
Building and tenant improvements		11,944
In-place leases		808
Above market lease intangibles		229
Leasing costs		358
Below market lease intangibles		(10)
Total purchase price	$	16,404

Belpre Portfolio [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	3,997
Building and tenant improvements		53,520
In-place leases		2,660
Above market lease intangibles		2,527
Leasing costs		1,979
Below market lease intangibles		(632)
Total purchase price	$	64,051

Derby [Member]

Schedule of tangible and intangible assets

The following table presents the details of the tangible and intangible assets acquired and liabilities assumed:

Land and site improvements	$	566
Building and tenant improvements		2,585
In-place leases		299
Above market lease intangibles
Leasing costs		154
Below market lease intangibles		(23)
Total purchase price	$	3,581

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Stock-Based Compensation

Schedule of time-based vesting LTIP unit activity

The time-based vesting LTIP unit activity under the Plan during the nine months ended September 30, 2019 was as follows:

LTIP Units outstanding as of December 31, 2018	588
LTIP Units earned and granted via the 2018 performance program – Annual Awards (1)	108
LTIP Units granted on a discretionary basis related to the Annual Awards (2)	28
LTIP Units granted as 2019 long-term time based awards (3)	54
LTIP Units granted to independent directors of the Board (4)	22
LTIP Units – other grant and forfeitures, net (5)	(9)
LTIP Units outstanding as of September 30, 2019	791

⁽¹⁾ The 108 LTIP Units represents earned and granted units from the previously disclosed 2018 annual awards (the “Annual Awards”). On March 5, 2019 the Compensation Committee of the Board (the “Compensation Committee”) determined the extent to which the Company achieved the performance goals related to the 2018 Annual Awards and determined the number of LTIP Units that each grantee was entitled to receive. These grants vested 50% on March 5, 2019, the determination date, and 50% vest on March 5, 2020.

⁽²⁾ The 28 LTIP Units represents a discretionary grant by the Board. These grants vested 50% on March 5, 2019, the grant date, and 50% vest on March 5, 2020.

⁽³⁾ The 54 LTIP Units represent grants approved by the Board on March 5, 2019 pursuant to the Company' 2019 Long-Term Incentive Plan. These grants are valued based on the Company’s share price at the date of grant of $10.07 and vest in equal one-third increments on each of March 5, 2020, March 5, 2021, and March 5, 2022.

⁽⁴⁾ The 22 LTIP Units represent a grant to the independent directors of the Board made on May 29, 2019, which vest on May 29, 2020.

⁽⁵⁾ The decrease of nine LTIP Units net represents 11 LTIP Units redeemed for the Company’s common stock with a value of $110 and one LTIP Unit that was forfeited, partially offset by three LTIP Units that were granted on March 15, 2019 related to a new hire. These three LTIP Units vest in equal one-third increments on each of March 15, 2020, March 15, 2021, and March 5, 2022.

A detail of the vested and unvested LTIP units outstanding as of September 30, 2019 is as follows:

Total vested units	483
Unvested units:
Granted to employees of the Advisor	286
Granted to the Company’s independent directors	22
Total unvested units	308
LTIP Units outstanding as of September 30, 2019	791

Schedule of of the Annual Awards and Long-Term Awards

A detail of the Annual Awards and Long-Term Awards under the 2017, 2018, and 2019 programs as of September 30, 2019 is as follows:

	2017 Program	2018 Program		2019 Program
	Long-Term	Annual	Long-Term	Annual	Long-Term	Total
Net annual and long-term LTIP awards as of December 31, 2018 (at target)	96	161	110	—	—	367
LTIP Unit target grants via the 2019 Performance Program – Annual Awards and Long-Term Awards (1)	—	—	—	133	82	215
LTIP Units earned and granted via the 2018 Performance Program – Annual Awards (2)	—	(108)	—	—	—	(108)
LTIP Units granted on a discretionary basis via the 2018 Performance Program – Annual Awards (2)	—	(28)	—	—	—	(28)
LTIP Units not earned under the 2018 Performance Program – Annual Awards (3)	—	(25)	—	—	—	(25)
Net annual and long-term LTIP awards as of September 30, 2019 (at target)	96	—	110	133	82	421

⁽¹⁾ These target Annual Awards and Long-Term Awards were approved by the Board on March 5, 2019.

⁽²⁾ These amounts represent grants from the 2018 program Annual Awards. Refer to the “Time-Based Grants” table above which presents these grants as earned and time-based.

⁽³⁾ On March 5, 2019 the Compensation Committee determined the extent to which the Company achieved the performance goals and concluded that these target awards were not achieved.

Schedule of of the assumptions for the Long-Term Awards using Monte Carlo simulations

Below are details regarding certain of the assumptions for the Long-Term Awards using Monte Carlo simulations:

	2019 Long-Term			2018 Long-Term			2017 Long-Term
	Awards			Awards			Awards
Share price	$	10.07		$	8.86		$	8.86
Target awards		82			110			96
Volatility		31.7	%		33.8	%		33.8% - 35.4%
Risk-free rate		2.5	%		2.6	%		2.4% - 2.6%
Dividend assumption		reinvested			reinvested			reinvested
Expected term in years		3			2.7			1.7 – 2.7

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Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions

Related Party Transactions

Note 6 – Related Party Transactions

Management Agreement

Upon completion of the Company’s initial public offering on July 1, 2016, the Company and the Advisor entered into an amended and restated management agreement (the “Management Agreement”). Certain material terms of the Management Agreement are summarized in the section titled “Business — Our Advisor and our Management Agreement,” contained in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018 filed with the SEC on March 11, 2019.

Management Fees and Accrued Management Fees

The Company’s management fee to the Advisor is calculated in accordance with the terms of the Management Agreement, which requires an annual base management fee equal to 1.5% of our stockholders’ equity (as defined in the Management Agreement). For the three and nine months ended September 30, 2019, management fees of $1,621 and $4,539, respectively, were incurred and expensed by the Company. For the three and nine months ended September 30, 2018, management fees of $1,104 and $3,280, respectively , were incurred and expensed by the Company. Accrued management fees due to the Advisor were $1,622 and $1,143 as of September 30, 2019 and December 31, 2018, respectively. No incentive management fee was incurred by the Company during the three and nine months ended September 30, 2019 or 2018.

Allocated General and Administrative Expenses

Effective May 8, 2017, the Company and the Advisor entered into an agreement pursuant to which, for a period of one year commencing on May 8, 2017, the Company agreed to reimburse the Advisor for $125 of the annual salary of the General Counsel and Secretary of the Company for so long as he continues to be primarily dedicated to the Company in his capacity as its General Counsel and Secretary. This agreement expired in May 2018 and was not renewed. In the future, the Company may receive additional allocations of general and administrative expenses from the Advisor that are either clearly applicable to or were reasonably allocated to the operations of the Company. There were no allocated general and administrative expenses from the Advisor for the three and nine months ended September 30, 2019. Other than via the terms of the reimbursement agreement noted above, there were no allocated general and administrative expenses from the Advisor for the three and nine months ended September 30, 2018.

Related Party Balances

A rollforward of the due from related parties and due to related party balance, net, as of September 30, 2019 is as follows:

	Due From
	Related Parties		Due to Related Party,Net
			Other
	Funds for		Mgmt.Fees		Funds due		Due to
	Various		due to		from		Related
	Purposes		Advisor		Advisor		Party, net
Balance as of January 1, 2019	$	61	$	(1,143)		52	$	(1,091)
Management fee expense incurred		—		(4,539)		—		(4,539)
Management fees paid to Advisor		—		4,060		—		4,060
Loans to Advisor		—		—		(14)		(14)
Loans to other related parties		14		—		—		—
Balance as of September 30, 2019	$	75	$	(1,622)		38	$	(1,584)

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies

Commitments and Contingencies

Note 10 – Commitments and Contingencies

Litigation

The Company is not presently subject to any material litigation nor, to its knowledge, is any material litigation threatened against the Company, which if determined unfavorably to the Company, would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Environmental Matters

The Company follows a policy of monitoring its properties for the presence of hazardous or toxic substances. While there can be no assurance that a material environmental liability does not exist at its properties, the Company is not currently aware of any environmental liability with respect to its properties that would have a material effect on its financial position, results of operations, or cash flows. Additionally, the Company is not aware of any material environmental liability or any unasserted claim or assessment with respect to an environmental liability that management believes would require additional disclosure or the recording of a loss contingency.

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue
Rental revenue	$ 18,117	$ 13,995	$ 50,093	$ 38,790
Other income	78	8	182	27
Total revenue	18,195	14,003	50,275	38,817
Expenses
General and administrative	1,681	1,395	4,928	4,169
Operating expenses	1,362	941	3,826	2,726
Management fees - related party	1,621	1,104	4,539	3,280
Depreciation expense	5,006	3,614	13,481	9,965
Amortization expense	1,500	953	3,757	2,645
Interest expense	4,549	4,055	12,707	10,681
Preacquisition fees	168	168	224	294
Total expenses	15,887	12,230	43,462	33,760
Net income	2,308	1,773	6,813	5,057
Less: Preferred stock dividends	(1,455)	(1,455)	(4,366)	(4,366)
Less: Net income attributable to noncontrolling interest	(83)	(32)	(246)	(59)
Net income attributable to common stockholders	$ 770	$ 286	$ 2,201	$ 632
Net income attributable to common stockholders per share - basic and diluted	$ 0.02	$ 0.01	$ 0.07	$ 0.03
Weighted average shares outstanding - basic and diluted	35,512	21,797	32,514	21,687

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Organization

9 Months Ended

Sep. 30, 2019

Organization

Organization

Note 1 – Organization

Global Medical REIT Inc. (the “Company”) is a Maryland corporation engaged primarily in the acquisition of purpose-built healthcare facilities and the leasing of those facilities to strong healthcare systems and physician groups with leading market share. The Company is externally managed and advised by Inter-American Management, LLC (the “Advisor”), a Delaware limited liability company and an affiliate of the Company.

The Company holds its facilities and conducts its operations through a Delaware limited partnership subsidiary named Global Medical REIT L.P. (the “Operating Partnership”). The Company serves as the sole general partner of the Operating Partnership through a wholly-owned subsidiary of the Company named Global Medical REIT GP LLC, a Delaware limited liability company. As of September 30, 2019, the Company was the 90.22% limited partner of the Operating Partnership, with an aggregate of 9.78% of the Operating Partnership owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services to the Operating Partnership in exchange for common limited partnership units (“OP Units”).

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Property Portfolio - Summary of the acquired lease intangible amortization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
In-place leases [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 1,033	$ 647	$ 2,562	$ 1,797
Leasing Costs [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	467	307	1,195	848
Above Market Lease intangibles [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	343	240	895	620
Below Market Lease intangible [Member]
Property, Plant and Equipment [Line Items]
Finite-Lived Intangible Assets, Accumulated Amortization	$ 114	$ 56	$ 261	$ 152

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Tenant Receivables		$ 4,167		$ 2,905
Escrow Deposit		2,865		1,752
Deferred Costs and Other Assets		13,307		9,352
Deferred Rent Receivables, Net		13,020		8,706
Security Deposit Liability		6,362		4,152
Other Assets		4,363		322
Other Deferred Costs, Net		287		646
Lease Deposit Liability		1,420		880
Accumulated Capitalized Interest Costs		54		139
Prepaid Expense and Other Assets		339		183
Derivative Liabilities		10,399		3,487
Operating Lease, Right-of-Use Asset		3,094
Other Liabilities		2,379
Reclassification from Expense Recoveries to Rental Revenue	$ 884		$ 2,610
Deferred preacquisition and construction in process costs		930
Accounting Standards Update 2017-02 [Member]
Other Liabilities		2,379
Interest Rate Swap [Member]
Derivative Liabilities		10,399		3,487
Building [Member]
Accumulated Capitalized Interest Costs		$ 54
Building [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life		50 years
Building [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life		23 years
Tenant improvements [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life		19 years
Tenant improvements [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life		1 year
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life		14 years
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life		3 years
Plano Lease [Member]
Security Deposit Liability		$ 4,942		$ 3,272

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Credit Facility, Notes Payable and Derivative Instruments - Schedule of net of unamortized discount balances (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Credit Facility, Notes Payable and Derivative Instruments
Notes payable, gross	$ 39,475	$ 39,475
Less: Unamortized debt discount	(701)	(799)
Cumulative principal repayment	(123)	(22)
Notes payable, net	$ 38,651	$ 38,654

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Stock-Based Compensation - Additional Information (Details) - USD ($)				1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 05, 2021	Mar. 05, 2020	Mar. 05, 2019	Apr. 15, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Share-based Compensation					$ 868,000	$ 741,000	$ 2,493,000	$ 1,978,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage							100.00%
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized					$ 3,500		$ 3,500
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition							1 year 6 months
Performance Goals For Awards							100%
Additional Earn Up Rate For Grantee							150.00%
2017 Long-Term Awards
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%	50.00%
2018 Time Based Awards
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value		$ 10.07
Long Tem Incentives Plan Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%	50.00%
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted			28	3
Share Based Compensation Arrangement By Share Based Payment Award Non Option Equity Instruments Other Grant And Forfeitures				9
Conversion of Stock, Amount Converted				$ 110
Long Tem Incentives Plan Units [Member] | 2016 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant					1,020,000		1,020,000
Common Stock, Capital Shares Reserved for Future Issuance					2,232,000		2,232,000
Long Tem Incentives Plan Units [Member] | 2018 Long-Term Awards
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted									108
Long-Term Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate							0.00%
Long-Term Awards [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%
Long-Term Awards [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
Long-Term Awards [Member] | Long Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate					200.00%		200.00%
Long-Term Awards [Member] | 2018 Long-Term Awards | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			50.00%
Long-Term Awards [Member] | 2018 Long-Term Awards | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%

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Rent Concentration (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Concentration Risk, Percentage	100.00%	100.00%	100.00%	100.00%
Encompass [Member]
Concentration Risk, Percentage	10.00%	11.00%	10.00%	12.00%
Belpre [Member]
Concentration Risk, Percentage	8.00%	11.00%	8.00%	7.00%
OCOM [Member]
Concentration Risk, Percentage	7.00%	9.00%	6.00%	10.00%
Sherman [Member]
Concentration Risk, Percentage	5.00%	6.00%	5.00%	6.00%
Austin [Member]
Concentration Risk, Percentage	5.00%	6.00%	5.00%	7.00%
All Other Facilities [Member]
Concentration Risk, Percentage	65.00%	57.00%	66.00%	58.00%