EX-99.1 8 finalvida2023financialstat.htm EX-99.1 Document







CONSOLIDATED FINANCIAL STATEMENTS

Vida JV LLC & Subsidiaries
(A Limited Liability Company)
For the Years Ended December 31, 2023, 2022 and 2021
With Report of Independent Auditors



Vida JV LLC & Subsidiaries

Consolidated Financial Statements

For the Years Ended December 31, 2023, 2022 and 2021

Table of Contents
Report of Independent Auditors    
Consolidated Financial Statements
Consolidated Balance Sheets    
Consolidated Statements of Operations    
Consolidated Statements of Changes in Members' Equity    
Consolidated Statements of Cash Flows    
Notes to Consolidated Financial Statements    
Supplemental Information: Schedule III - Real Estate and Accumulated Depreciation     23
























1

Report of Independent Auditors
To the Management of Vida JV LLC
Opinion
We have audited the accompanying consolidated financial statements of Vida JV LLC and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, of members' equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.










2

In performing an audit in accordance with US GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Supplemental Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The accompanying Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2023 (the “supplemental information”) is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. The supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the consolidated financial statements taken as a whole.



/s/ PricewaterhouseCoopers
Dallas, Texas
March 19, 2024
3


Vida JV LLC & Subsidiaries
Consolidated Balance Sheets
ASSETS:December 31, 2023December 31, 2022
Real estate investments:
Real property owned:
Land and land improvements$    62,865,776    $    62,865,776    
Buildings and improvements    298,428,575    295,534,702
Less accumulated depreciation and amortization    (32,458,915)    (22,253,800)
Net real property owned    328,835,436        336,146,678    
Lease intangibles, net    22,525,689    28,049,260
Operating leases right-of-use assets, net    8,280,377    8,443,316
Finance leases right-of-use assets, net    5,639,747    5,757,438
Net real estate investments    365,281,249        378,396,692    
Other assets:
Cash and cash equivalents    4,420,250    2,263,939
Restricted cash    254,075    528,785
Straight-line rent receivable    7,087,947    5,200,077
Receivables and other assets    14,540,993    21,015,900
Total other assets    26,303,265        29,008,701    
TOTAL ASSETS$    391,584,514    $    407,405,393    
LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net$    200,583,272    $    197,925,808    
Operating lease liabilities, net    4,180,412    4,157,280
Finance lease liabilities, net    7,294,495    7,238,273
Accrued expenses and other liabilities    10,180,086    11,251,795
Total Liabilities    222,238,265        220,573,156    
Equity:
Members equity    164,310,816    173,910,816
Accumulated income    5,035,433        12,921,421    
Total Equity    169,346,249        186,832,237    
TOTAL LIABILITIES AND EQUITY$    391,584,514    $    407,405,393    
See accompanying notes to the consolidated financial statements


4



Vida JV LLC & Subsidiaries
Consolidated Statements of Operations
For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
REVENUES:
Rental income$    37,382,586    $    37,170,747    $    36,100,040    
Total revenues    37,382,586        37,170,747        36,100,040    
EXPENSES:
Property operating expenses    13,510,435        12,148,434        11,606,551    
Interest expense    16,763,984        10,032,560        6,531,976    
Gain on derivative instrument    (2,524,346)    (16,105,244)    (4,963,689)
Depreciation and amortization    16,815,766        19,232,180        20,113,197    
General and administrative expenses    651,802        607,855        558,635    
Total expenses    45,217,641        25,915,785        33,846,670    
Income (loss) from operations before income taxes    (7,835,055)    11,254,962        2,253,370    
Income tax expense    (50,933)    (50,994)    (46,536)
NET INCOME (LOSS)$    (7,885,988)$    11,203,968    $    2,206,834    
See accompanying notes to the consolidated financial statements




5



Vida JV LLC & Subsidiaries
Consolidated Statements of Changes in Members' Equity
For the Years Ended December 31, 2023, 2022 and 2021
Welltower Inc.Vida MOB Portfolio Co-Invest LLC
Members' EquityAccumulated Income (Deficit)Members' EquityAccumulated Income (Deficit)Total Equity
BALANCE AT DECEMBER 31, 2020$    26,863,502    $    (73,407)$    152,226,513    $    (415,974)$    178,600,634    
Net income    —        331,025        —        1,875,809        2,206,834    
Cash contributions    3,254,070        —        18,439,731        —        21,693,801    
Cash distributions    (2,065,950)    —        (11,707,050)    —        (13,773,000)
BALANCE AT DECEMBER 31, 2021$    28,051,622    $    257,618    $    158,959,194    $    1,459,835    $    188,728,269    
Net income    —        1,680,595        —        9,523,373        11,203,968    
Cash distributions    (1,965,000)    —        (11,135,000)    —        (13,100,000)
BALANCE AT DECEMBER 31, 2022$    26,086,622    $    1,938,213    $    147,824,194    $    10,983,208    $    186,832,237    
Net loss    —        (1,182,898)    —        (6,703,090)    (7,885,988)
Cash distributions    (1,440,000)    —        (8,160,000)    —        (9,600,000)
BALANCE AT DECEMBER 31, 2023$    24,646,622    $    755,315    $    139,664,194    $    4,280,118    $    169,346,249    
See accompanying notes to the consolidated financial statements


6



Vida JV LLC & Subsidiaries
Consolidated Statements of Cash Flows
CASH FLOWS PROVIDED FROM (USED IN) OPERATING ACTIVITIES:For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Net Income (loss)$    (7,885,988)$    11,203,968    $    2,206,834    
Adjustments to reconcile net income (loss) to
net cash provided from (used in) operating activities:
Depreciation and amortization expense    16,698,076        19,118,483        20,005,480    
Amortization of deferred financing costs    968,267        957,003        933,184    
Amortization related to above/below market leases, net    140,686        120,523        32,083    
Rental income in excess of cash received    (1,887,870)    (2,113,469)    (2,401,267)
Loss (gain) on derivative instrument    7,367,472        (13,120,383)    (5,318,602)
Amortization of right-of-use assets    280,630        291,298        260,599    
Accrued interest on lease liabilities    79,354        118,760        82,890    
(Increase) decrease in receivables and other assets    (892,565)    (1,594,366)    355,441    
Increase (decrease) in accrued expenses and other liabilities    (1,125,628)    1,075,067        2,162,739    
Net cash provided from (used in) operating activities    13,742,434        16,056,884        18,319,381    
CASH FLOWS PROVIDED FROM (USED IN) INVESTING ACTIVITIES:
Cash disbursed for acquisition of properties    —        —        (45,708,110)
Capital expenditures on properties    (4,228,007)    (1,909,315)    (4,084,238)
Proceeds from insurance casualty claims    277,977        —        —    
Net cash provided from (used in) investing activities    (3,950,030)    (1,909,315)    (49,792,348)
CASH FLOWS PROVIDED FROM (USED IN) FINANCING ACTIVITIES:
Deferred financing costs    —        —        (455,358)
Secured debt issuance    1,689,197        —        23,621,470    
Cash contributions from Welltower Inc.    —        —        3,254,070    
Cash contributions from Vida MOB Portfolio Co-Invest LLC    —        —        18,439,731    
Cash distributions to Welltower Inc.    (1,440,000)    (1,965,000)    (2,065,950)
Cash distributions to Vida MOB Portfolio Co-Invest LLC    (8,160,000)    (11,135,000)    (11,707,050)
Net cash provided from (used in) financing activities    (7,910,803)    (13,100,000)    31,086,913    
INCREASE / (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH    1,881,601        1,047,569        (386,054)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD2,792,7241,745,155    2,131,209    
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD$    4,674,325    $    2,792,724    $    1,745,155    
7

Vida JV LLC & Subsidiaries
Consolidated Statements of Cash Flows (continued)
For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheet:
Cash and cash equivalents4,420,2502,263,939    1,473,970    
Restricted cash254,075528,785    271,185    
Total cash and cash equivalents and restricted cash$    4,674,325    $    2,792,724    $    1,745,155    
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid$    5,375,857    $    5,035,768    $    5,534,693    
Accrued capital expenditures$    957,627    $    556,943    $    724,789    
See accompanying notes to the consolidated financial statements

8
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements
1. Business and Organization
Vida JV LLC and its subsidiaries (“the Company”, “we” or “our”) were formed on July 6, 2020 under the laws of the state of Delaware. The Company was formed to facilitate the ownership of outpatient medical properties. On September 29, 2020 (inception), the Company commenced operations with the purchase of 13 properties and on December 23, 2020, the Company purchased an additional five properties. On February 4, 2021, the Company purchased two additional properties. Together, the 20 properties are referred to as the “Portfolio” or the “Portfolios”.
The Portfolios were purchased by the Company from Welltower Inc. or subsidiaries of Welltower Inc. who retained a 15% ownership interest. The remaining 85% is owned by Vida MOB Portfolio Co-Invest LLC, which is a partnership between Invesco U.S. Income REIT, LLC and Invesco REIT Operating Partnership, LP ("Investors"). The Investors are represented by their advisor, Invesco Advisers, Inc. (“Invesco”), an affiliate of Invesco Real Estate.
2. Summary of Significant Accounting Policies
The Company’s financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The significant accounting policies are summarized below.
Principles of Consolidation
The consolidated financial statements include the accounts of Vida JV LLC and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the allocation of purchase price to tangible and intangible assets and liabilities, the evaluation of asset impairments, assigning useful lives to depreciable assets, assessing collectability of tenant lease income, and other contingencies. Actual results could differ from those estimates and assumptions.
9
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Real Property Owned
Expenditures for repairs and maintenance are expensed as incurred. The Company evaluates acquisitions under ASC 805, Business Combinations. Real estate acquisitions are accounted for as asset acquisitions as the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets and the acquisition does not meet the definition of a business acquisition as defined in ASC 805-10. We measure the assets acquired and liabilities assumed based on their cost, which includes consideration transferred to the seller and direct transaction costs. The cost of the acquisition is then allocated to the assets acquired and liabilities assumed based on their relative estimated fair values. We assess relative fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that we deem appropriate, as well as other available market information. We estimate future cash flows based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. Tangible assets primarily consist of land, building and improvements. Tangible assets are depreciated on a straight-line basis over their estimated useful lives, which are 40 years for buildings and five to 15 years for improvements. Intangible assets (liabilities) consist of in-place leases and above (below) market tenant leases acquired with the acquisitions. We also
consider an allocation of purchase price to acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including but not limited to the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. The value allocable to the above or below market component of the acquired in-place lease is determined by a third-party appraiser based upon the present value (using a discount rate which reflects the risks associated with the acquired leases) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) an estimate of the amounts that would be paid using market rental rates over the remaining term of the lease. The amounts allocated to above market leases are included in lease intangibles and below market leases are included in accrued expenses and other liabilities on the balance sheets and are amortized to rental income over the remaining terms of the respective leases.
We consider incremental, direct costs incurred in conjunction with re-leasing properties, including tenant improvements and lease commissions, to represent the acquisition of productive assets and accordingly such costs are reflected as investment activities in our statement of cash flows.
10
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if facts and circumstances suggest that the assets may be impaired or that the depreciable life may need to be reduced. We consider external factors relating to each asset. If these factors and the projected undiscounted cash flows of the assets over the remaining estimated hold period indicate that the asset will not be recoverable, the carrying value is reduced to the estimated fair market value. In addition, we are exposed to the risks inherent in concentrating investments in real estate, and, the health care industry. A downturn in the real estate industry could adversely affect the value of our properties and our ability to sell the properties for a price or on terms acceptable to us. No impairments were recorded for the years ended December 31, 2023, 2022 and 2021.
Cash and Cash Equivalents
Cash and cash equivalents consist of all highly liquid investments with an original maturity of three months or less. The Company is subject to concentrations of credit risk as a result of its temporary cash investments. The Company places its temporary cash investments with high credit quality financial institutions in order to mitigate that risk. Throughout the year, the Company may have cash balances in excess of federally insured amounts on deposit with various financial institutions.
Restricted Cash
Restricted cash primarily consists of escrows for future payments of capital improvements.
Receivables
Trade accounts receivables represent amounts for which the rental/lease income has been earned and cash has not yet been received.
We review past due rent receivable balances for collectability. If it is concluded that it is not probable all contractual rent payments will be collected, we will begin to recognize income based only on the cash received.
Leases
The Company accounts for leases under ASC 842, which requires lessees to recognize assets and liabilities on their consolidated balance sheets related to the rights and obligations created by most leases, while continuing to recognize expenses on their consolidated statements of operations over the lease term. The Company determined that the lease component is the primary component for leases in which it is the lessor and thus variable lease payments (primarily common area maintenance reimbursements) are recognized as part of the lease payment in accordance with ASC 842. Additionally, when the Company is the lessee, the Company has made the policy election to keep short-term leases less than twelve months off the balance sheet for all classes of underlying assets.
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Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Income Allocation
For financial reporting purposes, income, gain, loss, credits and deductions are allocated as outlined in the Limited Liability Company Agreement (“LLC Agreement”). Operating cash flow is distributed to the members in proportion to their respective ownership percentages.
Cash proceeds resulting from a material capital transaction such as a refinance, insurance proceeds, or sale of a property are distributed in the following manner:

1. First, to the members on a proportionate basis until their capital accounts are reduced to zero.
2. Second, to the members on a proportionate basis until Vida MOB Portfolio Co-Invest LLC has achieved a rate of return equal to 12%.
3. Third, 80% of the remaining amount to the members on a proportionate basis and 20% of the remaining amount to Welltower Inc.
Cash proceeds resulting from the liquidation of the Company are also distributed as outlined as above, after the payment of any loans or other liabilities of the Company.
Deferred Financing Costs
Deferred financing costs are fees incurred by the Company in connection with the issuance, assumption and amendments of debt arrangements. Deferred financing costs related to debt instruments are recorded as a reduction of the related debt liability. We amortize these costs over the term of the debt using the straight-line method, which approximates the effective interest method.
Revenue Recognition
Substantially all of our revenue is generated through operating lease arrangements which contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is generally recorded based on the contractual cash rental payments due for the period. Our leases typically include some form of operating expense reimbursement by the tenant. If collection of the operating lease payments are deemed to no longer be probable (either at lease commencement or after the commencement date), we record rental income for the amount of cash collected and write off the accrued balances deemed to be uncollectible.
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Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
Income Taxes
The Company is a limited liability company treated as a partnership for federal income tax purposes with all income tax liabilities or benefits of the Company being passed through to the members. As such, no recognition of federal income taxes for the Company or its subsidiaries that are organized as limited liability companies has been provided for in the accompanying consolidated financial statements. Income tax expense represents state and local taxes. The Company is subject to gross margin taxes in the State of Texas where some of the properties are located. This expense is included in income tax expense on the Consolidated Statement of Operations. The Company remains subject to examination by U.S. federal, state, and local jurisdictions for tax years since commencement in 2020 and upon completion of any examination, tax adjustments may be necessary. The Company is currently not under an audit by any tax jurisdiction.
The members’ capital reflected in the accompanying consolidated financial statements may differ from amounts reported in the Company’s federal income tax returns because of differences in accounting policies adopted for financial and tax reporting purposes. The qualification as a LLC for tax purposes, and the amount of distributable member income or loss are subject to examination by the Internal Revenue Service.
ASC 740-10-25, Income Taxes, Overall Recognition describes a comprehensive model for the measurement, recognition, presentation and disclosure of uncertain tax positions in the financial statements. Under the interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the tax authorities have full knowledge of the position and all relevant facts, but without considering time values. The Company has no uncertain tax positions that require an accrual as of December 31, 2023 or as of December 31, 2022.
Reclassifications
Certain prior period reported amounts have been reclassified to be consistent with the current presentation. Such reclassifications have no impact on total assets, net income or members' equity.

3. Real Estate Investments and Acquisitions
On February 4, 2021, the Company acquired two outpatient medical facilities for an aggregate purchase price of $45,900,000. In conjunction with the acquisition, the Company incurred $105,082 of transaction costs which were capitalized as a component of the purchase price. The Company also received a credit of $435,102 for tenant improvements at closing which were treated as a reduction to the purchase price.
The Company had no acquisitions in the years ended December 31, 2023 and December 31, 2022.






13
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
The following table summarizes the allocation of the total cost for the properties acquired in the transactions:
For the Year Ended December 31, 2021
Land and land improvements$    120,149    
Buildings and improvements    39,766,576    
Acquired lease intangibles(1)
    6,414,505    
Operating lease ROU assets, net(2)
    —    
Finance lease ROU assets, net(2)
    (443,850)
Receivables and other assets    123,599    
Total assets acquired    45,980,979    
Accrued expenses and other liabilities    169,378    
Below market lease intangible    103,491    
Total liabilities assumed    272,869    
Cash disbursed for acquisition$    45,708,110    
(1) Lease intangible assets include in-place leases, above market tenant leases, and leasing commissions.
(2) Lease ROU assets, net include (above) below market ground leases.













14
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Real Estate Intangibles
The following is a summary of our real estate intangibles:
December 31, 2023December 31, 2022
Assets:
In place lease intangibles$    45,490,152    $    45,490,152    
Above market tenant leases    2,869,766        2,869,766    
Lease commissions    2,191,264        811,270    
Gross historical cost    50,551,182        49,171,188    
Accumulated amortization    (28,025,493)    (21,121,928)
Net book value$    22,525,689    $    28,049,260    
Weighted-average amortization period in years    8.4        8.2    
Liabilities:
Below market tenant leases$    4,309,656    $    4,309,656    
Accumulated amortization    (1,334,070)    (987,305)
Net book value$    2,975,586    $    3,322,351    
Weighted-average amortization period in years    43.5        41.0    
The following is a summary of real estate intangible amortization:
For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Rental income related to above/below market tenant leases, net$    140,686    $    120,523    $    32,083    
Depreciation and amortization related to lease intangibles    6,185,750        8,455,407        10,021,162    









15
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)

4. Real Estate Intangibles (continued)
The estimated future amortization of our intangibles for each of the next five years and thereafter as of December 31, 2023 is:
AssetsLiabilities
2024$    5,007,864    $    290,478    
2025    3,641,028        191,155    
2026    3,162,845        150,066    
2027    1,990,757        141,674    
2028    1,752,416        138,262    
Thereafter    6,970,779        2,063,951    
Total$    22,525,689    $    2,975,586    

5. Transactions with Affiliates
The Company entered into a property management agreement with Healthcare Property Managers of America (HPMA), an affiliate of Welltower Inc., to provide property management services to the Portfolio. The agreement has a term of five years and expires in September of 2025. Property management fees are charged to the properties at various percentages ranging from 1.0% to 5.0% of gross rental receipts for all properties. The property management fee is payable monthly. Total property management fees incurred for the years ended 2023, 2022 and 2021 were $1,154,768, $1,136,053 and $1,079,763, respectively. These fees are included in property operating expenses on the Consolidated Statements of Operations.
The LLC Agreement also provides for an oversight fee for services rendered in connection with asset management, accounting and reporting. The annual oversight fee is equal to 0.10% of the gross purchase price of the Portfolio and is payable in quarterly installments. Total oversight fees incurred for the years ended 2023, 2022 and 2021 were $401,058, $401,058 and $396,686, respectively. These fees are included in general and administrative expenses on the Consolidated Statements of Operations.
The LLC Agreement also provides for a construction management fee to be paid to Welltower Inc. for construction management services for projects over $10,000. The fee is equal to 5% of construction costs up to $500,000 and 4% of construction costs when costs exceed $500,000. Total construction management fees incurred for the years ended 2023, 2022 and 2021 were $181,486, $20,647 and $149,898, respectively. These fees are capitalized within buildings and improvements on the Consolidated Balance Sheets.
The Company has payables due to affiliates of $367,497 and $1,362,019 as of December 31, 2023 and 2022, respectively, which include the above mentioned property management and oversight fees of $0 and $100,264, respectively, as of December 31, 2023; and $217,611 and $100,264 as of December 31,
16
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
2022. Also included is the reimbursement due to affiliated entities of $267,233 for expenses paid on behalf of the Company as of December 31, 2023, and $1,044,144 as of December 31, 2022.

Additionally, the Company had a Net Operating Income ("NOI") guarantee provision in the LLC Agreement that expired in 2023. The provision guaranteed that the Company's annual return on investment for two years past the acquisition date was at least 5.5%. If actual cumulative NOI for that two-year period was deemed to fall short of the 5.5% NOI threshold, Welltower Inc. will pay the Company an amount equal to the difference in order for the Company to earn a 5.5% return. While the calculation was performed on a monthly basis and cash would be transferred from Welltower Inc. to the Company on a monthly basis if deemed necessary, the period over which cumulative NOI was determined and cash was ultimately settled were two, separate one-year periods. As of December 31, 2023 and 2022, respectively, the amount due the Company was $0.
17
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Ground Leases
The Company assumed five ground leases in December 2020, with an additional two ground leases assumed in February 2021. The agreements have remaining terms of 38 to 69 years that expire between 2062 and 2092. Four of the leases are classified as operating leases while three of the leases are classified as finance leases. Six of the leases have renewal options between 10 to 25 years.
Renewal options that we are reasonably certain to exercise are recognized in our right-of-use assets and lease liabilities. We consider it reasonably certain that we will exercise renewal options that begin prior to the date of the building being fully depreciated. As our leases do not provide a rate implicit in the lease agreement, we use our incremental borrowing rate available at lease commencement to determine the present value of lease payments. The incremental borrowing rates were determined using our longer term borrowing rates (actual pricing through 30 years, as well as other longer-term market rates). The components of lease expense are as follows:































18
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Ground Leases (Continued)
For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Classification
Operating lease cost:
Straight-line amortization(1)
Property operating expenses$    345,133    $    346,629    $    334,049    
Finance lease cost:
Amortization of leased assets (2)
Depreciation and amortization$    120,312    $    117,781    $    106,113    
Interest on ground lease liabilityInterest expense    306,165        304,610        283,846    
$    426,477    $    422,391    $    389,959    
(1) Included in this figure is amortization of the below market ground lease intangible assets related to the ground lease acquired in conjunction with the transactions. The value of these intangibles is included in the Operating lease asset line item on the balance sheet. Annual amortization of these intangibles is summarized for the following 5 years in the table below.
(2) Included in this figure is amortization of the above market ground lease intangible assets related to the ground lease acquired in conjunction with the transactions. The value of these intangibles is included in the Finance lease asset line item on the balance sheet. Annual amortization of these intangibles is summarized for the following 5 years as follows:

Above Market Ground Lease AmortizationBelow Market Ground Lease Amortization
2024$    (25,678)$    107,905    
2025    (25,678)    107,905    
2026    (25,678)    107,905    
2027    (25,678)    107,905    
2028    (25,678)    107,905    
Thereafter    (908,920)    3,803,798    
Total$    (1,037,310)$    4,343,323    








19
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)


6. Ground Leases (Continued)
Future payments of lease liabilities as of December 31, 2023 are as follows:
Operating LeasesFinance Leases
2024$    161,532    $    252,351    
2025164,036254,817
2026166,605257,343
2027169,238260,441
2028171,936277,220
Thereafter9,954,62618,487,392
Total lease payments10,787,97319,789,564
Less: imputed interest    (6,607,561)    (12,495,069)
Total present values of lease liabilities$    4,180,412    $    7,294,495    

Supplemental information related to leases is as follows:
December 31, 2023December 31, 2022
Weighted average remaining lease term (years):
Operating leases    44.5        45.5    
Finance lease    47.1        48.1    
Weighted average discount rate:
Operating leases    4.4    %    4.4    %
Finance lease    4.2    %    4.2    %
Supplemental cash flow information related to leases acquired in the years as follows:
20
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
December 31, 2023December 31, 2022December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating lease$    —    $    —    $    130    
Financing cash flow from finance lease    —        —        —    
Non-cash information on lease liabilities arising from obtaining right-of-use assets:
Operating leases$    —    $    —    $    —    
Finance lease    —        —        5,305,509    


7. Debt
The Company has one loan payable in the amount of $202,218,197 outstanding as of December 31, 2023. On September 29, 2020, we obtained $130,296,194 of secured debt with the first acquisition of 13 properties. The loan was increased by $46,611,336 on December 23, 2020 in conjunction with the acquisition of the additional five properties. On February 4, 2021, the Company obtained $23,621,470 of secured debt with the acquisition of two properties. On June 1, 2022 we entered into an amendment for this loan payable which converted the benchmark interest rate from London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"). In 2023, the Company obtained $1,689,197 of secured debt for tenant improvements and leasing commissions. The interest rate is SOFR plus 2.50%. SOFR as of December 31, 2023 was 5.34%. Payments on the loan are interest only through the maturity date of September 29, 2025, with a balloon payment due at that time. The loan can be extended for one successive year term at our option.
The following is a summary of our secured debt as of December 31, 2023 and December 31, 2022:
Secured DebtDeferred Loan CostsSecured Debt Total
BALANCE AT DECEMBER 31, 2021$    200,529,000    $    (3,560,195)$    196,968,805    
Debt Issuance    —        —        —    
Amortization    —        957,003        957,003    
BALANCE AT DECEMBER 31, 2022$    200,529,000    $    (2,603,192)$    197,925,808    
Debt Issuance$    1,689,197    $    —    $    1,689,197    
Amortization$    —    $    968,267    $    968,267    
BALANCE AT DECEMBER 31, 2023$    202,218,197    $    (1,634,925)$    200,583,272    
The Company is subject to various quarterly debt covenants. As of December 31, 2023, the Company was in compliance with all debt covenants.
21
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. Derivative Instruments
On September 29, 2020, we entered into a pay fixed (0.269%) receive LIBOR interest rate swap contract with a notional value of $130,296,194, and on December 28, 2020, we entered into a pay fixed (0.292%) receive LIBOR interest rate swap contract with a notional value of $46,611,336. On February 4, 2021, we entered into a pay fixed (0.3255%) receive LIBOR rate swap contract with a notional value of $23,621,470. The first contract matures on September 29, 2025 while the two additional contracts mature October 1, 2024. These interest rate swap contracts were used to hedge the variable cash flows associated with our variable rate debt until The Company terminated them on May 31, 2022. The Company transitioned from LIBOR interest rate swap contracts to SOFR interest rate swap contracts due to reference rate reform.
On June 1, 2022, we entered into three SOFR interest rate swap contracts including a pay fixed (0.148%) receive SOFR interest rate swap contract with a notional value of $130,296,194, a pay fixed (0.163%) receive SOFR interest rate swap contract with a notional value of $46,611,336, and a pay fixed (0.198%) receive SOFR interest rate swap contract with a notional value of $23,621,470. The first contract matures on September 29, 2025 while the two additional contracts mature October 1, 2024. These interest rate swap contracts are used to hedge the variable cash flows associated with our variable rate debt.

The fair value of these contracts totaled $11,246,280 for the year ended December 31, 2023 and $18,613,752 for the year ended December 31, 2022. Interest incurred/(received) in connection with these contracts for the year ended 2023, 2022 and 2021 was $(9,891,818), $(2,984,861), and $354,913, respectively. The derivative assets are included in receivables and other assets on the Consolidated Balance Sheets.
These derivative instruments are not designated as hedges for accounting purposes, therefore gains and losses resulting from the changes in fair value of these derivative instruments are recorded in gain on derivative instrument on the Consolidated Statement of Operations.
9. Operating Leases
Substantially all of our operating leases in which we are the lessor contain escalating rent structures. Leases with fixed annual rental escalators are generally recognized on a straight-line basis over the non-cancellable lease period, subject to a collectability assessment. Rental income related to leases with contingent rental escalators is recorded based on the contractual cash rental payments due for the period. The Company’s leases typically include some form of operating expense reimbursement by the tenant.








22
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Operating Leases (continued)
The following table is a summary of our rental income:
For the Year Ended December 31, 2023For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Fixed lease payment$    29,834,707    $    30,294,480    $    29,923,196    
Variable lease payment    7,711,561        6,999,671        6,208,927    
Lease intangible amortization    (163,682)    (123,404)    (32,083)
Total rental income$    37,382,586    $    37,170,747    $    36,100,040    
The following table sets forth the future minimum lease payments receivable, excluding operating expense reimbursements, for leases in effect at December 31, 2023:

2024$    27,558,446    
2025    25,265,032    
2026    22,794,776    
2027    17,469,913    
2028    15,655,956    
Thereafter    108,253,540    
Totals$    216,997,663    




The following tenants contributed greater than 10% of rental income recorded for the year ended December 31, 2023:
23
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
Concentration by TenantPercentage of Current Year Rental IncomeLease Expiration Year
Florida Medical Clinic, P.A. 19%2038
Bethesda Healthcare System10%2026
The below table is a breakdown of rental revenue by state for the year ended December 31, 2023:
Concentration by StatePercentage of Current Year Rental Income
California    9    %
Colorado    6    %
Florida    54    %
Tennessee    4    %
Texas    27    %
Total    100    %




10. Disclosure about the Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value instruments based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined below:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
10. Disclosure about the Fair Value of Financial Instruments (continued)
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and Cash Equivalents and Restricted Cash - The carrying amount approximates fair value.
24
Vida JV LLC & Subsidiaries
Notes to Consolidated Financial Statements (continued)
Secured Debt - The fair value of the Company’s secured debt was $200,788,090 and $199,059,782 as of the years ended December 31, 2023 and 2022, respectively. Fair value of the Company’s secured debt is estimated by modeling the cash flows required by the Company’s debt agreements and discounting them back to the present value using the appropriate discount rate based on current market rates and conditions determined by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of the Company’s indebtedness are considered Level 3.
Interest Rate Swaps - Interest rate swaps are recorded in other assets or other liabilities on the balance sheet at fair value that is derived from observable market data (Level 2).
11. Subsequent Events
The Company has reviewed subsequent events through March 19, 2024, the date the consolidated financial statements were available for issuance. There have been no events subsequent to the balance sheet date which require disclosures or adjustment in these consolidated financial statements.



























25












Vida JV LLC & Subsidiaries
Supplemental Information
















26

Vida JV LLC & Subsidiaries
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2023
 
  Initial Cost to Company Gross Amount at Which Carried at Close of Period   
DescriptionEncumbrancesLand & Land ImprovementsBuilding & ImprovementsCost Capitalized Subsequent to AcquisitionLand & Land ImprovementsBuilding & ImprovementsAccumulated DepreciationYear AcquiredYear BuiltAddress
        
Castle Rock, CO$    10,723,301    $    20,669    $    20,045,458    $    211,525    $    20,669    $    20,256,983    $    1,867,459    202120132352 Meadows Boulevard
Glendale, CA    12,927,931        99,480        19,721,146        423,818        99,480        20,144,964    $    1,850,901    20212002222 W. Eulalia St.
Franklin, TN    7,141,922        2,993,824        9,360,827        613,427        2,993,824        9,974,254    $    1,121,210    20201988100 Covey Drive
Dallas, TX    18,832,332        167,883        31,245,013        924,907        167,883        32,169,920    $    3,350,064    202020047115 Greenville Avenue
Plano, TX    8,136,776        2,866,200        9,883,197        1,561,814        2,866,200        11,445,011    $    1,574,148    202020076957 Plano Parkway
Plantation, FL    8,941,005        3,521,860        8,965,846        624,749        3,521,860        9,590,595    $    1,204,912    20201996600 Pine Island Rd.
Lakewood, CA    5,363,812        61,967        8,434,764        (49,768)    61,967        8,384,996    $    846,637    202019935750 Downey Ave.
Boynton Beach, FL    6,557,110        425,339        11,245,322        104,378        425,339        11,349,700    $    1,158,992    2020199610075 Jog Rd.
San Antonio, TX    9,259,860        20,557        15,926,023        653,820        20,557        16,579,843    $    1,935,517    202020073903 Wiseman Boulevard
Coral Springs, FL    8,254,295        3,718,538        10,774,695        641,558        3,718,538        11,416,253    $    1,601,306    202020052901 Coral Hills Drive
Coral Springs, FL    8,268,631        2,186,298        11,183,023        62,238        2,186,298        11,245,261    $    1,227,231    202020083001 Coral Hills Drive
Brandon, FL    4,957,506        1,867,086        7,177,051        (175)    1,867,086        7,176,876    $    712,662    202020162020 Town Center Boulevard
Land O Lakes, FL    15,303,606        5,173,522        22,942,126        (540)    5,173,522        22,941,586    $    2,228,603    202020092100 Via Bella
Land O Lakes, FL    6,951,286        2,556,235        10,144,417        (244)    2,556,235        10,144,173    $    996,730    202020112150 Via Bella
Tampa, FL    6,358,541        2,755,421        8,739,640        (221)    2,755,421        8,739,419    $    866,072    2020199612500 N Dale Mabry
Zephyrhills, FL    20,530,542        9,096,656        27,368,792        (698)    9,096,656        27,368,094    $    2,757,209    202020162352 Bruce B Downs Boulevard
San Antonio, TX    4,353,915        1,391,480        4,705,644        487,890        1,391,480        5,193,534    $    844,336    2020199919016 Stone Oak Pkwy.
San Antonio, TX    4,030,339        1,751,736        3,780,187        911,773        1,751,736        4,691,960    $    752,188    20201999540 Stone Oak Centre Drive
Boynton Beach, FL    32,868,745        21,238,136        44,549,244        830,809        21,238,136        45,380,053    $    4,945,362    2020199510301 Hagen Ranch Road
Palm Springs, FL    2,456,742        952,889        3,915,211        319,889        952,889        4,235,100    $    617,376    202019971630 S. Congress Ave.
Total$    202,218,197    $    62,865,776    $    290,107,626    $    8,320,949    $    62,865,776    $    298,428,575    $    32,458,915    

27

The following table summarizes activity for real estate and accumulated depreciation for the years ended December 31, 2023, 2022 and 2021:

 Year Ended December 31,
 202320222021
Investment in real estate:  
Beginning balance$    358,400,478    $    356,870,920    $    314,103,965    
Acquisitions and development    —        —        39,886,725    
Improvements    2,893,873        1,529,558        2,880,230    
Ending balance$    361,294,351    $    358,400,478    $    356,870,920    
Accumulated depreciation:
Beginning balance$    (22,253,800)$    (11,768,040)$    (1,885,384)
Depreciation and amortization expenses    (10,205,115)    (10,485,760)    (9,882,656)
Ending balance$    (32,458,915)$    (22,253,800)$    (11,768,040)

28