Filed Pursuant to Rule 424(b)(5)
Registration No. 333-276248
PROSPECTUS SUPPLEMENT
(To prospectus dated February 27, 2024)
Up to $300,000,000
Common Stock
We and Global Medical REIT L.P. previously entered
into a sales agreement, dated January 9, 2024 (the “Sales Agreement”), with BMO Capital Markets Corp., B. Riley Securities, Inc.,
Robert W. Baird & Co. Incorporated, Berenberg Capital Markets LLC, Colliers Securities LLC, Compass Point Research &
Trading, LLC, Janney Montgomery Scott LLC, Citizens JMP Securities, LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Samuel
A Ramirez & Company, Inc., Stifel, Nicolaus & Company, Incorporated, Truist Securities, Inc. and Wells
Fargo Securities, LLC, the Forward Sellers (as defined below) and the Forward Purchasers (as defined below) relating to shares of our
common stock, $0.001 par value per share, offered by this prospectus supplement and the accompanying prospectus. We refer to these entities,
when acting in their capacity as our sales agents or acting as principals, individually as an “Agent” and collectively as
the “Agents” and, if applicable, when acting in their capacity as agents for the Forward Purchasers, individually as a “Forward
Seller” and collectively as the “Forward Sellers.” In accordance with the terms of the sales agreement, up to $300,000,000
of shares of our common stock may be sold from time to time by us through the Agents, by the Forward Purchasers through the Forward Sellers
or by us directly to the Agents acting as principals.
Our common stock is listed on The New York Stock
Exchange, or NYSE, under the symbol “GMRE.” The last reported sale price of our common stock on the NYSE on February 26,
2024 was $9.28 per share.
Sales of shares of our common stock under this
prospectus supplement and the accompanying prospectus may be made by any method permitted by law deemed to be an “at the market
offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”),
including, without limitation, sales made directly on or through the NYSE or any other existing trading market for our common stock. The
Agents will make all sales using commercially reasonable efforts consistent with their normal trading and sales practices, on mutually
agreed terms between the Agents and us. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
Under the terms of the Sales Agreement, we may
also sell shares of our common stock to any of the Agents, acting as principal, at a price per share to be agreed upon at the time of
sale. If we sell shares to an Agent as principal, we will enter into a separate terms agreement with that Agent.
In addition to the issuance and sale of shares
of our common stock through the Agents, we also may enter into separate forward sale agreements from time to time with any of BMO Capital
Markets Corp., B. Riley Securities, Inc., Robert W. Baird & Co. Incorporated, Citizens JMP Securities, LLC, J.P. Morgan
Securities LLC, KeyBanc Capital Markets Inc., Stifel, Nicolaus & Company, Incorporated, Truist Securities, Inc. and
Wells Fargo Securities, LLC or their respective affiliates. We refer to these entities, when acting in this capacity, individually as
a “Forward Purchaser” and collectively as the “Forward Purchasers.” In connection with any forward sale agreement,
the relevant Forward Purchaser or its affiliate will, at our request, use commercially reasonable efforts consistent with their normal
trading and sales practices, on mutually agreed terms between the Forward Purchaser and us, to borrow from third parties and sell, through
the relevant Forward Seller, a number of shares of our common stock equal to the number of shares of our common stock underlying the particular
forward sale agreement.
We will not initially receive any proceeds from
any sale of borrowed shares of our common stock through a Forward Seller. Subject to certain conditions, we generally have the right to
elect physical, cash or net share settlement under the forward sale agreements. We expect to fully physically settle each forward sale
agreement, if any, with the relevant Forward Purchaser on one or more dates specified by us on or prior to the maturity date of such forward
sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying
the particular forward sale agreement multiplied by the relevant forward sale price. We may also elect to cash settle or net share settle
our obligations under the forward sale agreements if we determine that it is in our best interests to do so. If we elect to cash settle
any forward sale agreement, we may not receive any proceeds, and we may owe cash to the relevant Forward Purchaser. If we elect to net
share settle any forward sale agreement, we will not receive any proceeds, and we may owe shares of our common stock to the relevant Forward
Purchaser. See “Plan of Distribution” in this prospectus supplement.
The Agents will be entitled to compensation of
up to 2.0% of the gross proceeds from the sale of the shares of our common stock sold through them under the Sales Agreement. In connection
with each forward sale agreement, we will pay the relevant Forward Seller, in the form of a reduction to the initial forward sale price
under the related forward sale agreement with the related Forward Purchaser, commissions at a mutually agreed rate that will not exceed,
but may be lower than, 2.0% of the gross sales price of all borrowed shares of our common stock sold through it as a Forward Seller during
the applicable forward hedge selling period for such shares. In connection with the sale of shares of our common stock on our behalf,
the Agents and the Forward Purchasers may be deemed to be “underwriters” within the meaning of the Securities Act, as amended,
and the compensation paid to the Agents and the Forward Purchasers in the form of a reduced initial forward sale price under the related
forward sale agreement with the related Forward Purchaser may be deemed to be underwriting commissions or discounts. Please see the section
under the caption “Plan of Distribution” for further information relating to the compensation arrangements for the Agents
and the Forward Purchasers.
We elected to be taxed as a real estate investment
trust (a “REIT”) for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016. Shares
of our common stock are subject to restrictions on ownership and transfer that are intended, among other purposes, to assist us in qualifying
and maintaining our qualification as a REIT. Our charter, subject to certain exceptions, limits ownership to no more than 9.8% in value
or number of shares, whichever is more restrictive, of any class or series of our outstanding capital stock.
Investing in our common stock involves a high
degree of risk. See “Risk Factors” beginning on page S-4 of this prospectus supplement, as well as those described in
our most recent Annual Report on Form 10-K, as amended, updated and supplemented from time to time, and in our subsequent Quarterly
Reports on Form 10-Q and other information that we file from time to time with the Securities and Exchange Commission (the “SEC”).
Neither the SEC nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
| BMO Capital Markets |
B. Riley Securities |
Baird |
Berenberg |
Colliers Securities LLC |
| Compass Point |
Janney Montgomery Scott |
Citizens JMP |
J.P. Morgan |
| KeyBanc Capital Markets |
Ramirez & Co., Inc. |
Stifel |
Truist Securities |
Wells Fargo Securities |
The date of this prospectus supplement is February 27,
2024.
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
No dealer, salesperson or other person is authorized
to give any information or to represent anything not contained or incorporated by reference in this prospectus supplement, the accompanying
prospectus or any applicable free writing prospectus. If anyone provides you with different, inconsistent or unauthorized information
or representations, you must not rely on them. This prospectus supplement and the accompanying prospectus are an offer to sell only the
securities offered by these documents and only under circumstances and in jurisdictions where it is lawful to do so. The information contained
in this prospectus supplement, the accompanying prospectus or any applicable free writing prospectus or incorporated by reference in these
documents is current only as of the respective dates of those documents or the dates that are specified therein.
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document consists of two parts. The first
part is this prospectus supplement, which describes the specific terms of the offering and also adds to and updates information contained
in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information. If the information
set forth in this prospectus supplement differs in any way from the information set forth in the accompanying prospectus, you should rely
on the information set forth in this prospectus supplement.
This prospectus supplement does not contain all
of the information that is important to you. You should read the accompanying prospectus as well as the documents incorporated by reference
in this prospectus supplement and the accompanying prospectus. See “Where You Can Find More Information” in the accompanying
prospectus.
Unless otherwise indicated or unless the context
requires otherwise, all references in this prospectus or any accompanying prospectus supplement to “we,” “our,”
“us” and “our company” refer to Global Medical REIT Inc., a Maryland corporation (the “Company”),
together with its consolidated subsidiaries, including: (1) Global Medical REIT L.P. (the “Operating Partnership”), a
Delaware limited partnership, and (2) Global Medical REIT GP LLC (the “GP”), a Delaware limited liability company that
is our wholly owned subsidiary and the sole general partner of our Operating Partnership.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
When used in this prospectus supplement and the
accompanying prospectus, including the documents that we have incorporated by reference, statements which are not historical in nature,
including those containing words such as “believe,” “expect,” “anticipate,” “estimate,”
“plan,” “continue,” “intend,” “should,” “may” or similar expressions, are
intended to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, as such, may involve known and unknown risks,
uncertainties and assumptions. These forward-looking statements include information about possible or assumed future results of our business,
financial condition, liquidity, results of operations, plans and objectives.
The forward-looking statements included in this
prospectus supplement and the accompanying prospectus, including the documents that we have incorporated by reference, are based on our
beliefs, assumptions and expectations of our future performance, taking into account all information available to us at the time the forward-looking
statements are made. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of
which are known to us. If a change occurs, our business, prospects, financial condition, liquidity and results of operations may vary
materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment
decision concerning our securities. Factors that could cause actual results to vary from our forward-looking statements include, but are
not limited to:
| · | difficulties in identifying healthcare facilities to acquire (due to increased competition or otherwise) and completing such acquisitions; |
| · | defaults on or non-renewal of leases by tenants; |
| · | our ability to collect rents; |
| · | increases in interest rates and increased operating costs; |
| · | macroeconomic and geopolitical factors, including, but not limited to, inflationary pressures, interest rate volatility, distress
in the banking sector, global supply chain disruptions and ongoing geopolitical conflicts and war; |
| · | an epidemic or pandemic (such as the COVID-19 pandemic), and the measures that international, federal, state and local governments,
agencies, law enforcement and/or health authorities implement to address it; |
| · | our ability to satisfy the covenants in our existing and any future debt agreements; |
| · | decreased rental rates or increased vacancy rates, including expected rent levels on acquired properties; |
| · | 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; |
| · | 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 hedge our interest rate risk; |
| · | 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 or to redeem our preferred stock; |
| · | expectations regarding the timing and/or completion of any acquisition; |
| · | expectations regarding the timing and/or completion of dispositions, and the expected use of proceeds therefrom; |
| · | general volatility of the market price of our common and preferred stock; |
| · | changes in our business or our investment or financing strategy; |
| · | our dependence upon key personnel whose continued service is not guaranteed; |
| · | our ability 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 laws 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 capital and tenant improvement expenditures; |
| · | changes in accounting policies generally accepted in the United States of America; |
| · | lack of, or insufficient amounts of, insurance; |
| · | other factors affecting the real estate industry generally; |
| · | changes in the tax treatment of our distributions; |
| · | our failure to maintain our qualification as a REIT for U.S. federal income tax purposes; |
| · | our ability to qualify for the safe harbor from the 100% prohibited transactions tax under the REIT rules with respect to our
property dispositions; |
| · | limitations imposed on our business and our ability to satisfy complex rules relating to REIT qualification for U.S. federal
income tax purposes; |
| · | risks related to any forward sale agreement, including substantial dilution to our earnings per share or substantial cash payment
or stock delivery obligations; and |
| · | the factors discussed in this prospectus supplement and the accompanying prospectus, including those set forth under the section titled
“Risk Factors,” and the sections captioned “Risk Factors” in our most recent Annual Report on Form 10-K,
as amended, updated and supplemented from time to time, subsequent Quarterly Reports on Form 10-Q and other documents that we file
with the SEC. |
All forward-looking statements speak only as of
the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they
may affect us. Except as required by law, we are not obligated to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
WHERE
YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements
of the Exchange Act and, in accordance with those requirements, file reports, proxy statements and other information with the SEC. The
SEC maintains a website that contains reports, proxy statements and other information regarding registrants, including us, that file such
information electronically with the SEC. The address of the SEC’s website is www.sec.gov. Our common stock is listed on the
NYSE and our corporate website is located at www.globalmedicalreit.com. Our corporate website and the information contained therein
or connected thereto do not constitute a part of this prospectus supplement, the accompanying prospectus or any amendment or supplement
thereto.
We have filed with the SEC a registration statement
on Form S-3 under the Securities Act with respect to the securities offered by this prospectus supplement and the accompanying prospectus.
This prospectus supplement and the accompanying prospectus, which form a part of the registration statement, do not contain all of the
information set forth in the registration statement and its exhibits and schedules, certain parts of which are omitted in accordance with
the SEC’s rules and regulations. For further information about us and our common stock, we refer you to the registration statement
and to such exhibits and schedules. Statements contained in this prospectus supplement and the accompanying prospectus concerning the
provisions of any document filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily complete,
and in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION
BY REFERENCE OF INFORMATION FILED WITH THE SEC
The SEC allows us to “incorporate by reference”
into this prospectus supplement and the accompanying prospectus the information we file with the SEC, which means that we can disclose
important business, financial and other information to you by referring you to other documents separately filed with the SEC. The information
incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus from the date we file
that document. Any reports filed by us with the SEC after the date of this prospectus supplement and before the date that the offering
of the securities by means of this prospectus supplement and the accompanying prospectus is terminated will automatically update and,
where applicable, supersede any information contained in this prospectus supplement and the accompanying prospectus or incorporated by
reference in this prospectus supplement and the accompanying prospectus.
We incorporate by reference the following documents
or information filed with the SEC into this prospectus supplement and the accompanying prospectus (other than, in each case, documents
or information deemed to have been furnished and not filed in accordance with SEC rules):
| · | our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023 and September 30,
2023, filed with the SEC on May 5, 2023, August 4, 2023 and November 7, 2023, respectively; |
| · | all documents filed by us under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus
supplement and before the termination of the offer and sale of shares of our common stock pursuant to this prospectus supplement. |
We will provide without charge to each person,
including any beneficial owner, to whom this prospectus supplement and the accompanying prospectus are delivered, upon his or her written
or oral request, a copy of any or all documents referred to above that have been or may be incorporated by reference into this prospectus
supplement and the accompanying prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference
into those documents. You may request those documents from us by contacting: Global Medical REIT Inc., 7373 Wisconsin Avenue, Suite 800,
Bethesda, Maryland 20814, telephone: (202) 524-6851.
SUMMARY
The following summary is qualified in its entirety
by the more detailed information and consolidated financial statements and notes thereto appearing elsewhere in, or incorporated by reference
into, this prospectus supplement and the accompanying prospectus. Because this is a summary, it may not contain all of the information
that is important to you. You should read the entire prospectus supplement and the accompanying prospectus, including the section entitled
“Risk Factors” and the documents incorporated by reference herein, before making an investment decision.
Our Company
We are a Maryland corporation and internally-managed
REIT that owns and acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare
systems.
Our principal business objective is to provide
attractive risk-adjusted returns to our stockholders through a combination of (i) reliable dividends and (ii) stock price appreciation.
Corporate Information
We elected to be taxed as a REIT commencing with
our taxable year ended December 31, 2016. Subject to certain 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 or
eliminating its corporate level taxes. 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 been 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 to remain qualified as a REIT.
The Company holds its facilities and conducts
its operations through the Operating Partnership. The Company serves as the sole general partner of the Operating Partnership through
the GP. As of December 31, 2023, the Company was the 92.91% limited partner of the Operating Partnership, with the remaining 7.09%
owned by the holders of long term incentive plan units issued by the Operating Partnership as incentive equity awards and third-party
holders who contributed properties or services to the Operating Partnership in exchange for
Operating Partnership Units (“OP Units”). The Company intends to conduct all future acquisition activity and operations through
the Operating Partnership. The Operating Partnership holds the Company’s healthcare facilities through separate wholly owned Delaware
limited liability company subsidiaries that were formed for each healthcare facility acquisition.
Our common stock is listed on the NYSE under the
symbol “GMRE.” Our principal executive offices are located at 7373 Wisconsin Avenue, Suite 800, Bethesda MD, 20814. Our
telephone number is (202) 524-6851. Our website is located at www.globalmedicalreit.com. The information found on, or otherwise
accessible through, our website is not incorporated into, and does not form a part of, this prospectus supplement and the accompanying
prospectus or any other report or document we file with or furnish to the SEC.
THE
OFFERING
| Issuer | |
Global Medical REIT
Inc. |
| | |
|
| Common stock offered by
us or the Forward Purchasers or their affiliates | |
Common stock having an aggregate
gross offering price of up to $300,000,000. |
| | |
|
| Use of Proceeds | |
We will contribute the net proceeds
of this offering to our Operating Partnership in exchange for OP Units in our Operating Partnership. Our Operating Partnership intends
to use the net proceeds it receives from this offering to repay a portion of the outstanding indebtedness under our credit facility
(the “Credit Facility”) for which it is liable, to fund acquisitions, and for other general corporate purposes. Certain
of the Agents, Forward Purchasers and/or their respective affiliates are or may in the future be lenders and/or agents under our
Credit Facility and therefore may receive a portion of any net proceeds from this offering used for the repayment of borrowings under
our Credit Facility. See “Plan of Distribution — Other Relationships” and “Plan of Distribution —
Conflicts of Interest.” |
| | |
|
| | |
If we enter into any forward
sale agreement with a Forward Purchaser, the relevant Forward Purchaser or its affiliate will use commercially reasonable efforts,
consistent with its normal trading and sales practices for similar transactions and applicable laws and regulations, to borrow from
third parties and sell, through its affiliated Forward Seller, shares of our common stock to hedge such Forward Purchaser’s
exposure under such forward sale agreement. All of the net proceeds from the sale of any such borrowed shares of our common stock
will be paid to the applicable Forward Seller (or one or more of its affiliates). Such entity will be either an Agent or an affiliate
of an Agent. As a result, an Agent or one of its affiliates will receive the net proceeds from any sale of borrowed shares of our
common stock made in connection with any forward sale agreement. We will not initially receive any proceeds from any sale of borrowed
shares of our common stock through a Forward Seller in connection with any forward sale agreement. |
| | |
|
| Accounting treatment of
any forward sales | |
If we enter into any forward
sale agreement, we expect that before the issuance of shares of our common stock, if any, upon physical or net share settlement of
such forward sale agreement, the shares issuable upon settlement of that forward sale agreement will be reflected in our diluted
earnings per share, return on equity and dividends per share calculations using the treasury stock method. Under this method, the
number of shares of our common stock used in calculating diluted earnings per share, return on equity and dividends per share is
deemed to be increased by the excess, if any, of the number of shares of our common stock that would be issued upon full physical
settlement of that particular forward sale agreement over the number of shares of our common stock that could be purchased by us
in the market (based on the average market price during the relevant period) using the proceeds receivable upon full physical settlement
(based on the adjusted forward sale price at the end of the relevant reporting period). |
| | |
Consequently, before physical or net share settlement of a particular forward sale agreement and subject to the occurrence of certain events, we anticipate there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the applicable adjusted forward sale price under that particular forward sale agreement, subject to increase or decrease based on a specified daily rate, less a spread, and subject to decrease by an amount per share specified in the particular forward sale agreement. However, if we physically or net share settle a particular forward sale agreement, the delivery by us of shares of our common stock would result in an increase in the number of shares outstanding and dilution to our earnings per share, return on equity and dividends per share. |
| | |
|
| U.S. federal income tax considerations | |
For a discussion of the material U.S. federal income tax considerations relating to purchasing, owning and disposing our common stock, please see the section entitled “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus. |
| | |
|
| Ownership and transfer restrictions | |
To assist us in qualifying as a REIT, among other purposes, our charter generally limits beneficial and constructive ownership of our capital stock by any person to no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock. In addition, our charter contains various other restrictions on the ownership and transfer of our common stock. See “Description of Capital Stock — Restrictions on Ownership and Transfer” in the accompanying prospectus. |
| | |
|
| NYSE symbol | |
“GMRE.” |
| | |
|
| Risk Factors | |
Investing in our common stock involves a high degree of risk. You should carefully read and consider the information set forth under “Risk Factors” and all other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus before investing in our common stock. |
RISK
FACTORS
Before purchasing any securities offered by
this prospectus supplement and the accompanying prospectus, you should carefully consider the risk factors incorporated by reference into
this prospectus supplement and the accompanying prospectus from our most recent Annual Report on Form 10-K, as amended, updated and
supplemented from time to time, and in our subsequent Quarterly Reports on Form 10-Q and other information that we file from time
to time with the SEC and the other risks, uncertainties and additional information set forth in the documents incorporated by reference
into this prospectus supplement, as well as any risks described in the accompanying prospectus. For a description of these reports and
documents, and information about where you can find them, see “Where You Can Find More Information” and “Incorporation
by Reference of Information Filed with the SEC.” Additional risks not presently known or that are currently deemed immaterial could
also materially and adversely affect our financial condition, results of operations, business and prospects.
Supplemental Risks Related to our Common Stock and this Offering
The market price and trading volume of our common stock may be
volatile following the offer and sale of shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus.
The market price of our common stock may be highly
volatile and be subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant
price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at
or above the public offering price. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly
in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume
of our common stock include:
| · | actual or anticipated variations in our quarterly operating results or distributions; |
| · | changes in our earnings estimates or publication of research reports by securities analysts; |
| · | increased difficulty in maintaining or obtaining financing on attractive terms, or at all; |
| · | changes in interest rates; |
| · | changes in market valuations of similar companies; |
| · | changes in the regulatory environment in which our business operates; |
| · | additions or departures of key management personnel; |
| · | actions by institutional stockholders; |
| · | speculation in the press or investment community; and |
| · | general market and economic conditions. |
Future sales or issuances of our common stock or other securities
convertible into our common stock could cause the market value of our common stock to decline and could result in dilution of your shares.
Our board of directors is authorized to increase
the total number of shares of stock that we are authorized to issue and, without your approval, to cause us to issue additional shares
of our stock or to raise capital through the issuance of preferred stock, options, warrants and other rights on terms and for consideration
as our board of directors in its sole discretion may determine. The sale or issuance of substantial amounts of our common stock, or other
securities convertible into our common stock, may dilute your ownership and could cause the market price of our common stock to decrease
significantly. We cannot predict the effect, if any, of future sales or issuances of our common stock, or the availability of our common
stock for future sales, on the market price of our common stock. The sale or issuance of substantial amounts of our common stock, or other
securities convertible into our common stock, or the perception that such sales or issuances could occur, may adversely affect the market
price of our common stock.
In addition, our Operating Partnership may issue
additional OP Units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating
Partnership and would have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the
amount of distributions we can make to our stockholders. Any such issuances, or the perception of such issuances, could materially and
adversely affect the market price of our common stock.
Future offerings of debt securities, which would rank senior
to our common stock upon our liquidation, and future offerings of equity securities that may be senior to our common stock for the purposes
of dividend and liquidating distributions, may adversely affect the market price of our common stock.
In the future, we may attempt to increase our
capital resources by making offerings of debt or additional offerings of equity securities, including commercial paper, medium-term notes,
senior or subordinated notes and preferred stock. Upon bankruptcy or liquidation, holders of our debt securities and shares of preferred
stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common
stock. Our Series A preferred stock has, and any future preferred stock issuances could have, a preference on liquidating distributions
or a preference on dividend payments that could limit our ability to make a dividend distribution to the holders of our common stock.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control,
we cannot predict or estimate the amount, timing, or nature of our future offerings. Thus, holders of our common stock bear the risk of
our future offerings reducing the market price of our common stock and diluting their stock holdings in us.
We have not established a minimum distribution payment level,
and we cannot assure you of our ability to make distributions in the future.
We have not established a minimum distribution
payment level, and our ability to make distributions may be adversely affected by the risk factors described in or incorporated by reference
into this prospectus supplement and the accompanying prospectus. All distributions will be declared at the discretion of our board of
directors and will depend on our earnings, our financial condition, maintenance of our REIT status and other factors as our board of directors
may deem relevant from time to time. We may not be able to make distributions in the future. In addition, some of our distributions may
include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated tax earnings
and profits, such distributions would generally be considered a return of capital for U.S. federal income tax purposes. A return of capital
is not taxable, but it has the effect of reducing the holder’s basis in its investment.
An increase in market interest rates may have an adverse effect
on the market price of our common stock.
One of the factors that investors may consider
in deciding whether to buy or sell shares of our common stock is our distribution rate as a percentage of our share price relative to
market interest rates. If the market price of our common stock is based primarily on the earnings and return that we derive from our investments
and income with respect to our investments and our related distributions to stockholders, and not from the market value of the investments
themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our common stock. For
instance, if market rates rise without an increase in our distribution rate, the market price of our common stock could decrease as potential
investors may require a higher distribution yield on our common stock or seek other securities paying higher distributions or interest.
In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash
flow and our ability to service our indebtedness and pay distributions.
Investing in our common stock may involve an above average degree
of risk.
The investments we make in accordance with our
investment strategy may result in a higher amount of risk, volatility, or loss of principal than alternative investment options. Our investments
may be highly speculative and aggressive, and therefore, an investment in our common stock may not be suitable for someone with lower
risk tolerance.
Our management team has broad discretion in the use of the proceeds
of this offering and we may invest or spend such proceeds in ways with which you may not agree or in ways that may not yield a significant
return.
Our management will have broad discretion over
the use of the proceeds from this offering. The net proceeds from this offering are intended to be used to repay a portion of the outstanding
indebtedness under the Credit Facility for which the Operating Partnership is liable, to fund new acquisitions, and for other general
corporate purposes. Our management will have considerable discretion in the application of such net proceeds, and you will not have the
opportunity, as part of your investment decision, to assess whether such proceeds are being used appropriately. As a result, the net proceeds
from this offering may be used for purposes that do not increase our operating results or enhance the market price of our common stock.
Risks Related to our Forward Sale Agreements
The following risk factors under this caption
“— Risks Related to our Forward Sale Agreements” apply to any forward sale agreement we may enter into in connection
with the offering of common stock pursuant to this prospectus supplement and the accompanying prospectus.
Affiliates of certain of the Agents may receive benefits in connection
with this offering.
If we enter into any forward sale agreement with
a Forward Purchaser, the relevant Forward Purchaser or its affiliate will use commercially reasonable efforts, consistent with its normal
trading and sales practices for similar transactions and applicable laws and regulations, to borrow from third parties and sell, through
its affiliated Forward Seller, shares of our common stock to hedge such Forward Purchaser’s exposure under such forward sale agreement.
All of the net proceeds from the sale of any such borrowed shares of our common stock will be paid to the applicable Forward Seller (or
one or more of its affiliates). Such entity will be either an Agent or an affiliate of an Agent. As a result, an Agent or one of its affiliates
will receive the net proceeds from any sale of borrowed shares of common stock made in connection with any forward sale agreement.
These transactions create potential conflicts
of interest because these Agents and Forward Purchasers have an interest in the successful completion of this offering beyond the sales
commissions they will receive. The interest may influence the decision regarding the terms and circumstances under which this offering
is completed.
Provisions contained in our forward sale agreements could result
in substantial dilution to our earnings per share or result in substantial cash payment or stock delivery obligations.
Each Forward Purchaser will have the right to
accelerate its forward sale agreement (with respect to all or any portion of the transaction under that particular forward sale agreement
that the relevant Forward Purchaser determines is affected by an event described below) and require us to settle on a date specified by
the relevant Forward Purchaser if:
| · | the Forward Purchaser is unable, after using commercially reasonable efforts, to, or would incur a materially increased cost to, establish,
maintain or unwind its hedge position with respect to the relevant forward sale agreement, and we do not elect to pay an adjustment amount
or amend the forward sale agreement accordingly; |
| · | the Forward Purchaser is unable, after using commercially reasonable efforts, to continue to borrow a number of shares of our common
stock equal to the number of shares of our common stock underlying the relevant forward sale agreement or that, with respect to borrowing
such number of shares of our common stock, it would incur a rate of borrowing that is greater than the borrow cost specified in the relevant
forward sale agreement, subject to certain exceptions in the case of such a rate of borrowing that is greater than a borrow cost specified
in such forward sale agreement, and we do not elect to pay an adjustment amount or amend the relevant forward sale agreement accordingly; |
| · | certain ownership thresholds applicable to the Forward Purchaser and its affiliates are exceeded; |
| · | we declare a dividend or distribution on shares of our common stock with a cash value in excess of a specified amount, or with an
ex-dividend date that occurs earlier than a specified date, or we declare certain non-cash dividends; |
| · | there occurs an announcement of an event or transaction that, if consummated, would result in a merger event, tender offer, nationalization,
delisting or change in law (in each case, as determined pursuant to the terms of the applicable forward sale agreement); or |
| · | certain other events of default, termination events or other specified events occur, including, among other things, any material misrepresentation
made by us in connection with entering into the relevant forward sale agreement or a market disruption event during a specified period
that lasts for more than eight scheduled trading days (in each case, as determined pursuant to the terms of the applicable forward sale
agreement). |
Any Forward Purchaser’s decision to exercise
its right to accelerate the settlement of the relevant forward sale agreement will be made irrespective of our interests, including our
need for capital. In such cases, we could be required to issue and deliver shares of our common stock under the physical settlement provisions
or, if we so elect and the relevant Forward Purchaser so permits our election in its good faith and in its reasonable discretion, net
share settlement provisions of the relevant forward sale agreement irrespective of our capital needs, which would result in dilution to
our earnings per share, return on investment and dividends per share in the event that such net share settlement requires issuance and
delivery of shares of our common stock.
We expect that settlement of any forward sale
agreement will generally occur no later than the date specified in the relevant forward sale agreement. However, any forward sale agreement
may be settled earlier than the latest potential settlement date specified in such forward sale agreement, in whole or in part, at our
option, subject to the satisfaction of certain conditions. We expect that any forward sale agreement will be physically settled by delivery
of shares of our common stock unless we elect to cash settle or net share settle such forward sale agreement, subject to the satisfaction
of certain conditions. Upon physical settlement or, if we so elect, net share settlement of a any forward sale agreement, delivery of
shares of our common stock in connection with such physical settlement (or, if we elect net share settlement, upon such settlement to
the extent we are obligated to deliver shares of our common stock) will result in dilution to our earnings per share and return on equity.
If we elect cash settlement or net share settlement
with respect to all or a portion of the common stock underlying any forward sale agreement, we expect the relevant Forward Purchaser (or
its affiliate) will purchase a number of shares of common stock in secondary market transactions over an unwind period to:
| · | return shares of common stock to securities lenders in order to unwind the relevant Forward Purchaser’s hedge (after taking
into consideration any shares of common stock to be delivered by us to such Forward Purchaser, in the case of net share settlement); and |
| · | if applicable, in the case of net share settlement, deliver shares of common stock to us to the extent required in settlement of the
particular forward sale agreement. |
The purchase of our common stock in connection
with the relevant Forward Purchaser or its affiliate unwinding its hedge positions could cause the price of our common stock to increase
over such time (or reduce the amount of a decrease over such time), thereby increasing the amount of cash we would be required to pay
to the relevant Forward Purchaser (or decreasing the amount of cash that the relevant Forward Purchaser would be required to pay us) upon
a cash settlement of the particular forward sale agreement or increasing the number of shares of common stock we would be required to
deliver to the relevant Forward Purchaser (or decreasing the number of shares of common stock that the relevant Forward Purchaser would
be required to deliver to us) upon net share settlement of the particular forward sale agreement.
The forward sale price that we expect to receive
upon physical settlement of a particular forward sale agreement will be subject to adjustment on a daily basis based on a floating interest
rate factor determined by reference to a specified daily rate less a spread to be mutually agreed by us and the applicable Forward Purchaser
and will be decreased on certain dates based on amounts related to expected dividends on our common stock during the term of such forward
sale agreement. If the specified daily rate is less than the spread under such forward sale agreement on any day, the interest rate factor
will result in a daily reduction of the applicable forward sale price. If the prevailing market price for our common stock determined
in accordance with the terms of the relevant forward sale agreement during the relevant valuation period under any forward sale agreement
is above the relevant forward sale price, in the case of cash settlement, we would pay the relevant Forward Purchaser under such forward
sale agreement an amount per share in cash equal to the difference or, in the case of net share settlement, we would deliver to the relevant
Forward Purchaser a number of shares of common stock having a value, determined in accordance with the terms of the relevant forward sale
agreement, equal to the difference. Thus, we could be responsible for a potentially substantial cash payment or stock delivery. See “Plan
of Distribution” in this prospectus supplement for more information on the forward sale agreements.
In case of our bankruptcy or insolvency, any forward sale agreement
will automatically terminate, and we would not receive the expected proceeds from any forward sales of shares of common stock.
If we file for, or a regulatory authority with
jurisdiction over us institutes, or we consent to, a proceeding seeking a judgment in bankruptcy or insolvency or any other relief under
any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or we or a regulatory authority with jurisdiction
over us presents a petition for our winding-up or liquidation, and we consent to such a petition, any forward sale agreement then in effect
will automatically terminate. If any such forward sale agreement so terminates under these circumstances, we would not be obligated to
deliver to the relevant Forward Purchaser any shares of common stock not previously delivered, and such Forward Purchaser would be discharged
from its obligation to pay the applicable forward sale price per share in respect of any shares of common stock not previously settled
under the applicable forward sale agreement. Therefore, to the extent that there are any shares of common stock with respect to which
any forward sale agreement has not been settled at the time of the commencement of any such bankruptcy or insolvency proceedings, we would
not receive the relevant forward sale price per share in respect of those shares of common stock.
The federal income tax treatment of the cash that we might receive
from cash settlement of any forward sale agreement is unclear and could jeopardize our ability to meet the REIT qualification requirements.
In the event that we elect to settle any forward
sale agreement for cash and the settlement price is below the applicable forward sale price, we would be entitled to receive a cash payment
from the applicable Forward Purchaser. Under Section 1032 of the Code, generally, no gain or loss is recognized by a corporation
when it deals in its own shares, including pursuant to a “securities futures contract,” as defined in the Code by reference
to the Exchange Act. Although we believe that any amount received by us in exchange for our common shares would qualify for the exemption
under Section 1032 of the Code, because it is not entirely clear whether a forward sale agreement qualifies as a “securities
futures contract,” the federal income tax treatment of any cash settlement payment we receive is uncertain. In the event that we
recognize a significant gain from the cash settlement of any forward sale agreement, we might not be able to satisfy the gross income
requirements applicable to REITs under the Code. In that case, we may be able to rely upon the relief provisions under the Code in order
to avoid the loss of our REIT status. Even if the relief provisions apply, we will be subject to a 100% tax on the greater of
(i) the excess of 75% of our gross income (excluding gross income from prohibited transactions) over the amount of such income attributable
to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income (excluding gross income from prohibited
transactions) over the amount of such gross income attributable to sources that qualify under the 95% test, as discussed in the section
titled “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus, multiplied in either case by a fraction
intended to reflect our profitability. In the event that these relief provisions were not available, we could lose our REIT status under
the Code.
USE
OF PROCEEDS
The shares of our common stock offered pursuant
to this prospectus supplement and the accompanying prospectus include newly issued shares that may be offered and sold by us to or through
the Agents, acting as our sales agents or as principals, and borrowed shares of our common stock that may be offered and sold by the Forward
Purchasers through the Forward Sellers, acting as agents for the Forward Purchasers. We will contribute the net proceeds of this offering
to our Operating Partnership in exchange for OP Units in our Operating Partnership. Our Operating Partnership intends to use the net proceeds
it receives from this offering to repay a portion of the outstanding indebtedness under our Credit Facility for which it is liable, to
fund acquisitions, and for other general corporate purposes. The Credit Facility consists of (i) $500 million
of term loans, which include (a) a $350 million term loan (“Term Loan A”)
and (b) a $150 million term loan (“Term Loan B”), and (ii) a $400 million
revolver (the “Revolver”). The Credit Facility also includes a $500 million
accordion feature. Amounts repaid under the Revolver may be re-borrowed from time to time, subject to the terms of the Credit Facility.
Term Loan A matures in May 2026, Term Loan B matures in February 2028, and the Revolver
matures in August 2026, with two six-month extension
options. As of December 31, 2023, we had approximately $585.3 million in borrowings outstanding under our Credit Facility,
net of unamortized debt issuance costs. Interest rates on amounts outstanding under the Credit Facility equal the term Secured Overnight
Financing Rate plus a related spread adjustment of 10 basis points and a borrowing spread based on the current pricing grid in the Credit
Facility. Borrowings under the Credit Facility were primarily incurred to fund acquisitions.
We will not initially receive any proceeds from
any sale of borrowed shares of our common stock through a Forward Seller in connection with a forward sale agreement. We expect that settlement
of any forward sale agreement will generally occur no later than the date specified in the relevant forward sale agreement, unless certain
adjustment events occur, in which case the settlement date may be extended in accordance with the terms of the forward sale agreement.
However, any forward sale agreement may be settled earlier than the latest potential settlement date specified in such forward sale agreement,
in whole or in part, at our option, subject to the satisfaction of certain conditions. We currently expect to fully physically settle
each particular forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement in an amount equal
to the number of shares underlying the particular forward sale agreement multiplied by the relevant forward sale price. The forward sale
price that we expect to receive upon physical settlement of a particular forward sale agreement will be equal to the gross sales price
of all borrowed shares of common stock sold by the relevant Forward Seller during the applicable forward hedge selling period for such
shares less a forward hedge selling commission rate not to exceed, but may be lower than, 2.0% (which gross sales price will be adjusted
for daily accruals based on a floating interest rate and specified amounts related to expected dividends on shares of our common stock
if an ex-dividend date occurs during such forward hedge selling period). If, however, we elect to cash settle or net share settle any
forward sale agreement, we would expect to receive an amount of proceeds that is significantly lower than the product set forth in the
preceding sentence (in the case of any cash settlement) or will not receive any proceeds (in the case of any net share settlement), and
we may owe cash (in the case of any cash settlement) or shares of common stock (in the case of any net share settlement) to the relevant
Forward Purchaser. See “Plan of Distribution” in this prospectus supplement.
Certain of the Agents, Forward Purchasers and/or
their respective affiliates are or may in the future be lenders and/or agents under our Credit Facility and therefore may receive a portion
of any net proceeds from this offering used for the repayment of borrowings under our Credit Facility. See “Plan of Distribution — Other
Relationships” and “Plan of Distribution — Conflicts of Interest” in this prospectus supplement.
If we enter into any forward sale agreement with
a Forward Purchaser, we expect that such Forward Purchaser or its affiliate will attempt to borrow and sell, through the relevant Forward
Seller, shares of our common stock to hedge the relevant Forward Purchaser’s exposure under such forward sale agreement. All of
the net proceeds from the sale of any such borrowed shares will be paid to the relevant Forward Purchaser (or one or more of its affiliates).
Such entity will be either an Agent or one of its affiliates. As a result, an Agent or one of its affiliates will receive the net proceeds
from any sale of borrowed shares of common stock made in connection with any forward sale agreement. See “Plan of Distribution — Other
Relationships” in this prospectus supplement.
PLAN
OF DISTRIBUTION
On January 9, 2024, we entered into the Sales
Agreement with each of the Agents and the Forward Purchasers under which shares of our common stock may be sold having an aggregate gross
sales price of up to $300,000,000 from time to time through the Agents, acting as our sales agents or directly to the Agents, acting as
principals, or Forward Sellers. A copy of the Sales Agreement was filed as Exhibit 1.1 to our Current Report on Form 8-K filed with the SEC on January 9, 2024 and is incorporated by reference into the registration statement of which this prospectus supplement
and the accompanying prospectus are a part.
Upon delivery of a placement notice and subject
to the terms and conditions of the Sales Agreement, the Agents may sell our common stock by any method permitted by law deemed to be an
“at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made
directly on or through the NYSE or on any other existing trading market for our common stock. We may instruct the Agents not to sell our
common stock if the sales cannot be effected at or above the minimum price designated by us from time to time. We or the Agents may suspend
the offering of our common stock upon proper notice and subject to other conditions.
Under the terms of the Sales Agreement, we may
also sell shares of our common stock to any of the Agents, acting as principal, at a price per share to be agreed upon at the time of
sale. If we sell shares to an Agent as principal, we will enter into a separate terms agreement with that Agent.
In addition to the issuance and sale of our common
stock to or through the Agents, we may enter into separate forward sale agreements with any of the Forward Purchasers. In connection with
each particular forward sale agreement, we expect the relevant Forward Purchaser or its affiliate will borrow from third parties and,
through the relevant Forward Seller, sell a number of shares of our common stock equal to the number of shares of our common stock underlying
the particular forward sale agreement.
We will not initially receive any proceeds from
any sale of borrowed shares of our common stock through a Forward Seller. Subject to certain conditions, we generally have the right to
elect physical, cash or net share settlement under the forward sale agreements. We expect to fully physically settle each forward sale
agreement, if any, with the relevant Forward Purchaser on one or more dates specified by us on or prior to the maturity date of such forward
sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares underlying
the particular forward sale agreement multiplied by the relevant forward sale price. We may also elect to cash settle or net share settle
our obligations under the forward sale agreements if we determine that it is in our best interests to do so. If we elect to cash settle
any forward sale agreement, we may not receive any proceeds, and we may owe cash to the relevant Forward Purchaser. If we elect to net
share settle any forward sale agreement, we will not receive any proceeds, and we may owe shares of our common stock to the relevant Forward
Purchaser.
We will pay commissions to the Agents, in cash,
for their services in acting as Agents in the sale of our common stock. The Agents will be entitled to compensation of up to 2.0% of the
gross sales price per share sold. In connection with each forward sale agreement, we will pay the relevant Forward Seller, in the form
of a reduced initial forward sale price under the related forward sale agreement with the related Forward Purchaser, commissions at a
mutually agreed rate that will not exceed, but may be lower than, 2.0% of the gross sales price of all borrowed shares of common stock
sold through it as a Forward Seller. The Agents may also receive customary brokerage commissions from purchasers of the common stock in
compliance with FINRA Rule 2121. The Agents may effect sales to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the Agents and/or purchasers of shares of our common stock for whom they may act
as agents or to whom they may sell as principal. Because there is no minimum offering amount required as a condition to close this offering,
the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. We estimate that the
total expenses for the offering, excluding compensation and reimbursement payable to the Agents under the terms of the Sales Agreement,
will be approximately $170,000.
In connection with the sale of our common stock
on our behalf, each of the Agents, Forward Sellers and the Forward Purchasers may be deemed to be an “underwriter” within
the meaning of the Securities Act and the compensation paid to each Agent or the Forward Sellers in the form of a reduced initial forward
sale price under the related forward sale agreement with the related Forward Purchaser may be deemed to be underwriting commissions or
discounts. We have agreed to provide indemnification and contribution to the Agents, Forward Purchasers and Forward Sellers against certain
civil liabilities, including liabilities under the Securities Act.
The offering of our common stock pursuant to the
Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. We, an Agent (as to itself) or a Forward
Purchaser (as to itself) may terminate the Sales Agreement at any time upon three days’ prior notice.
This prospectus supplement and the accompanying
prospectus in electronic format may be made available on a website maintained by the Agents and the Agents may distribute this prospectus
supplement and the accompanying prospectus electronically.
Sales through the Agents
Settlement for sales of our common stock will
occur on the second business day following the date on which any sales are made, or on some other date that is agreed upon by us and the
Agents in connection with a particular transaction (but in no case later than as required by the securities laws), in return for payment
of the net proceeds to us. Sales of our common stock, if any, as contemplated by this prospectus supplement and the accompanying prospectus
will be settled through the facilities of The Depository Trust Company or by such other means as we and the Agents may agree upon. Pursuant
to recent amendments to Rule 15c6-1 of the Exchange Act, settlement for any securities offered under this prospectus supplement on
or after May 28, 2024, may occur on the first business day that is also a trading day following the date on which any sales were
made in return for payment of the net proceeds to us. There is no arrangement for funds to be received in an escrow, trust or similar
arrangement.
The Agents will use their commercially reasonable
efforts, consistent with their sales and trading practices, to solicit offers to purchase shares of our common stock under the terms and
subject to the conditions set forth in the Sales Agreement.
Sales through the Forward Sellers
From time to time during the term of the Sales
Agreement, and subject to the terms and conditions set forth therein and in the related forward sale agreements, we may deliver a placement
notice relating to a forward sale agreement to any of the Forward Purchasers and the relevant Forward Seller. Upon acceptance of a placement
notice from us requesting that the Forward Seller execute sales of borrowed shares of our common stock in connection with a forward sale
agreement, and subject to the terms and conditions of the Sales Agreement, the relevant Forward Seller will use commercially reasonable
efforts consistent with its normal trading and sales practices to sell the relevant shares of common stock on such terms to hedge the
relevant Forward Purchaser’s exposure under that particular forward sale agreement. We or the relevant Forward Seller may immediately
suspend the offering of our stock at any time upon proper notice to the other.
We expect that settlement between the relevant
Forward Purchaser and Forward Seller of sales of borrowed shares of common stock, as well as the settlement between the relevant Forward
Seller and buyers of such shares of common stock in the market, will generally occur on the standard settlement cycle then in-effect.
The obligation of the relevant Forward Seller under the Sales Agreement to execute such sales of shares of our common stock is subject
to a number of conditions, which each Forward Seller reserves the right to waive in its sole discretion.
The forward sale price per share under each forward
sale agreement will initially equal the product of (i) an amount equal to one minus the applicable forward selling commission and
(ii) the volume-weighted average price per share at which the shares of borrowed common stock were sold pursuant to the Sales Agreement
through the relevant Forward Seller, subject to adjustment as described below.
The forward sale price that we expect to receive
upon physical settlement of a particular forward sale agreement will be subject to adjustment on a daily basis based on a floating interest
rate factor determined by reference to a specified daily rate less a spread to be mutually agreed by us and the applicable Forward Purchaser
and will be decreased on certain dates based on amounts related to expected dividends on our common stock during the term of such forward
sale agreement. If the specified daily rate is less than the spread under such forward sale agreement on any day, the interest rate factor
will result in a daily reduction of the applicable forward sale price. If the prevailing market price for our common stock determined
in accordance with the terms of the relevant forward sale agreement during the relevant valuation period under any forward sale agreement
is above the relevant forward sale price, in the case of cash settlement, we would pay the relevant Forward Purchaser under such forward
sale agreement an amount per share in cash equal to the difference or, in the case of net share settlement, we would deliver to the relevant
Forward Purchaser a number of shares of common stock having a value, determined in accordance with the terms of the relevant forward sale
agreement, equal to the difference. Thus, we could be responsible for a potentially substantial cash payment or stock delivery.
If we enter into any forward sale agreement, we
expect that before the issuance of shares of our common stock, if any, upon physical or net share settlement of such forward sale agreement,
the shares issuable upon settlement of that particular forward sale agreement will be reflected in our diluted earnings per share, return
on equity and dividends per share calculations using the treasury stock method. Under this method, the number of shares of our common
stock used in calculating diluted earnings per share, return on equity and dividends per share is deemed to be increased by the excess,
if any, of the number of shares of our common stock that would be issued upon full physical settlement of that particular forward sale
agreement over the number of shares of our common stock that could be purchased by us in the market (based on the average market price
during the relevant period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the
end of the relevant reporting period). Consequently, before physical or net share settlement of a particular forward sale agreement and
subject to the occurrence of certain events, we anticipate there will be no dilutive effect on our earnings per share except during periods
when the average market price of shares of our common stock is above the applicable adjusted forward sale price under that particular
forward sale agreement, subject to increase or decrease based on a specified daily rate, less a spread, and subject to decrease by an
amount per share specified in the particular forward sale agreement. However, if we physically or net share settle a particular forward
sale agreement, the delivery by us of shares of our common stock would result in an increase in the number of shares outstanding and dilution
to our earnings per share, return on equity and dividends per share.
Except under limited circumstances described below,
we have the right to elect physical, cash or net share settlement under any forward sale agreement. Although we expect to settle any forward
sale agreement entirely by delivering shares of our common stock in connection with full physical settlement, we may, subject to certain
conditions, elect cash settlement or net share settlement for all or a portion of our obligations under a particular forward sale agreement
if we conclude that it is in our interest to do so. For example, we may conclude that it is in our interest to cash settle or net share
settle a particular forward sale agreement if we have no then-current use for all or a portion of the net proceeds that we would receive
upon physical settlement. In addition, subject to certain conditions, we may elect to accelerate the settlement of all or a portion of
the number of shares of common stock underlying a particular forward sale agreement.
If we elect to physically settle any forward sale
agreement, we will receive an amount of cash from the relevant Forward Purchaser equal to the product of the forward sale price per share
under that particular forward sale agreement and the number of shares of common stock underlying such forward sale agreement. In the event
that we elect to cash settle, the settlement amount will be generally related to (i) (a) the weighted average price at which
the relevant Forward Seller or its affiliate purchases shares of common stock during the relevant valuation period for such settlement
under the particular forward sale agreement minus (b) the applicable forward sale price; multiplied by (ii) the number of shares
of common stock underlying the particular forward sale agreement subject to cash settlement. In the event that we elect to net share settle,
the settlement amount will be generally related to (i) (a) the weighted average price at which the relevant Forward Seller or
its affiliate purchases shares of common stock during the relevant valuation period for such settlement under that particular forward
sale agreement minus (b) the applicable forward sale price; multiplied by (ii) the number of shares of common stock underlying
that particular forward sale agreement subject to such net share settlement. If this settlement amount is a negative number, the relevant
Forward Purchaser will pay us the absolute value of that amount (in the case of cash settlement) or deliver to us a number of shares of
common stock having a value, determined pursuant to the terms of the relevant forward sale agreement, equal to the absolute value of such
amount (in the event of net share settlement). If this settlement amount is a positive number, we will pay the relevant Forward Purchaser
that amount (in the case of cash settlement) or deliver to the relevant Forward Purchaser a number of shares of common stock having a
value, determined pursuant to the terms of the relevant forward sale agreement, equal to such amount (in the event of net share settlement).
If we elect cash settlement or net share settlement
with respect to all or a portion of the shares of common stock underlying a particular forward sale agreement, we expect the relevant
Forward Purchaser (or its affiliate) will purchase a number of shares of common stock in secondary market transactions over an unwind
period to:
| · | return shares of common stock to securities lenders in order to unwind the relevant Forward Purchaser’s hedge (after taking
into consideration any common stock to be delivered by us to such Forward Purchaser, in the case of net share settlement); and |
| · | if applicable, in the case of net share settlement, deliver shares of common stock to us to the extent required in settlement of the
particular forward sale agreement. |
The purchase of our common stock in connection
with the relevant Forward Purchaser or its affiliate unwinding its hedge positions could cause the price of our common stock to increase
over such time (or reduce the amount of a decrease over such time), thereby increasing the amount of cash we would be required to pay
to the relevant Forward Purchaser (or decreasing the amount of cash that the relevant Forward Purchaser would be required to pay us) upon
a cash settlement of the particular forward sale agreement or increasing the number of shares of common stock we would be required to
deliver to the relevant Forward Purchaser (or decreasing the number of shares of common stock that the relevant Forward Purchaser would
be required to deliver to us) upon net share settlement of the particular forward sale agreement. See “Risk Factors — Risks
Related to our Forward Sale Agreements” in this prospectus supplement.
Each Forward Purchaser will have the right to
accelerate its forward sale agreement (with respect to all or any portion of the transaction under that particular forward sale agreement
that the relevant Forward Purchaser determines is affected by an event described below) and require us to settle on a date specified by
the relevant Forward Purchaser if:
| · | the Forward Purchaser is unable, after using commercially reasonable efforts, to, or would incur a materially increased cost to, establish,
maintain or unwind its hedge position with respect to the relevant forward sale agreement, and we do not elect to pay an adjustment amount
or amend the forward sale agreement accordingly; |
| · | the Forward Purchaser is unable, after using commercially reasonable efforts, to continue to borrow a number of shares of our common
stock equal to the number of shares of our common stock underlying the relevant forward sale agreement or that, with respect to borrowing
such number of shares of our common stock, it would incur a rate of borrowing that is greater than the borrow cost specified in the relevant
forward sale agreement, subject to certain exceptions in the case of such a rate of borrowing that is greater than a borrow cost specified
in such forward sale agreement, and we do not elect to pay an adjustment amount or amend the relevant forward sale agreement accordingly; |
| · | certain ownership thresholds applicable to the Forward Purchaser and its affiliates are exceeded; |
| · | we declare a dividend or distribution on shares of our common stock with a cash value in excess of a specified amount, or with an
ex-dividend date that occurs earlier than a specified date, or we declare certain non-cash dividends; |
| · | there occurs an announcement of an event or transaction that, if consummated, would result in a merger event, tender offer, nationalization,
delisting or change in law (in each case, as determined pursuant to the terms of the applicable forward sale agreement); or |
| · | certain other events of default, termination events or other specified events occur, including, among other things, any material misrepresentation
made by us in connection with entering into the relevant forward sale agreement or a market disruption event during a specified period
that lasts for more than eight scheduled trading days (in each case, as determined pursuant to the terms of the applicable forward sale
agreement). |
Any Forward Purchaser’s decision to exercise
its right to accelerate the settlement of the relevant forward sale agreement will be made irrespective of our interests, including our
need for capital. In such cases, we could be required to issue and deliver shares of our common stock under the physical settlement provisions
or, if we so elect and the relevant Forward Purchaser so permits our election in its good faith and in its reasonable discretion, net
share settlement provisions of the relevant forward sale agreement irrespective of our capital needs, which would result in dilution to
our earnings per share, return on investment and dividends per share in the event that such net share settlement requires issuance and
delivery of shares of our common stock. See “Risk Factors — Risks Related to our Forward Sale Agreements”
in this prospectus supplement.
Other Relationships
Some of the Agents, the Forward Purchasers, the
Forward Sellers and/or their affiliates have provided, and may in the future provide, various investment banking, commercial banking and
other financial services for us and our affiliates, for which services they may receive customary fees. To the extent required by Regulation
M, such Agents, Forward Purchasers and Forward Sellers will not engage in any market making activities involving our common stock while
the offering is ongoing pursuant to this prospectus supplement and the accompanying prospectus in violation of Regulation M.
Affiliates of certain of the Agents, Forward Purchasers
and/or Forward Sellers are lenders under our Credit Facility and have been paid customary fees. We intend to use a portion of the net
proceeds from this offering to repay amounts outstanding under our Credit Facility for which the Operating Partnership is liable. Accordingly,
such affiliates will receive their pro rata portions of the net proceeds from this offering used to repay borrowings thereunder.
If we enter into any forward sale agreement with
a Forward Purchaser, we expect that such Forward Purchaser or its affiliate will attempt to borrow and sell, through the relevant Forward
Seller, shares of our common stock to hedge the relevant Forward Purchaser’s exposure under such forward sale agreement. All of
the net proceeds from the sale of any such borrowed shares will be paid to the relevant Forward Purchaser (or one or more of its affiliates).
Such entity will be either an Agent or one of its affiliates. As a result, an Agent or one of its affiliates will receive the net proceeds
from any sale of borrowed shares of common stock made in connection with any forward sale agreement.
Some of the Agents, Forward Purchasers, Forward
Sellers and their respective affiliates have engaged in, and may in the future engage in, commercial banking, investment banking and other
commercial dealings in the ordinary course of business with us or our affiliates for which they have received, or may in the future receive,
customary fees and commissions.
Conflicts of Interest
We have entered, and in the future may enter,
into interest rate swaps with affiliates of certain of the Agents and Forward Purchasers and Forward Sellers. In addition, certain of
the Agents, Forward Purchasers, Forward Sellers and their respective affiliates have been, may be, or are lenders to, and counterparties
in securities, derivatives and other trading activities with, certain of our affiliates and us and in the ordinary course of their business
activities, the Agents, Forward Purchasers, Forward Sellers and their respective affiliates may hold or trade securities of ours or our
affiliates. In conjunction with services that affiliates of the Agents, Forward Purchasers and Forward Sellers have provided, may provide
or are providing to us and our affiliates, commercial disputes may arise.
Robert W. Baird & Co. Incorporated may
pay a referral fee to an affiliate of The Huntington National Bank, one of the lenders under our Credit Facility, and Samuel A. Ramirez &
Company, Inc. will pay a referral fee to Associated Investment Services, Inc. (AIS), a Financial Industry Regulatory Authority
member and indirect, wholly owned subsidiary of Associated Banc-Corp.
Affiliates of BMO Capital Markets Corp., Citizens
JMP Securities, LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Stifel, Nicolaus & Company, Incorporated,
Truist Securities, Inc. and Wells Fargo Securities, LLC are lenders and/or agents under our Credit Facility.
NYSE Listing
The shares are listed on the NYSE under the symbol
“GMRE.”
LEGAL
MATTERS
Certain legal matters will be passed upon for
us by Vinson & Elkins L.L.P., Richmond, Virginia, and, with respect to matters of Maryland law, by Venable LLP, Baltimore, Maryland.
Certain legal matters will be passed upon for the Agents, the Forward Purchasers and the Forward Sellers by Cooley LLP, New York, New
York.
EXPERTS
The consolidated financial statements, and the
related financial statement schedule, of the Company as of December 31, 2022 and 2021, and for each of the three years in the period
ended December 31, 2022, incorporated by reference in this Prospectus Supplement by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2022, and the effectiveness of the Company’s internal control over financial
reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports.
Such financial statements and financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
PROSPECTUS
$750,000,000
Common Stock
Preferred Stock
Debt Securities
We may offer, issue and sell from time to time,
together or separately, the securities described in this prospectus, at an aggregate public offering price that will not exceed $750,000,000.
We will provide the specific terms of any securities
we may offer in supplements to this prospectus. You should read this prospectus and any applicable prospectus supplement carefully before
you invest. This prospectus may not be used to offer and sell any securities unless accompanied by a prospectus supplement describing
the amount of and terms of the offering of those securities.
We may offer and sell these securities to or through
one or more underwriters, dealers or agents, or directly to purchasers on a continuous or delayed basis. We reserve the sole right to
accept, and together with any underwriters, dealers and agents, reserve the right to reject, in whole or in part, any proposed purchase
of securities. The names of any underwriters, dealers or agents involved in the sale of any securities, the specific manner in which they
may be offered and any applicable commissions or discounts will be set forth in the prospectus supplement covering the sales of those
securities.
We elected to be taxed as a real estate investment
trust (“REIT”) for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016. To assist
us in complying with certain U.S. federal income tax requirements applicable to REITs, among other purposes, our charter generally limits
beneficial and constructive ownership by any person to no more than 9.8% in value or in number of shares, whichever is more restrictive,
of the outstanding shares of any class or series of our capital stock. In addition, our charter contains various other restrictions on
the ownership and transfer of our common stock. See “Description of Capital Stock — Restrictions on Ownership and Transfer.”
Our common stock is listed on the New York Stock
Exchange, or the NYSE, under the symbol “GMRE.” Our 7.50% Series A Cumulative Redeemable Preferred Stock is listed on
the NYSE under the symbol “GMRE PrA,” The last reported sale price of our common stock on the NYSE on February 26, 2024
was $9.28 per share. We have not yet determined whether any of the other securities that may be offered by this prospectus will
be listed on any exchange, inter-dealer quotation system or over-the-counter system. If we decide to seek a listing for any of those securities,
that will be disclosed in a prospectus supplement.
Investing in our securities involves risks.
Before making a decision to invest in our securities, you should carefully consider the risks described under the section entitled “Risk
Factors” on page 6 of this prospectus and included in our most recent Annual Report on Form 10-K, subsequent Quarterly
Reports on Form 10-Q and other documents filed by us with the Securities and Exchange Commission, including any risks described in
any accompanying prospectus supplement.
Neither the U.S. Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus or any accompanying
prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 27,
2024
TABLE OF CONTENTS
Page
Unless otherwise indicated or unless the context
requires otherwise, all references in this prospectus or any accompanying prospectus supplement to “we,” “our,”
“us” and “our company” refer to Global Medical REIT Inc., a Maryland corporation (the “Company”),
together with its consolidated subsidiaries, including: (1) Global Medical REIT L.P. (the “Operating Partnership”), a
Delaware limited partnership, and (2) Global Medical REIT GP LLC (the “GP”), a Delaware limited liability company, that
is our wholly owned subsidiary and the sole general partner of our Operating Partnership.
You should rely only on the information contained
in or incorporated by reference into this prospectus or any accompanying prospectus supplement. We have not authorized anyone to provide
you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should
assume that the information contained in this prospectus and any accompanying prospectus supplement, as well as information that we have
previously filed with the U.S. Securities and Exchange Commission, or the SEC, and incorporated by reference, is accurate only as of the
date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since those dates.
The distribution of this prospectus and any accompanying
prospectus supplement and the offering of our securities in certain jurisdictions may be restricted by law. If you possess this prospectus
or any accompanying prospectus supplement, you should find out about and observe these restrictions. This prospectus and any accompanying
prospectus supplement are not an offer to sell our securities and are not soliciting an offer to buy our securities in any jurisdiction
where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom
it is not permitted to make such offer or sale. See “Plan of Distribution” in this prospectus.
About
This Prospectus
This prospectus is part of a “shelf”
registration statement that we have filed with the SEC. By using a shelf registration statement, we may sell, at any time and from time
to time, in one or more offerings, any combination of the securities described in this prospectus. The exhibits to our registration statement
and documents incorporated by reference contain the full text of certain contracts and other important documents that we have summarized
in this prospectus or that we may summarize in a prospectus supplement. Since these summaries may not contain all the information that
you may find important in deciding whether to purchase the securities we offer, you should review the full text of these documents. The
registration statement and the exhibits and other documents can be obtained from the SEC as indicated under the sections entitled “Where
You Can Find More Information” and “Incorporation by Reference of Information Filed with the SEC.”
This prospectus only provides you with a general
description of the securities we may offer, which is not meant to be a complete description of each security. Each time we sell securities,
we will provide a prospectus supplement that contains specific information about the terms of those securities. The prospectus supplement
may also add, update or change information contained in this prospectus. If there is any inconsistency between the information in this
prospectus and any prospectus supplement, you should rely on the information in the prospectus supplement. You should read carefully both
this prospectus and any prospectus supplement together with the additional information described under the sections entitled “Where
You Can Find More Information” and “Incorporation by Reference of Information Filed with the SEC.”
Incorporation
by Reference of Information Filed with the SEC
The SEC allows us to “incorporate by reference”
the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The
information incorporated by reference is an important part of this prospectus and any accompanying prospectus supplement. Any statement
contained in a document which is incorporated by reference into this prospectus and any accompanying prospectus supplement is automatically
updated and superseded if information contained in this prospectus or any accompanying prospectus supplement, or information that we later
file with the SEC, modifies or replaces this information. We incorporate by reference the following documents we filed with the SEC:
| ● | Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023 and September 30,
2023, filed with the SEC on May 5, 2023, August 4, 2023 and November 7, 2023, respectively; |
We are also incorporating by reference additional
documents that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), after the date of this prospectus and prior to termination of the offering of the securities described
in this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed above
or filed in the future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02
or 7.01 of Form 8-K or certain exhibits furnished pursuant to Item 9.01 of Form 8-K.
To receive a free copy of any of the documents
incorporated by reference into this prospectus, including exhibits, if they are specifically incorporated by reference into the documents,
call us at (202) 524-6851 or submit a written request to Global Medical REIT Inc., 7373 Wisconsin Avenue, Suite 800, Bethesda, Maryland
20814.
Where
You Can Find More Information
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC at http://www.sec.gov. You may inspect reports
and other information we file at the offices of the NYSE, 20 Broad Street, New York, New York 10005. In addition, we maintain a website
that contains information about us at http://www.globalmedicalreit.com. The information found on, or otherwise accessible through,
our website is not incorporated by reference into, and does not form a part of, this prospectus or any accompanying prospectus supplement
or any other report or document we file with or furnish to the SEC.
We have filed with the SEC a registration statement
on Form S-3, of which this prospectus is a part, including exhibits, schedules and amendments filed with, or incorporated by reference
into, the registration statement, under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the
securities registered hereby. This prospectus and any accompanying prospectus supplement do not contain all of the information set forth
in the registration statement and exhibits and schedules to the registration statement. For further information with respect to our company
and the securities registered hereby, reference is made to the registration statement, including the exhibits to the registration statement.
Statements contained in this prospectus and any accompanying prospectus supplement as to the contents of any contract or other document
referred to in, or incorporated by reference into, this prospectus and any accompanying prospectus supplement are not necessarily complete
and, where such contract or other document is an exhibit to the registration statement, each statement is qualified in all respects by
the exhibit to which the reference relates. The registration statement of which this prospectus is a part is available to you on the SEC’s
website.
Cautionary
Note Regarding Forward-Looking Statements
When used in this prospectus and any accompanying
prospectus supplement, including the documents that we have incorporated by reference, in future filings with the SEC or in press releases
or other written or oral communications, statements which are not historical in nature, including those containing words such as “believe,”
“expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,”
“should,” “may” 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, are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities
Act and Section 21E of the Exchange Act). In particular, statements pertaining to our trends, liquidity, capital resources, and the
healthcare industry, the healthcare real estate markets and opportunity, among others, contain forward-looking statements. 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:
| ● | difficulties in identifying healthcare facilities to acquire (due to increased cost of capital, competition or otherwise) and completing
such acquisitions; |
| ● | defaults on or non-renewal of leases by tenants; |
| ● | our ability to collect rents; |
| ● | increases in interest rates and increased operating costs; |
| ● | macroeconomic and geopolitical factors, including, but not limited to, inflationary pressures, interest rate volatility, distress
in the banking sector, global supply chain disruptions and ongoing geopolitical conflicts and war; |
| ● | an epidemic or pandemic (such as the COVID-19 pandemic), and the measures that international,
federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it; |
| ● | our ability to satisfy the covenants in our existing and any future debt agreements; |
| ● | decreased rental rates or increased vacancy rates, including expected rent levels on acquired properties; |
| ● | 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; |
| ● | 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 hedge our interest rate risk; |
| ● | 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 or to redeem our preferred stock; |
| ● | expectations regarding the timing and/or completion of any acquisition; |
| ● | expectations regarding the timing and/or completion of dispositions, and the expected use of
proceeds therefrom; |
| ● | general volatility of the market price of our common and preferred stock; |
| ● | changes in our business or our investment or financing strategy; |
| ● | our dependence upon key personnel whose continued service is not guaranteed; |
| ● | our ability 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 laws 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 capital and tenant improvement expenditures; |
| ● | changes in accounting policies generally accepted in the United States of America; |
| ● | lack of, or insufficient amounts of, insurance; |
| ● | other factors affecting the real estate industry generally; |
| ● | changes in the tax treatment of our distributions; |
| ● | our failure to maintain our qualification as a REIT for U.S. federal income tax purposes; |
| ● | our ability to qualify for the safe harbor from the 100% prohibited transactions tax under the REIT rules with respect to our
property dispositions; and |
| ● | limitations imposed on our business due to, 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, 2022 for further discussion of these and other risks, as well as the risks, uncertainties
and other factors discussed in this prospectus 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 prospectus,
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.
Global
MedicaL REIT Inc.
Global Medical
REIT Inc. (the “Company,” “us,” “we,” or “our”) is a Maryland corporation and internally
managed REIT that owns and acquires healthcare facilities and leases those facilities to physician groups and regional and national healthcare
systems.
We hold
our facilities and conduct our operations through a Delaware limited partnership subsidiary named 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 December 31, 2023, we owned 92.91% of the outstanding common operating partnership units (“OP Units”) of our
Operating Partnership, with an aggregate of 7.09% 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 OP
Units.
We elected to be taxed as a REIT for U.S. federal
income tax purposes commencing with our taxable year ended December 31, 2016.
Our common stock is listed on the NYSE under the
symbol “GMRE.” Our Series A Preferred Stock is listed on the NYSE under the symbol “GMRE PrA.” Our principal
executive offices are located at 7373 Wisconsin Avenue, Suite 800, Bethesda Maryland, 20814. Our telephone number is (202) 524-6851.
Our website is located at http://www.globalmedicalreit.com. The information found on, or otherwise accessible through, our website
is not incorporated into, and does not form a part of, this prospectus or any accompanying prospectus supplement or any other report or
document we file with or furnish to the SEC.
Risk
Factors
Before purchasing any securities offered by this
prospectus, you should carefully consider the risk factors incorporated by reference into this prospectus from our most recent Annual
Report on Form 10-K, the risks, uncertainties and additional information set forth in our SEC reports on Forms 10-K, 10-Q and 8-K
and in the other documents incorporated by reference into this prospectus, and any risks described in any accompanying prospectus supplement.
For a description of these reports and documents, and information about where you can find them, see “Where You Can Find More Information”
and “Incorporation by Reference of Information Filed with the SEC.” Additional risks not presently known or that are currently
deemed immaterial could also materially and adversely affect our financial condition, results of operations, business and prospects.
Use
of Proceeds
Unless otherwise set forth in a prospectus supplement,
we intend to use the net proceeds from the offering of securities by us under this prospectus for general corporate purposes, including
funding acquisitions, repayment of indebtedness and working capital. Further details relating to the use of the net proceeds from the
offering of securities under this prospectus will be set forth in the applicable prospectus supplement.
Description
of Capital Stock
Although the following summary describes the material
terms of our capital stock, it is not a complete description of Maryland law or of our charter and bylaws, which are incorporated herein
by reference to the Company’s SEC filings. See “Where You Can Find More Information.”
Description of Common Stock
Our charter provides that we may issue up to 500,000,000
shares of common stock, $0.001 par value per share. As of February 26, 2024, there were 65,574,549 shares of our common stock issued
and outstanding. Our charter authorizes our board of directors to amend our charter to increase or decrease the aggregate number of authorized
shares or the number of shares of any class or series without stockholder approval.
Under Maryland law, stockholders are not personally
liable for the obligations of a corporation solely as a result of their status as stockholders.
Dividends;
Liquidation. Subject to the preferential rights, if any, of holders of any other class or series of stock, including our Series A
Preferred Stock, and to the provisions of our charter regarding the restrictions on ownership and transfer of stock, holders of shares
of our common stock are entitled to receive distributions on such shares out of assets legally available therefor if, as and when authorized
by our board of directors and declared by us, and the holders of our common stock are entitled to share ratably in our assets legally
available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate
provision for all of our known debts and liabilities, and subject to the rights of holders of our preferred stock, including our Series A
Preferred Stock, if outstanding at such time.
Voting
Rights. Subject to the provisions of our charter regarding the restrictions on ownership and transfer of shares of stock and
except as may otherwise be specified in the terms of any class or series of stock, each outstanding share of common stock entitles the
holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as provided with
respect to any other class or series of stock, the holder of such share of common stock will possess the exclusive voting power. There
is no cumulative voting in the election of our directors, which means that the stockholders entitled to cast a majority of the votes entitled
to be cast in the election of directors can elect all of the directors then standing for election, and the remaining stockholders will
not be able to elect any directors. Directors are elected by a majority of all the votes cast at a meeting of stockholders duly called
and at which a quorum is present if the election is uncontested.
Other.
Holders of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any of our securities. Subject to the restrictions on ownership and transfer of stock contained in our charter
and the terms of any other class or series of stock, all our shares of common stock have equal dividend, liquidation and other rights.
Under the Maryland General Corporation Law (the
“MGCL”), a Maryland corporation generally cannot dissolve, amend its charter, merge, convert or consolidate with another entity,
sell all or substantially all of its assets or engage in a statutory share exchange, unless the action is advised by our board of directors
and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter,
unless a lesser percentage (but not less than a majority) is specified in the corporation’s charter. Our charter provides that,
except for amendments to the provisions of our charter relating to (i) the removal of directors, (ii) the restrictions on ownership
and transfer of our capital stock and (iii) the vote required to amend such provisions (each of which requires the affirmative vote
of stockholders entitled to cast not less than two-thirds of all the votes to be cast on the matter) and certain amendments that require,
pursuant to the MGCL, only approval by our board of directors, these actions may be taken only if advised by our board of directors and
approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.
Listing.
Our common stock is currently listed on the NYSE under the symbol “GMRE.”
Transfer
Agent and Registrar. The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company,
LLC.
Description of Series A Preferred Stock
Our charter provides that we may issue up to 10,000,000
shares of preferred stock, $0.001 par value per share. 3,105,000 shares of preferred stock have been designated as shares of 7.50% Series A
Cumulative Redeemable Preferred Stock, par value $0.001 per share. As of February 26, 2024, there were 3,105,000 shares of our Series A
Preferred Stock issued and outstanding. Our charter authorizes the board of directors to amend our charter to increase or decrease the
aggregate number of authorized shares or the number of shares of any class or series without stockholder approval. Our board of directors
may authorize the issuance of preferred stock in one or more classes or series and may determine, with respect to any such class or series,
the rights, preferences, privileges and restrictions of the preferred stock of that class or series.
Reopening.
The provisions of our charter establishing our Series A Preferred Stock permit us to “reopen” this series, without the
consent of the holders of our Series A Preferred Stock, in order to issue additional shares of Series A Preferred Stock from
time to time. We may in the future issue additional shares of Series A Preferred Stock without the consent of the holders of Series A
Preferred Stock. Any additional shares of Series A Preferred Stock will have the same terms as our current Series A Preferred
Stock. These additional shares of Series A Preferred Stock will, together with our current Series A Preferred Stock, constitute
a single series of securities.
Maturity.
Our Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or mandatory redemption, and will remain
outstanding indefinitely unless and until (i) we redeem such Series A Preferred Stock at our option as described below in “—
Redemption at Our Option,” or (ii) they are converted by the holder of such Series A Preferred Stock in the event of a
Change of Control as described below in “— Conversion Right upon a Change of Control.”
Ranking.
Our Series A Preferred Stock ranks, with respect to dividend rights and rights upon our voluntary or involuntary liquidation, dissolution
or winding up:
| 1) | senior to our common stock and to any other class or series of our equity shares, currently issued or issued in the future, expressly
designated as ranking junior to the Series A Preferred Stock; |
| 2) | on parity with any preferred or convertible preferred stock ranking on parity with the Series A Preferred Stock, currently issued
or issued in the future; and |
| 3) | junior to all equity shares issued by us with terms specifically providing that those equity shares rank senior to the Series A
Preferred Stock with respect to rights of dividend payments and the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, which issuance is subject to the approval of the holders of two-thirds of the outstanding shares
of Series A Preferred Stock and any parity preference shares. |
The term “equity shares” does not
include convertible or exchangeable debt securities, which debt securities would rank senior to the Series A Preferred Stock.
Dividends.
Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by our board of directors or a duly authorized
committee of the board of directors, out of funds legally available for the payment of dividends under Maryland law, cumulative cash dividends
from the original issue date or the immediately preceding dividend payment date, as applicable, quarterly in arrears on January 31,
April 30, July 31 and October 31 of each year (each, a “dividend payment date”). These cumulative cash dividends
will accrue on the liquidation preference amount of $25.00 per share at a rate per annum equal to 7.50% of the liquidation preference
of $25.00 per share (equivalent to $1.875 per annum per share) with respect to each dividend period from and including the original issue
date. If we issue additional shares of Series A Preferred Stock after the original issue date, dividends on such shares will accrue
from the original issue date or the most recent dividend payment date at which dividends were paid in full.
Dividends will be payable to holders of record
as of 5:00 p.m., New York time, on the related record date. The record dates for the Series A Preferred Stock are the January 15,
April 15, July 15 or October 15 immediately preceding the relevant dividend payment date (each, a “dividend record
date”). The term “business day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor
a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.
A dividend period is the period from and including
a dividend payment date to, but excluding, the next dividend payment date or any earlier redemption date. Dividends payable on the Series A
Preferred Stock will be computed based on a 360-day year consisting of twelve 30-day months and will be calculated from the original issue
date.
Notwithstanding the foregoing, dividends on the
Series A Preferred Stock will accrue whether or not funds are legally available for the payment of those dividends, whether or not
we have earnings and whether or not those dividends are authorized. No interest, or sum of money in lieu of interest, will be payable
in respect of any dividend payment or payments on the Series A Preferred Stock which may be in arrears, and holders of the Series A
Preferred Stock will not be entitled to any dividends, whether payable in cash, property or shares, in excess of full cumulative dividends
on the Series A Preferred Stock described above. Any dividend payment made on the Series A Preferred Stock shall be first credited
against the earliest accumulated but unpaid dividend due with respect to those shares.
If, for any taxable year, we designate as a “capital
gain dividend,” as defined in Section 857 of the Internal Revenue Code of 1986, as amended (the “Code”), which
we refer to as a Capital Gains Amount, any portion of the dividends, as determined for U.S. federal income tax purposes, paid or made
available for that year to holders of all classes of our shares of capital stock, then, except as otherwise required by applicable law,
the portion of the Capital Gains Amount that shall be allocable to the holders of the Series A Preferred Stock will be in proportion
to the amount that the total dividends, as determined for U.S. federal income tax purposes, paid or made available to holders of Series A
Preferred Stock for the year bears to the total dividends paid or made available for that year to holders of all classes of our shares
of capital stock. In addition, except as otherwise required by applicable law, we will make a similar allocation with respect to any undistributed
long-term capital gains that are to be included in our stockholders’ long-term capital gains based on the allocation of the Capital
Gains Amount that would have resulted if those undistributed long-term capital gains had been distributed as “capital gain dividends”
by us to our stockholders.
Our Series A Preferred Stock ranks junior
as to payment of dividends to any class or series of our preferred stock that we may issue in the future that is expressly stated to be
senior as to payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Company. If at any
time we have failed to pay, on the applicable payment date, accrued dividends on any shares that rank in priority to the Series A
Preferred Stock with respect to dividends, we may not pay any dividends on the Series A Preferred Stock or redeem or otherwise repurchase
any Series A Preferred Stock until we have paid or set aside for payment the full amount of the unpaid dividends on the shares that
rank in priority with respect to dividends that must, under the terms of such shares, be paid before we may pay dividends on, or redeem
or repurchase, the Series A Preferred Stock.
So long as any shares of Series A Preferred
Stock remain outstanding, no dividend or distribution shall be paid or declared on junior equity securities, and no junior equity securities
shall be purchased, redeemed or otherwise acquired for consideration by us, directly or indirectly, during a dividend period, unless the
full cumulative dividends on all outstanding shares of Series A Preferred Stock have been declared and paid (or declared and a sum
sufficient for the payment thereof has been set aside).
The foregoing limitation does not apply to:
| ● | repurchases, redemptions or other acquisitions of junior equity shares of the Company in connection with any employee incentive or
benefit plan; |
| ● | an exchange, redemption, reclassification or conversion of any class or series of the Company’s junior equity shares, or any
junior equity shares or securities of a subsidiary of the Company, for any class or series of the Company’s junior equity shares;
or |
| ● | any dividend in the form of shares of capital stock, warrants, options or other rights where the dividend security or the security
issuable upon exercise of such warrants, options or other rights is the same security as that on which the dividend is being paid or ranks
equal or junior to that security. |
“Junior equity shares” mean any class
or series of shares of capital stock of the Company that ranks junior to the Company as to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up of the Company. Junior equity shares include shares of our common stock.
When dividends are not paid (or duly provided
for) on any dividend payment date (or, in the case of parity equity shares (as defined below) having dividend payment dates different
from the dividend payment dates pertaining to the Series A Preferred Stock, on a dividend payment date falling within the related
dividend period for Series A Preferred Stock) in full upon the Series A Preferred Stock and any shares of parity equity shares,
all dividends declared upon the Series A Preferred Stock and all such parity equity shares payable on such dividend payment date
(or, in the case of parity equity shares having dividend payment dates different from the dividend payment dates pertaining to the Series A
Preferred Stock, on a dividend payment date falling within the related dividend period for the Series A Preferred Stock) shall be
declared pro rata so that the respective amounts of such dividends shall bear the same ratio to each other as all accrued but unpaid
dividends per share on the Series A Preferred Stock and all parity equity shares payable on such dividend payment date (or, in the
case of parity equity shares having dividend payment dates different from the dividend payment dates pertaining to the Series A Preferred
Stock, on a dividend payment date falling within the related dividend period for the Series A Preferred Stock) bear to each other.
Our board of directors will not authorize and
we will not pay or set apart for payment dividends on our Series A Preferred Stock at any time when the terms and provisions of any
agreement of ours, including any agreement relating to our indebtedness, prohibits the authorization, payment or setting apart for payment
or provides that the authorization, payment or setting apart for payment would constitute a breach of the agreement or a default under
the agreement, or if the authorization, payment or setting apart for payment shall be restricted or prohibited by law. We also have the
right to withhold, from any amounts otherwise payable to you, with respect to all distributions (deemed or actual) to the extent that
withholding is or was required for such distributions under applicable tax withholding rules.
Future distributions on our common stock and preferred
stock, including our Series A Preferred Stock, will be at the discretion of our board of directors and will depend on, among other
things, our results of operations, funds from operations, cash flow from operations, financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the Code, our debt service requirements and any other factors our board
of directors deems relevant. In addition, our revolving credit facility contains provisions that could limit or, in certain cases, prohibit
the payment of distributions on our common stock and preferred stock, including the Series A Preferred Stock. Accordingly, although
we expect to pay quarterly cash distributions on our common stock and scheduled cash dividends on our Series A Preferred Stock, we
cannot guarantee that we will maintain these distributions or what the actual distributions will be for any future period.
Subject to the foregoing, dividends (payable in
cash, shares or otherwise) may be determined by our board of directors (or a duly authorized committee of the board of directors) and
may be declared and paid on our common stock and any shares of capital stock ranking, as to dividends, equally with or junior to the Series A
Preferred Stock from time to time out of any funds legally available for such payment, and the Series A Preferred Stock shall not
be entitled to participate in any such dividend.
Liquidation
Rights. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of our Series A
Preferred Stock are entitled to receive out of assets of the Company available for distribution to stockholders, after satisfaction of
liabilities to creditors, if any, and subject to the rights of holders of any shares of capital stock then outstanding ranking senior
to the Series A Preferred Stock in respect of distributions upon liquidation, dissolution or winding up of the Company, and before
any distribution of assets is made to holders of common stock or of any of our other classes or series of stock ranking junior to the
Series A Preferred Stock as to such a distribution, a liquidating distribution in the amount of $25.00 per share, plus accumulated
and unpaid dividends (whether or not authorized or declared) through but excluding the date of the final distribution to such holders.
Holders of the Series A Preferred Stock will not be entitled to any other amounts from us after they have received their full liquidation
preference.
In any such distribution, if the assets of the
Company are not sufficient to pay the liquidation preferences in full to all holders of the Series A Preferred Stock and all holders
of any of our other shares of capital stock ranking equally as to such distribution with the Series A Preferred Stock, the amounts
paid to the holders of Series A Preferred Stock and to the holders of all such other shares will be paid ratably in accordance with
the respective aggregate liquidation preferences of those holders. In any such distribution, the “liquidation preference”
of any holder of preferred stock means the amount otherwise payable to such holder in such distribution (assuming no limitation on our
assets available for such distribution), including any accumulated but unpaid dividends (whether or not authorized or declared). If the
liquidation preference has been paid in full to all holders of Series A Preferred Stock and any of our other shares of capital stock
ranking equally as to the liquidation preference, the holders of our shares of capital stock ranking junior as to the liquidation preference
shall be entitled to receive all remaining assets of the Company according to their respective rights and preferences.
For purposes of this section, the merger or consolidation
of the Company with or into any other entity, a statutory share exchange or the sale, transfer or conveyance of all or substantially all
of the assets of the Company, for cash, securities or other property shall not constitute a liquidation, dissolution or winding up of
the Company. See “— Conversion Right upon a Change of Control” below for information about conversion of the Series A
Preferred Stock in the event of a change of control of the Company.
Limited
Voting Rights. Holders of the Series A Preferred Stock generally will have no voting rights. However, if we are in arrears
on dividends, whether or not authorized or declared, on the Series A Preferred Stock for six or more quarterly periods, whether or
not consecutive, holders of Series A Preferred Stock (voting as a single class together with the holders of all other classes or
series of parity preferred stock upon which like voting rights have been conferred and are exercisable) will be entitled to elect two
additional directors at a special meeting called upon the request of at least 10% of such holders or at our next annual meeting and at
each subsequent annual meeting of stockholders, each additional director being referred to as a “Preferred Stock Director,”
until all unpaid dividends with respect to the Series A Preferred Stock and such other classes or series of preferred stock with
like voting rights have been paid. Each Preferred Stock Director will be elected by a plurality of the votes cast by the outstanding shares
of Series A Preferred Stock and any other series of parity equity shares with like voting rights, voting together as a single class.
Special meetings called in accordance with the provisions described in this paragraph shall be subject to the procedures in our bylaws,
except that we, rather than the holders of Series A Preferred Stock or any other class or series of parity preferred stock entitled
to vote thereon when they have the voting rights described above (voting together as a single class), will pay all costs and expenses
of calling and holding the meeting.
Any Preferred Stock Director may be removed at
any time with or without cause by the vote of, and may not be removed otherwise than by the vote of, the holders of record of a majority
of the outstanding shares of Series A Preferred Stock and all other classes or series of parity preferred stock entitled to vote
thereon when they have the voting rights described above (voting together as a single class). So long as a dividend arrearage continues,
any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in
office, or if none remains in office, by a plurality of the votes cast by the outstanding shares of Series A Preferred Stock when
they have the voting rights described above (voting as a single class with all other classes or series of parity preferred stock upon
which like voting rights have been conferred and are exercisable).
So long as any shares of Series A Preferred
Stock remain outstanding, we will not, without the affirmative vote or written consent of the holders of at least two-thirds of the then
outstanding shares of Series A Preferred Stock and each other class or series of parity preferred stock with like voting rights (voting
together as a single class), authorize, create, issue or increase the number of authorized or issued shares of any class or series of
equity shares ranking senior to the Series A Preferred Stock with respect to rights of dividend payments and the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, or reclassify any of our authorized equity
shares into such equity shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase
such equity shares. However, we may create additional classes of parity equity shares and junior equity shares, amend or supplement our
charter to increase the authorized number of shares of parity equity shares (including the shares of Series A Preferred Stock) and
junior equity shares and issue additional series of parity equity shares and junior equity shares without the consent of any holder of
Series A Preferred Stock.
In addition, the affirmative vote or written consent
of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock and each other class or series of parity
preferred stock with like voting rights (voting together as a single class) is required for us to amend, alter or repeal any provision
of our charter, whether by merger, consolidation or otherwise, so as to materially and adversely affect the voting rights, powers or preferences
of the Series A Preferred Stock, unless the Series A Preferred Stock remains outstanding without the terms thereof being materially
adversely changed in any way adverse to the holders thereof or is converted into or exchanged for preferred stock of the surviving entity
having preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption thereof that are substantially similar to those of the Series A Preferred Stock. If such amendment to our
charter disproportionately affects the terms of the Series A Preferred Stock relative to the terms of one or more other classes or
series of parity preferred stock, the affirmative vote or written consent of the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock (voting separately as a class) is required.
In any matter in which holders of Series A
Preferred Stock may vote (as expressly provided in the terms of the Series A Preferred Stock), each holder of Series A Preferred
Stock shall be entitled to one vote per share.
Information
Rights. During any period in which we are not subject to Section 13 or 15(d) of the Exchange Act and any shares of
Series A Preferred Stock are outstanding, we will (i) post to our website or transmit by mail (or other permissible means under
the Exchange Act) to all holders of Series A Preferred Stock, as their names and addresses appear on our record books and without
cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, respectively, that we would
have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other
than any exhibits that would have been required) and (ii) promptly, upon request, supply copies of such reports to any holders or
prospective holder of Series A Preferred Stock. We will post to our website or mail (or otherwise provide) the information to the
holders of the Series A Preferred Stock within 15 days after the respective dates by which an annual report on Form 10-K or
a quarterly report on Form 10-Q, as the case may be, would have been required to be filed with the SEC if we were subject to Section 13
or 15(d) of the Exchange Act, in each case, based on the dates on which we would be required to file such periodic reports with the
SEC.
Listing.
The Series A Preferred Stock is listed on the NYSE under the symbol “GMRE PrA.”
Transfer
Agent, Registrar and Depositary. American Stock Transfer & Trust Company, LLC is the transfer agent, registrar, dividend
disbursing agent, redemption agent and depositary for the Series A Preferred Stock.
No
Maturity, Sinking Fund or Mandatory Redemption. Our Series A Preferred Stock is perpetual and has no maturity date, and
is not subject to any mandatory redemption, sinking fund or other similar provisions. Accordingly, our Series A Preferred Stock will
remain outstanding indefinitely, unless and until we decide to redeem them or they are converted in connection with a Change of Control
(as defined below) by the holders of the Series A Preferred Stock.
Redemption
at Our Option. We may, at our option, redeem our Series A Preferred Stock for cash in whole or in part, from time to time,
at any time, upon not less than 30 days nor more than 60 days’ notice, at a cash redemption price equal to $25.00 per share, plus
any accumulated and unpaid dividends (whether or not authorized or declared), to, but excluding, the date of redemption. Holders of Series A
Preferred Stock will have no right to require the redemption or repurchase of the Series A Preferred Stock. Investors should not
expect us to redeem the Series A Preferred Stock on any particular date in the future or at all.
If Series A Preferred Stock is to be redeemed,
the notice of redemption (which may be contingent upon the occurrence of a future event) shall be mailed, postage pre-paid, not less than
30 days nor more than 60 days prior to the date of redemption, addressed to the holders of record of the Series A Preferred Stock
at their addresses as they appear on the Company’s share transfer records (provided that, if the shares of Series A
Preferred Stock are held in book-entry form through the Depository Trust Company, or DTC, we may give such notice in any manner permitted
by DTC). A failure to give such notice or any defect in the notice or in its mailing shall not affect the validity of the proceedings
for the redemption of any Series A Preferred Stock except as to the holder to whom notice was defective or not given. In addition
to any information required by law or by the applicable rules of any exchange upon which the Series A Preferred Stock may be
listed for trading, each notice of redemption will include a statement setting forth: (i) the redemption date, (ii) the number
of shares of Series A Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder, (iii) the redemption price and (iv) the place or places where holders
may surrender certificates evidencing shares of Series A Preferred Stock for payment of the redemption price. If notice of redemption
of any Series A Preferred Stock has been given and if the funds necessary for such redemption have been set aside by us for the benefit
of the holders of any Series A Preferred Stock so called for redemption, then, from and after the redemption date, dividends will
cease to accrue on such Series A Preferred Stock, such Series A Preferred Stock shall no longer be deemed outstanding and all
rights of the holders of such shares will cease, except the right to receive the redemption price, without interest from the date of such
redemption.
In the case of any redemption of only part of
the Series A Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot.
We may also redeem the Series A Preferred
Stock in limited circumstances relating to maintaining our qualification as a REIT, as described below in “— Restrictions
on Ownership and Transfer.”
Special
Redemption Option upon a Change of Control. Upon the occurrence of a Change of Control (as defined below), we may redeem for
cash, in whole or in part, the Series A Preferred Stock within 120 days after the date on which such Change of Control occurred,
by paying $25.00 per share, plus any accumulated and unpaid dividends (whether or not authorized or declared), to, but excluding, the
date of redemption. If, prior to the Change of Control Conversion Date (as defined below under the caption “— Conversion Rights
upon a Change of Control”), we have provided or provide notice of redemption with respect to the Series A Preferred Stock (whether
pursuant to our optional redemption right or our special redemption option), the holders of Series A Preferred Stock will not be
permitted to exercise the conversion right described below under “— Conversion Rights upon a Change of Control” with
respect to the shares subject to such notice.
We will mail to you, if you are a record holder
of the Series A Preferred Stock, a notice of redemption no fewer than 30 days nor more than 60 days before the redemption date. We
will send the notice to your address shown on our transfer books. A failure to give notice of redemption or any defect in the notice or
in its mailing will not affect the validity of the redemption of any Series A Preferred Stock except as to the holder to whom notice
was defective. Each notice will state the following:
| ● | the special redemption price; |
| ● | a statement setting forth the calculation of such special redemption price; |
| ● | the number of shares of Series A Preferred Stock to be redeemed; |
| ● | the place or places where the certificates, if any, evidencing the shares of Series A Preferred Stock are to be surrendered for
payment of the redemption price; |
| ● | procedures for surrendering noncertificated shares of Series A Preferred Stock for payment of the redemption price; |
| ● | that dividends on the shares of Series A Preferred Stock to be redeemed will cease to accrue on such redemption date unless we
fail to pay the redemption price on such date; |
| ● | that payment of the redemption price and any accrued and unpaid dividends will be made upon presentation and surrender of such shares
of Series A Preferred Stock; |
| ● | that the shares of Series A Preferred Stock are being redeemed pursuant to our special redemption right in connection with the
occurrence of a Change of Control and a brief description of the transaction or transactions constituting such Change of Control; and |
| ● | that the holders of the shares of Series A Preferred Stock to which the notice relates will not be able to tender such shares
of Series A Preferred Stock for conversion in connection with the Change of Control and each share of Series A Preferred Stock
tendered for conversion that is selected, prior to the Change of Control Conversion Date, for redemption will be redeemed on the related
date of redemption instead of converted on the Change of Control Conversion Date. |
A “Change of Control” means, after
the initial issuance of the Series A Preferred Stock, the following have occurred and are continuing:
| ● | the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of
the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger, conversion or other acquisition transaction
or series of purchases, mergers, conversions or other acquisition transactions, of shares of our stock entitling that person to exercise
more than 50% of the total voting power of all outstanding shares of our stock entitled to vote generally in the election of directors
(except that the person will be deemed to have beneficial ownership of all securities that the person has the right to acquire, whether
the right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and |
| ● | following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has
a class of common equity securities listed on the NYSE, the NYSE American LLC or Nasdaq, or listed or quoted on an exchange or quotation
system that is a successor to the NYSE, NYSE American LLC or Nasdaq. |
Conversion
Right Upon a Change of Control. Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will
have the right (unless, prior to the Change of Control Conversion Date (as defined below), we have provided or provide notice of our election
to redeem, in whole or in part, the Series A Preferred Stock as described above under “— Redemption at Our Option”)
to convert some or all of the Series A Preferred Stock held by such holder (the “Change of Control Conversion Right”),
on the Change of Control Conversion Date into a number of shares of our common stock per share of Series A Preferred Stock to be
converted equal to the lesser of:
| ● | the quotient obtained by dividing (i) the sum of (x) the liquidation preference amount of $25.00 per share of Series A
Preferred Stock, plus (y) any accrued and unpaid dividends thereon (whether or not declared) to, but excluding, the Change of Control
Conversion Date (unless the Change of Control Conversion Date is after a record date for a Series A Preferred Stock dividend payment
for which dividends have been declared and prior to the corresponding Series A Preferred Stock dividend payment date, in which case
no additional amount for such accrued and unpaid dividend will be included in this sum and such declared dividend will instead be paid,
on such dividend payment date, to the holder of record of the share of Series A Preferred Stock to be converted as of 5:00 p.m. New
York City time, on such record date) by (ii) the Common Stock Share Price (as defined below); and |
| ● | 5.3419 (the “Share Cap”), subject to certain adjustments; |
subject, in each case, to provisions for the receipt of alternative
consideration as described below.
The Share Cap is subject to pro rata adjustments
for any share splits (including those effected pursuant to a distribution of our common stock), subdivisions or combinations (in each
case, a “Share Split”) with respect to our common stock as follows: the adjusted Share Cap as the result of a Share Split
will be the number of common stock that is equivalent to the product obtained by multiplying (i) the Share Cap in effect immediately
prior to such Share Split by (ii) a fraction, the numerator of which is the number of common stock outstanding after giving effect
to such Share Split and the denominator of which is the number of our common stock outstanding immediately prior to such Share Split.
In the case of a Change of Control pursuant to
which our common stock will be converted into cash, securities or other property or assets (including any combination thereof) (the “Alternative
Form Consideration”), a holder of Series A Preferred Stock will receive upon conversion of such Series A Preferred
Stock the kind and amount of Alternative Form Consideration that such holder would have owned or to which that holder would have
been entitled to receive upon the Change of Control had such holder held a number of shares of our common stock equal to the Common Stock
Conversion Consideration immediately prior to the effective time of the Change of Control (the “Alternative Conversion Consideration,”
and the Common Stock Conversion Consideration or the Alternative Conversion Consideration, as may be applicable to a Change of Control,
is referred to as the “Conversion Consideration”).
If the holders of our common stock have the opportunity
to elect the form of consideration to be received in the Change of Control, the Conversion Consideration will be deemed to be the kind
and amount of consideration actually received by holders of a majority of our common stock that voted for such an election (if electing
between two types of consideration) or holders of a plurality of our common stock that voted for such an election (if electing between
more than two types of consideration), as the case may be, and will be subject to any limitations to which all holders of our common stock
are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Change of
Control.
Within 15 days following the occurrence of a Change
of Control, we will provide to holders of Series A Preferred Stock a notice of occurrence of the Change of Control that describes
the resulting Change of Control Conversion Right. This notice will state the following:
| ● | the events constituting the Change of Control; |
| ● | the date of the Change of Control; |
| ● | the last date and time by which the holders of Series A Preferred Stock may exercise their Change of Control Conversion Right; |
| ● | the method and period for calculating the Common Stock Share Price; |
| ● | the Change of Control Conversion Date; |
| ● | that if, prior to the Change of Control Conversion Date, we have provided or provide notice of our election to redeem all or any portion
of the Series A Preferred Stock, holders will not be able to convert Series A Preferred Stock designated for redemption and
such shares will be redeemed on the related redemption date, even if such shares have already been tendered for conversion pursuant to
the Change of Control Conversion Right; |
| ● | if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per Series A Preferred Stock; |
| ● | the name and address of the paying agent and the conversion agent; and |
| ● | the procedures that the holders of Series A Preferred Stock must follow to exercise the Change of Control Conversion Right. |
We will issue a press release for publication
on the Dow Jones & Company, Inc., Business Wire, PR Newswire or Bloomberg Business News (or, if these organizations are
not in existence at the time of issuance of the press release, such other news or press organization as is reasonably calculated to broadly
disseminate the relevant information to the public), or post a notice on our website, in any event prior to the opening of business on
the first business day following any date on which we provide the notice described above to the holders of Series A Preferred Stock.
To exercise the Change of Control Conversion Right,
the holders of Series A Preferred Stock will be required to deliver, on or before the close of business on the Change of Control
Conversion Date, the certificates (if any) or book entries representing Series A Preferred Stock to be converted, duly endorsed for
transfer (if certificates are delivered), together with a completed written conversion notice to our transfer agent. The conversion notice
must state:
| ● | the relevant Change of Control Conversion Date; |
| ● | the number of Series A Preferred Stock to be converted; and |
| ● | that the Series A Preferred Stock are to be converted pursuant to the change of control conversion right held by holders of Series A
Preferred Stock. |
We will not issue fractional shares of common
stock upon the conversion of the Series A Preferred Stock. Instead, we will pay the cash value of any fractional share otherwise
due, computed on the basis of the applicable Common Stock Share Price.
The “Change of Control Conversion Date”
is the date on which the shares of Series A Preferred Stock are to be converted, which will be a business day selected by us that
is no fewer than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of Series A
Preferred Stock.
The “Common Stock Share Price” will
be (i) if the consideration to be received in the Change of Control by the holders of our common stock is solely cash, the amount
of cash consideration per share of common stock or (ii) if the consideration to be received in the Change of Control by holders of
our common stock is other than solely cash (x) the average of the closing sale prices per share of our common stock (or, if no closing
sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average
closing bid and the average closing ask prices) for the 10 consecutive trading days immediately preceding, but not including, the effective
date of the Change of Control as reported on the principal U.S. securities exchange on which our common stock is then traded, or (y) the
average of the last quoted bid prices for our common stock in the over-the-counter market as reported by OTC Markets Group, Inc.
or similar organization for the 10 consecutive trading days immediately preceding, but not including, the effective date of the Change
of Control, if our common stock is not then listed for trading on a U.S. securities exchange.
Restrictions on Ownership and Transfer
For us to qualify and maintain our qualification
as a REIT under the Code, our shares of capital stock must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part
of a shorter taxable year. Also, not more than 50% of the value of our outstanding shares of capital stock may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the
first year for which an election to be a REIT has been made).
To assist us in maintaining our qualification
as a REIT, among other purposes, our charter, subject to certain exceptions, restricts the amount of shares of our stock that a person
may beneficially or constructively own. Our charter provides that, subject to certain exceptions, no person may beneficially or constructively
own more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of
our capital stock.
Our charter also prohibits any person from (i) beneficially
owning our shares of capital stock to the extent that such beneficial ownership would result in our being “closely held” within
the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of
the taxable year), (ii) transferring our shares of capital stock to the extent that such transfer would result in our shares of capital
stock being beneficially owned by less than 100 persons (determined under the principles of Section 856(a)(5) of the Code),
(iii) beneficially or constructively owning our shares of capital stock to the extent such beneficial or constructive ownership would
cause us to constructively own 10% or more of the ownership interests in a tenant (other than a taxable REIT subsidiary (“TRS”))
of our real property within the meaning of Section 856(d)(2)(B) of the Code and (iv) beneficially or constructively owning
our shares of capital stock if such beneficial or constructive ownership would otherwise cause us to fail to qualify as a REIT under the
Code, including, but not limited to, as a result of any operator that manages a “qualified healthcare property” for a TRS
of ours failing to qualify as an “eligible independent contractor” under the REIT rules. Any person who acquires or attempts
or intends to acquire beneficial or constructive ownership of our shares of capital stock that will or may violate any of the foregoing
restrictions on transferability and ownership, or any person who would have owned our shares of capital stock that resulted in a transfer
of shares of our capital stock to a charitable trust (as described below), is required to give written notice immediately to us, or in
the case of a proposed or attempted transaction, to give at least 15 days’ prior written notice, and provide us with such other
information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on
transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to continue
to qualify as a REIT.
Our board of directors, in its sole discretion,
may prospectively or retroactively exempt a person from the limits described in the paragraph above and may establish or increase an excepted
holder limit (as defined in our charter) for such person. The person seeking an exemption must provide to our board of directors such
representations, covenants and undertakings as our board of directors may deem appropriate in order to conclude that granting the exemption
and establishing or increasing the excepted holder limit will not cause us to lose our status as a REIT. Our board of directors may require
a ruling from the Internal Revenue Service (“IRS”) or an opinion of counsel, in either case in form and substance satisfactory
to the board of directors, in its sole discretion, in order to ensure our status as a REIT.
Any attempted transfer of our shares of capital
stock which, if effective, would violate any of the restrictions described above will result in the number of shares of our capital stock
causing the violation (rounded up to the nearest whole share) to be automatically transferred to a trust for the exclusive benefit of
one or more charitable beneficiaries, except that any transfer that results in the violation of the restriction relating to our shares
of capital stock being beneficially owned by fewer than 100 persons will be void ab initio. In either case, the proposed transferee will
not acquire any rights in such shares. The automatic transfer will be deemed to be effective as of the close of business on the business
day prior to the date of the purported transfer or other event that results in the transfer to the trust. Shares held in the trust will
be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares held in the trust,
will have no rights to dividends or other distributions and will have no rights to vote or other rights attributable to the shares held
in the trust. The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares
held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution
paid prior to our discovery that shares have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any
distribution authorized but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be
held in trust for the charitable beneficiary. Subject to Maryland law, the trustee will have the authority (i) to rescind as void
any vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast
the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already
taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.
Within 20 days of receiving notice from us that
shares of stock have been transferred to the trust, the trustee will sell the shares to a person designated by the trustee, whose ownership
of the shares will not violate the above ownership and transfer limitations. Upon the sale, the interest of the charitable beneficiary
in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the proposed transferee and to the charitable
beneficiary as follows: the proposed transferee will receive the lesser of (i) the price paid by the proposed transferee for the
shares or, if the proposed transferee did not give value for the shares in connection with the event causing the shares to be held in
the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of
the event causing the shares to be held in the trust and (ii) the price received by the trustee (net of any commission and other
expenses of sale) from the sale or other disposition of the shares. The trustee may reduce the amount payable to the proposed transferee
by the amount of dividends or other distributions paid to the proposed transferee and owed by the proposed transferee to the trustee.
Any net sale proceeds in excess of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary.
If, prior to our discovery that our shares of capital stock have been transferred to the trust, the shares are sold by the proposed transferee,
then (i) the shares shall be deemed to have been sold on behalf of the trust and (ii) to the extent that the proposed transferee
received an amount for the shares that exceeds the amount he or she was entitled to receive, the excess shall be paid to the trustee upon
demand.
If a transfer to a charitable trust, as described
above, would be ineffective for any reason to prevent a violation of a restriction, the transfer that would have resulted in such violation
will be void ab initio, and the proposed transferee shall acquire no rights in such shares.
Every owner of more than 5% (or such lower percentage
as required by the Code or the regulations promulgated thereunder) of our shares of capital stock, within 30 days after the end of each
taxable year, is required to give us written notice, stating his or her name and address, the number of shares of each class and series
of our stock that he or she beneficially owns and a description of the manner in which the shares are held. Each such owner will provide
us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on
our status as a REIT and to ensure compliance with the ownership limits. In addition, each stockholder will upon demand be required to
provide us with such information as we may request in good faith in order to determine our status as a REIT and to comply with the requirements
of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the stock ownership limit.
These ownership limitations could delay, defer
or prevent a transaction or a change in control that might involve a premium price for our shares of capital stock or otherwise be in
the best interest of our stockholders.
Description
of Debt Securities
General
The debt securities offered by this prospectus
will be our direct unsecured general obligations. This prospectus describes certain general terms of the debt securities offered through
this prospectus. In the following discussion, we refer to any of our direct unsecured general obligations as the “Debt Securities.”
When we offer to sell a particular series of Debt Securities, we will describe the specific terms of that series in a prospectus supplement
or any free writing prospectus. The Debt Securities will be issued under an open-ended Indenture (for Debt Securities) between us and
a trustee to be elected by us at or about the time we offer our Debt Securities. The open-ended Indenture (for Debt Securities) is incorporated
by reference into the registration statement of which this prospectus is a part and is filed as an exhibit to the registration statement.
In this prospectus we refer to the Indenture (for Debt Securities) as the “Debt Securities Indenture.” We refer to the trustee
under any Debt Securities Indenture as the “Debt Securities Trustee.”
The prospectus supplement or any free writing
prospectus applicable to a particular series of Debt Securities may state that a particular series of Debt Securities will be our subordinated
obligations. The form of Debt Securities Indenture referred to above includes optional provisions (designated by brackets (“[ ]”))
that we would expect to appear in a separate indenture for subordinated debt securities in the event we issue subordinated debt securities.
In the following discussion, we refer to any of our subordinated obligations as the “Subordinated Debt Securities.” Unless
the applicable prospectus supplement or any free writing prospectus provides otherwise, we will use a separate Debt Securities Indenture
for any Subordinated Debt Securities that we may issue. Our Debt Securities Indenture will be qualified under the Trust Indenture Act
of 1939, as amended (the “Trust Indenture Act”), and you should refer to the Trust Indenture Act for the provisions that apply
to the Debt Securities.
We have summarized selected provisions of the
Debt Securities Indenture below. Each Debt Securities Indenture will be independent of any other Debt Securities Indenture unless otherwise
stated in a prospectus supplement or any free writing prospectus. The summary that follows is not complete and the summary is qualified
in its entirety by reference to the provisions of the applicable Debt Securities Indenture. You should consult the applicable Debt Securities,
Debt Securities Indenture, any supplemental indentures, officers’ certificates and other related documents for more complete information
on the Debt Securities. These documents appear as exhibits to, or are incorporated by reference into, the registration statement of which
this prospectus is a part, or will appear as exhibits to other documents that we will file with the SEC, which will be incorporated by
reference into this prospectus. In the summary below, we have included references to applicable section numbers of the Debt Securities
Indenture so that you can easily locate these provisions.
Ranking
Our Debt Securities that are not designated Subordinated
Debt Securities will be effectively subordinated to all secured indebtedness that we have outstanding from time to time to the extent
of the value of the collateral securing such secured indebtedness. Our Debt Securities that are designated Subordinated Debt Securities
will be subordinate to all outstanding secured indebtedness as well as Debt Securities that are not designated Subordinated Debt Securities.
The Indenture (for Debt Securities) does not limit the amount of secured indebtedness that we may issue or incur.
We conduct substantially all of our operations,
and make substantially all of our investments, through our operating partnership and its subsidiaries. Our ability to meet our financial
obligations with respect to any future Debt Securities, and cash needs generally, is dependent on our operating cash flow, our ability
to access various sources of short- and long-term liquidity, including our bank facilities, the capital markets and distributions from
our subsidiaries. Holders of our Debt Securities will effectively have a junior position to claims of creditors of our subsidiaries, including
trade creditors, debt holders, secured creditors, taxing authorities and guarantee holders.
Provisions of a Particular Series
The Debt Securities may from time to time be issued
in one or more series. You should consult the prospectus supplement or free writing prospectus relating to any particular series of Debt
Securities for the following information:
| ● | the title of the Debt Securities; |
| ● | any limit on aggregate principal amount of the Debt Securities or the series of which they are a part; |
| ● | the date(s), or method for determining the date(s), on which the principal of the Debt Securities will be payable; |
| ● | the rate, including the method of determination if applicable, at which the Debt Securities will bear interest, if any, and |
| ● | the date from which any interest will accrue; |
| ● | the dates on which we will pay interest; |
| ● | our ability to defer interest payments and any related restrictions during any interest deferral period; and |
| ● | the record date for any interest payable on any interest payment date; |
| ● | the principal of, premium, if any, and interest on the Debt Securities will be payable; |
| ● | you may register transfer of the Debt Securities; |
| ● | you may exchange the Debt Securities; and |
| ● | you may serve notices and demands upon us regarding the Debt Securities; |
| ● | the security registrar for the Debt Securities and whether the principal of the Debt Securities is payable without presentment or
surrender of them; |
| ● | the terms and conditions upon which we may elect to redeem any Debt Securities, including any replacement capital or similar covenants
limiting our ability to redeem any Subordinated Debt Securities; |
| ● | the denominations in which we may issue Debt Securities, if other than $1,000 and integral multiples of $1,000; |
| ● | the terms and conditions upon which the Debt Securities must be redeemed or purchased due to our obligations pursuant to any sinking
fund or other mandatory redemption or tender provisions, or at the holder’s option, including any applicable exceptions to notice
requirements; |
| ● | the currency, if other than United States currency, in which payments on the Debt Securities will be payable; |
| ● | the terms according to which elections can be made by us or the holder regarding payments on the Debt Securities in currency other
than the currency in which the Debt Securities are stated to be payable; |
| ● | if payments are to be made on the Debt Securities in securities or other property, the type and amount of the securities and other
property or the method by which the amount shall be determined; |
| ● | the manner in which we will determine any amounts payable on the Debt Securities that are to be determined with reference to an index
or other fact or event ascertainable outside the applicable indenture; |
| ● | if other than the entire principal amount, the portion of the principal amount of the Debt Securities payable upon declaration of
acceleration of their maturity; |
| ● | any addition to the events of default applicable to any Debt Securities and any additions to our covenants for the benefit of the
holders of the Debt Securities; |
| ● | the terms applicable to any rights to convert Debt Securities into or exchange them for other of our securities or those of any other
entity; |
| ● | whether we are issuing Debt Securities as global securities, and if so, |
| ● | any limitations on transfer or exchange rights or the right to obtain the registration of transfer; |
| ● | any limitations on the right to obtain definitive certificates for the Debt Securities; and |
| ● | any other matters incidental to the Debt Securities; |
| ● | whether we are issuing the Debt Securities as bearer securities; |
| ● | any limitations on transfer or exchange of Debt Securities or the right to obtain registration of their transfer, and the terms and
amount of any service charge required for registration of transfer or exchange; |
| ● | any exceptions to the provisions governing payments due on legal holidays, or any variations in the definition of business day with
respect to the Debt Securities; |
| ● | any collateral security, assurance, guarantee or other credit enhancement applicable to the Debt Securities; |
| ● | any other terms of the Debt Securities not in conflict with the provisions of the applicable Debt Securities Indenture; and |
| ● | the material U.S. federal income tax consequences applicable to the Debt Securities. |
For more information, see Section 301 of
the applicable Debt Securities Indenture.
Debt Securities may be sold at a substantial discount
below their principal amount. You should consult the applicable prospectus supplement or free writing prospectus for a description of
certain material U.S. federal income tax considerations that may apply to Debt Securities sold at an original issue discount or denominated
in a currency other than dollars.
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, the covenants contained in the applicable indenture will not afford holders of Debt Securities
protection in the event we have a change in control or are involved in a highly-leveraged transaction.
Subordination
The applicable prospectus supplement or free writing
prospectus may provide that a series of Debt Securities will be Subordinated Debt Securities, subordinate and junior in right of payment
to all of our Senior Indebtedness, as defined below. If so, we will issue these securities under a separate Debt Securities Indenture
for Subordinated Debt Securities. For more information, see Article XV of the form of Debt Securities Indenture.
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, no payment of principal of, including redemption and sinking fund payments, or any premium or
interest on, the Subordinated Debt Securities may be made if:
| ● | there occur certain acts of bankruptcy, insolvency, liquidation, dissolution or other winding up of our company; |
| ● | any Senior Indebtedness is not paid when due; |
| ● | any applicable grace period with respect to other defaults with respect to any Senior Indebtedness has ended, the default has not
been cured or waived and the maturity of such Senior Indebtedness has been accelerated because of the default; or |
| ● | the maturity of the Subordinated Debt Securities of any series has been accelerated because of a default and Senior Indebtedness is
then outstanding. |
Upon any distribution of our assets to creditors
upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership
or other proceedings, all principal of, and any premium and interest due or to become due on, all outstanding Senior Indebtedness must
be paid in full before the holders of the Subordinated Debt Securities are entitled to payment. For more information, see Section 1502
of the applicable Debt Securities Indenture. The rights of the holders of the Subordinated Debt Securities will be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on
the Subordinated Debt Securities are paid in full. For more information, see Section 1504 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, the term “Senior Indebtedness” means all obligations (other than non-recourse obligations
and the indebtedness issued under the Subordinated Debt Securities Indenture) of, or guaranteed or assumed by, us:
| ● | for borrowed money (including both senior and subordinated indebtedness for borrowed money, but excluding the Subordinated Debt Securities); |
| ● | for the payment of money relating to any lease that is capitalized on our consolidated balance sheet in accordance with generally
accepted accounting principles; or |
| ● | indebtedness evidenced by bonds, debentures, notes or other similar instruments. |
In the case of any such indebtedness or obligations,
Senior Indebtedness includes amendments, renewals, extensions, modifications and refundings, whether existing as of the date of the Subordinated
Debt Securities Indenture or subsequently incurred by us.
The Subordinated Debt Securities Indenture does
not limit the aggregate amount of Senior Indebtedness that we may issue.
Form, Exchange and Transfer
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, we will issue Debt Securities only in fully registered form without coupons and in denominations
of $1,000 and integral multiples of that amount. For more information, see Sections 201 and 302 of the applicable Debt Securities Indenture.
Holders may present Debt Securities for exchange
or for registration of transfer, duly endorsed or accompanied by a duly executed instrument of transfer, at the office of the security
registrar or at the office of any transfer agent we may designate. Exchanges and transfers are subject to the terms of the applicable
indenture and applicable limitations for global securities. We may designate ourselves the security registrar.
No charge will be made for any registration of
transfer or exchange of Debt Securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge
that the holder must pay in connection with the transaction. Any transfer or exchange will become effective upon the security registrar
or transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. For
more information, see Section 305 of the applicable Debt Securities Indenture.
The applicable prospectus supplement or free writing
prospectus will state the name of any transfer agent, in addition to the security registrar initially designated by us, for any Debt Securities.
We may at any time designate additional transfer agents or withdraw the designation of any transfer agent or make a change in the office
through which any transfer agent acts. We must, however, maintain a transfer agent in each place of payment for the Debt Securities of
each series. For more information, see Section 602 of the applicable Debt Securities Indenture.
We will not be required to:
| ● | issue, register the transfer of, or exchange any Debt Securities or any tranche of any Debt Securities during a period beginning at
the opening of business 15 days before the day of mailing of a notice of redemption of any Debt Securities called for redemption and ending
at the close of business on the day of mailing; or |
| ● | register the transfer of, or exchange any Debt Securities selected for redemption except the unredeemed portion of any Debt Securities
being partially redeemed. |
For more information, see Section 305 of
the applicable Debt Securities Indenture.
Payment and Paying Agents
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, we will pay interest on a Debt Security on any interest payment date to the person in whose
name the Debt Security is registered at the close of business on the regular record date for the interest payment. For more information,
see Section 307 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or
free writing prospectus provides otherwise, we will pay principal and any premium and interest on Debt Securities at the office of the
paying agent whom we will designate for this purpose. Unless the applicable prospectus supplement or free writing prospectus states otherwise,
the corporate trust office of the Debt Securities Trustee in New York City will be designated as our sole paying agent for payments with
respect to Debt Securities of each series. Any other paying agents initially designated by us for the Debt Securities of a particular
series will be named in the applicable prospectus supplement or free writing prospectus. We may at any time add or delete paying agents
or change the office through which any paying agent acts. We must, however, maintain a paying agent in each place of payment for the Debt
Securities of a particular series. For more information, see Section 602 of the applicable Debt Securities Indenture.
All money we pay to a paying agent for the payment
of the principal and any premium or interest on any Debt Security that remains unclaimed at the end of two years after payment is due
will be repaid to us. After that date, the holder of that Debt Security shall be deemed an unsecured general creditor and may look only
to us for these payments. For more information, see Section 603 of the applicable Debt Securities Indenture.
Redemption
You should consult the applicable prospectus supplement
or free writing prospectus for any terms regarding optional or mandatory redemption of Debt Securities. Except for any provisions in the
applicable prospectus supplement or free writing prospectus regarding Debt Securities redeemable at the holder’s option, Debt Securities
may be redeemed only upon notice by mail not less than 30 nor more than 60 days prior to the redemption date. Further, if less than all
of the Debt Securities of a series, or any tranche of a series, are to be redeemed, the Debt Securities to be redeemed will be selected
by the method provided for the particular series. In the absence of a selection provision, the Debt Securities Trustee will select a fair
and appropriate method of selection. For more information, see Sections 403 and 404 of the applicable Debt Securities Indenture.
A notice of redemption we provide may state:
| ● | that redemption is conditioned upon receipt by the paying agent on or before the redemption date of money sufficient to pay the principal
of and any premium and interest on the Debt Securities; and |
| ● | that if the money has not been received, the notice will be ineffective and we will not be required to redeem the Debt Securities. |
For more information, see Section 404 of
the applicable Debt Securities Indenture.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into any
other person, nor may we transfer or lease substantially all of our assets and property to any other person, unless:
| ● | the corporation formed by the consolidation or into which we are merged, or the person that acquires by conveyance or transfer, or
that leases, substantially all of our property and assets: |
| ● | is organized and validly existing under the laws of any domestic jurisdiction; |
| ● | expressly assumes by supplemental indenture our obligations on the Debt Securities and under the applicable indentures; |
| ● | immediately after giving effect to the transaction, no event of default, and no event that would become an event of default, has occurred
and is continuing; and |
| ● | we have delivered to the Debt Securities Trustee an officer’s certificate and opinion of counsel as provided in the applicable
indentures. |
For more information, see Section 1101 of
the applicable Debt Securities Indenture.
Events of Default
Unless the applicable prospectus supplement or
free writing prospectus states otherwise, “event of default” under the applicable indenture with respect to Debt Securities
of any series means any of the following:
| ● | failure to pay any interest due on any Debt Security of that series within 30 days after it becomes due; |
| ● | failure to pay principal or premium, if any, when due on any Debt Security of that series; |
| ● | failure to make any required sinking fund payment on any Debt Securities of that series; |
| ● | breach of or failure to perform any other covenant or warranty in the applicable indenture with respect to Debt Securities of that
series for 60 days (subject to extension under certain circumstances for another 120 days) after we receive notice from the Debt Securities
Trustee, or we and the Debt Securities Trustee receive notice from the holders of at least 33% in principal amount of the Debt Securities
of that series outstanding under the applicable indenture according to the provisions of the applicable indenture; |
| ● | certain events of bankruptcy, insolvency or reorganization; or |
| ● | any other event of default set forth in the applicable prospectus supplement or free writing prospectus. |
For more information, see Section 801 of
the applicable Debt Securities Indenture.
An event of default with respect to a particular
series of Debt Securities does not necessarily constitute an event of default with respect to the Debt Securities of any other series
issued under the applicable indenture.
If an event of default with respect to a particular
series of Debt Securities occurs and is continuing, either the Debt Securities Trustee or the holders of at least 33% in principal amount
of the outstanding Debt Securities of that series may declare the principal amount of all of the Debt Securities of that series to be
due and payable immediately. If the Debt Securities of that series are discount securities or similar Debt Securities, only the portion
of the principal amount as specified in the applicable prospectus supplement or free writing prospectus may be immediately due and payable.
If an event of default occurs and is continuing with respect to all series of Debt Securities issued under a Debt Securities Indenture,
including all events of default relating to bankruptcy, insolvency or reorganization, the Debt Securities Trustee or the holders of at
least 33% in principal amount of the outstanding Debt Securities of all series issued under that Debt Securities Indenture, considered
together, may declare an acceleration of the principal amount of all series of Debt Securities issued under that Debt Securities Indenture.
There is no automatic acceleration, even in the event of our bankruptcy or insolvency.
The applicable prospectus supplement or free writing
prospectus may provide, with respect to a series of Debt Securities to which a credit enhancement is applicable, that the provider of
the credit enhancement may, if a default has occurred and is continuing with respect to the series, have all or any part of the rights
with respect to remedies that would otherwise have been exercisable by the holder of that series.
At any time after a declaration of acceleration
with respect to the Debt Securities of a particular series, and before a judgment or decree for payment of the money due has been obtained,
the event of default giving rise to the declaration of acceleration will, without further action, be deemed to have been waived, and the
declaration and its consequences will be deemed to have been rescinded and annulled, if:
| ● | we have paid or deposited with the Debt Securities Trustee a sum sufficient to pay: |
| ● | all overdue interest on all Debt Securities of the particular series; |
| ● | the principal of and any premium on any Debt Securities of that series that have become due otherwise than by the declaration of acceleration
and any interest at the rate prescribed in the Debt Securities; |
| ● | interest upon overdue interest at the rate prescribed in the Debt Securities, to the extent payment is lawful; and |
| ● | all amounts due to the Debt Securities Trustee under the applicable indenture; and |
| ● | any other event of default with respect to the Debt Securities of the particular series, other than the failure to pay the principal
of the Debt Securities of that series that has become due solely by the declaration of acceleration, has been cured or waived as provided
in the applicable indenture. |
For more information, see Section 802 of
the applicable Debt Securities Indenture.
The applicable Debt Securities Indenture includes
provisions as to the duties of the Debt Securities Trustee in case an event of default occurs and is continuing. Consistent with these
provisions, the Debt Securities Trustee will be under no obligation to exercise any of its rights or powers at the request or direction
of any of the holders unless those holders have offered to the Debt Securities Trustee reasonable indemnity against the costs, expenses
and liabilities that may be incurred by it in compliance with such request or direction. For more information, see Section 903 of
the applicable Debt Securities Indenture. Subject to these provisions for indemnification, the holders of a majority in principal amount
of the outstanding Debt Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available
to the Debt Securities Trustee, or exercising any trust or power conferred on the Debt Securities Trustee, with respect to the Debt Securities
of that series. For more information, see Section 812 of the applicable Debt Securities Indenture.
No holder of Debt Securities may institute any
proceeding regarding the applicable indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the applicable
indenture unless:
| ● | the holder has previously given to the Debt Securities Trustee written notice of a continuing event of default of that particular
series; |
| ● | the holders of a majority in principal amount of the outstanding Debt Securities of all series with respect to which an event of default
is continuing have made a written request to the Debt Securities Trustee, and have offered reasonable indemnity to the Debt Securities
Trustee, to institute the proceeding as trustee; and |
| ● | the Debt Securities Trustee has failed to institute the proceeding, and has not received from the holders of a majority in principal
amount of the outstanding Debt Securities of that series a direction inconsistent with the request, within 60 days after notice, request
and offer of reasonable indemnity. |
For more information, see Section 807 of
the applicable Debt Securities Indenture.
The preceding limitations do not apply, however,
to a suit instituted by a holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on the
Debt Securities on or after the applicable due date stated in the Debt Securities. For more information, see Section 808 of the applicable
Debt Securities Indenture.
We must furnish annually to the Debt Securities
Trustee a statement by an appropriate officer as to that officer’s knowledge of our compliance with all conditions and covenants
under each of the indentures for Debt Securities. Our compliance is to be determined without regard to any grace period or notice requirement
under the respective indenture. For more information, see Section 606 of the applicable Debt Securities Indenture.
Modification and Waiver
We and the Debt Securities Trustee, without the
consent of the holders of the Debt Securities, may enter into one or more supplemental indentures for any of the following purposes:
| ● | to evidence the assumption by any permitted successor of our covenants in the applicable indenture and the Debt Securities; |
| ● | to add one or more covenants or other provisions for the benefit of the holders of outstanding Debt Securities or to surrender any
right or power conferred upon us by the applicable indenture; |
| ● | to add any additional events of default; |
| ● | to change or eliminate any provision of the applicable indenture or add any new provision to it, but if this action would adversely
affect the interests of the holders of any particular series of Debt Securities in any material respect, the action will not become effective
with respect to that series while any Debt Securities of that series remain outstanding under the applicable indenture; |
| ● | to provide collateral security for the Debt Securities; |
| ● | to establish the form or terms of Debt Securities according to the provisions of the applicable indenture; |
| ● | to evidence the acceptance of appointment of a successor Debt Securities Trustee under the applicable indenture with respect to one
or more series of the Debt Securities and to add to or change any of the provisions of the applicable indenture as necessary to provide
for trust administration under the applicable indenture by more than one trustee; |
| ● | to provide for the procedures required to permit the use of a non-certificated system of registration for any series of Debt Securities; |
| ● | to change any place where: |
| ● | the principal of and any premium and interest on any Debt Securities are payable; |
| ● | any Debt Securities may be surrendered for registration of transfer or exchange; or |
| ● | notices and demands to or upon us regarding Debt Securities and the applicable indentures may be served; or |
| ● | to cure any ambiguity or inconsistency, but only by means of changes or additions that will not adversely affect the interests of
the holders of Debt Securities of any series in any material respect. |
For more information, see Section 1201 of
the applicable Debt Securities Indenture.
The holders of at least a majority in aggregate
principal amount of the outstanding Debt Securities of any series may waive:
| ● | compliance by us with certain provisions of the applicable indenture (see Section 607 of the applicable Debt Securities Indenture);
and |
| ● | any past default under the applicable indenture, except a default in the payment of principal, premium, or interest and certain covenants
and provisions of the applicable indenture that cannot be modified or amended without consent of the holder of each outstanding Debt Security
of the series affected (see Section 813 of the applicable Debt Securities Indenture). |
The Trust Indenture Act may be amended after the
date of the applicable indenture to require changes to the indenture. In this event, the indenture will be deemed to have been amended
so as to effect the changes, and we and the Debt Securities Trustee may, without the consent of any holders, enter into one or more supplemental
indentures to evidence or effect the amendment. For more information, see Section 1201 of the applicable Debt Securities Indenture.
Except as provided in this section, the consent
of the holders of a majority in aggregate principal amount of the outstanding Debt Securities issued pursuant to a Debt Securities Indenture,
considered as one class, is required to change in any manner the applicable indenture pursuant to one or more supplemental indentures.
If less than all of the series of Debt Securities outstanding under a Debt Securities Indenture are directly affected by a proposed supplemental
indenture, however, only the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of
all series directly affected, considered as one class, will be required. Furthermore, if the Debt Securities of any series have been issued
in more than one tranche and if the proposed supplemental indenture directly affects the rights of the holders of one or more, but not
all, tranches, only the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of all tranches
directly affected, considered as one class, will be required. In addition, an amendment or modification:
| ● | may not, without the consent of the holder of each outstanding Debt Security affected: |
| ● | change the maturity of the principal of, or any installment of principal of or interest on, any Debt Securities; |
| ● | reduce the principal amount or the rate of interest, or the amount of any installment of interest, or change the method of calculating
the rate of interest; |
| ● | reduce any premium payable upon the redemption of the Debt Securities; |
| ● | reduce the amount of the principal of any Debt Security originally issued at a discount from the stated principal amount that would
be due and payable upon a declaration of acceleration of maturity; |
| ● | change the currency or other property in which a Debt Security or premium or interest on a Debt Security is payable; or |
| ● | impair the right to institute suit for the enforcement of any payment on or after the stated maturity, or in the case of redemption,
on or after the redemption date, of any Debt Securities; |
| ● | may not reduce the percentage of principal amount requirement for consent of the holders for any supplemental indenture, or for any
waiver of compliance with any provision of or any default under the applicable indenture, or reduce the requirements for quorum or voting,
without the consent of the holder of each outstanding Debt Security of each series or tranche affected; and |
| ● | may not modify provisions of the applicable indenture relating to supplemental indentures, waivers of certain covenants and waivers
of past defaults with respect to the Debt Securities of any series, or any tranche of a series, without the consent of the holder of each
outstanding Debt Security affected. |
A supplemental indenture will be deemed not to
affect the rights under the applicable indenture of the holders of any series or tranche of the Debt Securities if the supplemental indenture:
| ● | changes or eliminates any covenant or other provision of the applicable indenture expressly included solely for the benefit of one
or more other particular series of Debt Securities or tranches thereof; or |
| ● | modifies the rights of the holders of Debt Securities of any other series or tranches with respect to any covenant or other provision. |
For more information, see Section 1202 of
the applicable Debt Securities Indenture.
If we solicit from holders of the Debt Securities
any type of action, we may at our option by board resolution fix in advance a record date for the determination of the holders entitled
to vote on the action. We shall have no obligation, however, to do so. If we fix a record date, the action may be taken before or after
the record date, but only the holders of record at the close of business on the record date shall be deemed to be holders for the purposes
of determining whether holders of the requisite proportion of the outstanding Debt Securities have authorized the action. For that purpose,
the outstanding Debt Securities shall be computed as of the record date. Any holder action shall bind every future holder of the same
security and the holder of every security issued upon the registration of transfer of or in exchange for or in lieu of the security in
respect of anything done or permitted by the Debt Securities Trustee or us in reliance on that action, whether or not notation of the
action is made upon the security. For more information, see Section 104 of the applicable Debt Securities Indenture.
Defeasance
Unless the applicable prospectus supplement or
free writing prospectus provides otherwise, any Debt Security, or portion of the principal amount of a Debt Security, will be deemed to
have been paid for purposes of the applicable indenture, and, at our election, our entire indebtedness in respect of the Debt Security,
or portion thereof, will be deemed to have been satisfied and discharged, if we have irrevocably deposited with the Debt Securities Trustee
or any paying agent other than us, in trust money, certain eligible obligations, as defined in the applicable indenture, or a combination
of the two, sufficient to pay principal of and any premium and interest due and to become due on the Debt Security or portion thereof.
For more information, see Section 701 of the applicable Debt Securities Indenture. For this purpose, unless the applicable prospectus
supplement or free writing prospectus provides otherwise, eligible obligations include direct obligations of, or obligations unconditionally
guaranteed by, the United States, entitled to the benefit of full faith and credit of the United States, and certificates, depositary
receipts or other instruments that evidence a direct ownership interest in those obligations or in any specific interest or principal
payments due in respect of those obligations.
Resignation, Removal of Debt Securities Trustee; Appointment of
Successor
The Debt Securities Trustee may resign at any
time by giving written notice to us or may be removed at any time by an action of the holders of a majority in principal amount of outstanding
Debt Securities delivered to the Debt Securities Trustee and us. No resignation or removal of the Debt Securities Trustee and no appointment
of a successor trustee will become effective until a successor trustee accepts appointment in accordance with the requirements of the
applicable indenture. So long as no event of default or event that would become an event of default has occurred and is continuing, and
except with respect to a Debt Securities Trustee appointed by an action of the holders, if we have delivered to the Debt Securities Trustee
a resolution of our board of trustees appointing a successor trustee and the successor trustee has accepted the appointment in accordance
with the terms of the applicable indenture, the Debt Securities Trustee will be deemed to have resigned and the successor trustee will
be deemed to have been appointed as trustee in accordance with the applicable indenture. For more information, see Section 910 of
the applicable Debt Securities Indenture.
Notices
We will give notices to holders of Debt Securities
by mail to their addresses as they appear in the Debt Security Register. For more information, see Section 106 of the applicable
Debt Securities Indenture.
Title
The Debt Securities Trustee and its agents, and
we and our agents, may treat the person in whose name a Debt Security is registered as the absolute owner of that Debt Security, whether
or not that Debt Security may be overdue, for the purpose of making payment and for all other purposes. For more information, see Section 308
of the applicable Debt Securities Indenture.
Governing Law
The Debt Securities Indentures and the Debt Securities,
including any Subordinated Debt Securities Indentures and Subordinated Debt Securities, will be governed by, and construed in accordance
with, the law of the State of New York. For more information, see Section 112 of the applicable Debt Securities Indenture.
Legal
Ownership of Securities
We can issue securities in registered form or
in the form of one or more global securities. We describe global securities in greater detail below. We refer to those persons who have
securities registered in their own names on the books that we or any applicable trustee maintain for this purpose as the “holders”
of those securities. These persons are the legal holders of the securities. We refer to those persons who, indirectly through others,
own beneficial interests in securities that are not registered in their own names, as “indirect holders” of those securities.
As we discuss below, indirect holders are not legal holders, and investors in securities issued in book-entry form or in street name will
be indirect holders.
Book-Entry Holders
We may issue securities in book-entry form only,
as we will specify in the accompanying prospectus supplement. This means securities may be represented by one or more global securities
registered in the name of a financial institution that holds them as depositary on behalf of other financial institutions that participate
in the depositary’s book-entry system. These participating institutions, which are referred to as participants, in turn, hold beneficial
interests in the securities on behalf of themselves or their customers.
Only the person in whose name a security is registered
is recognized as the holder of that security. Securities issued in global form will be registered in the name of the depositary or its
participants. Consequently, for securities issued in global form, we will recognize only the depositary as the holder of the securities,
and we will make all payments on the securities to the depositary. The depositary passes along the payments it receives to its participants,
which in turn pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under
agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the securities.
As a result, investors in a book-entry security
will not own securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial
institution that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the securities
are issued in global form, investors will be indirect holders, and not holders, of the securities.
Street Name Holders
We may terminate a global security or issue securities
in non-global form. In these cases, investors may choose to hold their securities in their own names or in “street name.”
Securities held by an investor in street name would be registered in the name of a bank, broker or other financial institution that the
investor chooses, and the investor would hold only a beneficial interest in those securities through an account he or she maintains at
that institution.
For securities held in street name, we will recognize
only the intermediary banks, brokers and other financial institutions in whose names the securities are registered as the holders of those
securities, and we will make all payments on those securities to them. These institutions pass along the payments they receive to their
customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally
required to do so. Investors who hold securities in street name will be indirect holders, not holders, of those securities.
Legal Holders
Our obligations run only to the legal holders
of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any
other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security or has no choice because
we are issuing the securities only in global form. For example, once we make a payment or give a notice to the holder, we have no further
responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or
by law, to pass it along to the indirect holders but does not do so. Whether and how the holders contact the indirect holders is up to
the holders.
Special Considerations for Indirect Holders
If you hold securities through a bank, broker
or other financial institution, either in book-entry form or in street name, you should check with your own institution to find out:
| ● | how it handles securities payments and notices; |
| ● | whether it imposes fees or charges; |
| ● | how it would handle a request for the holders’ consent, if ever required; |
| ● | whether and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted
in the future; |
| ● | how it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to
protect their interests; and |
| ● | if the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global Securities
A global security is a security held by a depositary
that represents one or any other number of individual securities. Generally, all securities represented by the same global securities
will have the same terms.
Each security issued in book-entry form will be
represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select.
The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the accompanying prospectus
supplement, The Depository Trust Company, New York, New York, or DTC, will be the depositary for all securities issued in book-entry form.
A global security may not be transferred to or
registered in the name of anyone other than the depositary, its nominee or a successor depositary, unless special termination situations
arise. We describe those situations below under “— Special Situations When a Global Security Will Be Terminated.” As
a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all securities represented
by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must
be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with
another institution that does. Thus, an investor whose security is represented by a global security will not be a holder of the security,
but only an indirect holder of a beneficial interest in the global security.
If the prospectus supplement for a particular
security indicates that the security will be issued in global form only, then the security will be represented by a global security at
all times unless and until the global security is terminated. If termination occurs, we may issue the securities through another book-entry
clearing system or decide that the securities may no longer be held through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investor’s rights
relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary,
as well as general laws relating to securities transfers. We do not recognize an indirect holder as a holder of securities and instead
deal only with the depositary that holds the global security.
If securities are issued only in the form of a
global security, an investor should be aware of the following:
| ● | An investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or
her interest in the securities, except in the special situations we describe below; |
| ● | An investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection
of his or her legal rights relating to the securities, as we describe under “Legal Ownership of Securities” above; |
| ● | An investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required
by law to own their securities in non-book-entry form; |
| ● | An investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
| ● | The depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in a global security. We and any applicable trustee have no responsibility for any aspect of
the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise
the depositary in any way; |
| ● | The depositary may, and we understand that DTC will, require that those who purchase and sell interests in a global security within
its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and |
| ● | Financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest
in a global security, may also have their own policies affecting payments, notices and other matters relating to the securities. There
may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the
actions of any of those intermediaries. |
Special Situations When a Global Security Will Be Terminated
In a few special situations described below, the
global security will terminate and interests in it will be exchanged for physical certificates representing those interests. After that
exchange, the choice of whether to hold securities directly or in street name will be up to the investor. Investors must consult their
own banks or brokers to find out how to have their interests in securities transferred to their own name, so that they will be direct
holders. We have described the rights of holders and street name investors above.
The global security will terminate when any of
the following special situations occur:
| ● | if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days; |
| ● | if we notify any applicable trustee that we wish to terminate that global security; or |
| ● | if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived. |
The prospectus supplement may also list additional
situations for terminating a global security that would apply only to the particular series of securities covered by the prospectus supplement.
When a global security terminates, the depositary, and not we or any applicable trustee, is responsible for deciding the names of the
institutions that will be the initial direct holders.
Certain
Provisions of Maryland Law and of Our Charter and Bylaws
Although the following summary describes certain
provisions of Maryland law and of our charter and bylaws, which are incorporated herein by reference to the Company’s SEC filings,
it is not a complete description of Maryland law and our charter and bylaws. See “Where You Can Find More Information.”
Number of Directors; Vacancies
Our charter and bylaws provide that the number
of directors of our Company will not be less than the minimum number required under the MGCL, which is one, and, unless our bylaws are
amended, not more than fifteen, and the number of directors of our company may be increased or decreased pursuant to our bylaws by a vote
of the majority of our entire board of directors. Our charter provides for an election to be subject to Title 3, Subtitle 8 of the MGCL
and therefore, subject to the rights of holders of one or more classes or series of preferred stock, any vacancy may be filled only by
a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any director elected to fill a
vacancy will serve for the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies.
Pursuant to our charter and bylaws, each member
of our board of directors is elected by our stockholders to serve until the next annual meeting of stockholders and until his or her successor
is duly elected and qualifies. Directors are elected by a majority of votes cast; provided, however, that directors are elected
by a plurality of the votes cast at a meeting of stockholders for which our Secretary determines that the number of nominees exceeds the
number of directors to be elected as of the record date for such meeting of stockholders. Holders of shares of our common stock have no
right to cumulative voting in the election of directors, and directors are elected by a majority of all the votes cast in the election
of directors. Consequently, at each annual meeting of stockholders, the holders of a majority of the shares of our common stock will be
able to elect all of our directors. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled
to be cast at a meeting constitutes a quorum.
Removal of Directors
Our charter provides that, subject to the rights
of holders of any series of preferred stock, a director may be removed only for “cause,” and then only by the affirmative
vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. For this purpose, “cause”
means, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding
that such director caused demonstrable, material harm to us through bad faith or active and deliberate dishonesty. These provisions, when
coupled with the exclusive power of our board of directors to fill vacancies on our board of directors, generally precludes stockholders
from (i) removing incumbent directors except for “cause” and with a substantial affirmative vote and (ii) filling
the vacancies created by such removal with their own nominees.
Subtitle 8
Subtitle 8 of Title 3 of the MGCL permits a Maryland
corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be
subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in
the charter or bylaws, to any or all of the following five provisions.
| ● | a two-thirds vote requirement for removing a director; |
| ● | a requirement that the number of directors be fixed only by vote of the directors; |
| ● | a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the
class of directors in which the vacancy occurred; and |
| ● | a majority requirement for the calling of a special meeting of stockholders. |
Through provisions in our charter and bylaws unrelated
to Subtitle 8, we already (1) require the affirmative vote of the holders of not less than two-thirds of all of the votes entitled
to be cast on the matter for the removal of any director from the board of directors, which removal will be allowed only for cause, (2) vest
in the board of directors the exclusive power to fix the number of directors and (3) require, unless called by our Chairman, Chief
Executive Officer, President or board of directors, the request of stockholders entitled to cast not less than a majority of the votes
entitled to be cast at such meeting to call a special meeting of stockholders. Our charter contains a provision electing to be subject
to the provisions of Subtitle 8 such that all vacancies on our board of directors can be filled only by the remaining directors and for
the remainder of the full term of the class of directors in which the vacancy occurred.
Business Combinations
Under certain provisions of the MGCL applicable
to Maryland corporations, certain “business combinations,” including a merger, consolidation, share exchange or, in certain
circumstances, an asset transfer or issuance or reclassification of equity securities, between a Maryland corporation and an “interested
stockholder” or, generally, any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding
voting shares or an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question,
was the beneficial owner of 10% or more of the voting power of the corporation’s then outstanding voting stock, or an affiliate
of such an interested stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes
an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of such corporation
and approved by the affirmative vote of at least (a) 80% of the votes entitled to be cast by holders of the corporation’s outstanding
voting stock and (b) two-thirds of the votes entitled to be cast by holders of the corporation’s voting stock other than stock
held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate
or associate of the interested stockholder, unless, among other conditions, the corporation’s stockholders receive a minimum price
(as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested
stockholder for its shares. Under the MGCL, a person is not an “interested stockholder” if the board of directors approved
in advance the transaction by which the person otherwise would have become an interested stockholder. A corporation’s board of directors
may provide that its approval is subject to compliance with any terms and conditions determined by it.
These provisions of the MGCL do not apply, however,
to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes
an interested stockholder. Pursuant to the MGCL, our board of directors has by resolution exempted business combinations between us and
any other person from these provisions of the MGCL, provided that the business combination is first approved by our board of directors,
including a majority of directors who are not affiliates or associates of such person, and, consequently, the five year prohibition and
the supermajority vote requirements will not apply to such business combinations. As a result, any person may be able to enter into business
combinations with us that may not be in the best interests of our stockholders without compliance by us with the supermajority vote requirements
and other provisions of the statute. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution
is repealed, or our board of directors does not otherwise approve a business combination, the statute may discourage others from trying
to acquire control of us and increase the difficulty of consummating any offer.
Control Share Acquisitions
The MGCL provides that “control shares”
of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by
the affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in respect
of which any of the following persons is entitled to exercise or direct the exercise of the voting power of such shares in the election
of directors: (1) a person who makes or proposes to make a control share acquisition, (2) an officer of the corporation or (3) an
employee of the corporation who is also a director of corporation. “Control shares” are voting shares which, if aggregated
with all other such shares owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting
power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within
one of the following ranges of voting power: (A) one-tenth or more but less than one-third, (B) one-third or more but less than
a majority or (C) a majority or more of all voting power. Control shares do not include shares that the acquirer is then entitled
to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition
of control shares, subject to certain exceptions.
A person who has made or proposes to make a control
share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel our board of directors
to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request
for a meeting is made, the corporation may itself present the question at any stockholders’ meeting.
If voting rights are not approved at the meeting
or if the acquirer does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and
limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved)
for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share
acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved.
If voting rights for control shares are approved at a stockholders’ meeting and the acquirer becomes entitled to vote a majority
of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes
of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.
The control share acquisition statute does not
apply to (a) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) acquisitions
approved or exempted by the charter or bylaws of the corporation.
Our bylaws contain a provision exempting from
the control share acquisition statute any and all acquisitions by any person of our shares. Our bylaws also provide that such provision
may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may,
to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition. There is no assurance that
such provision will not be amended or eliminated at any time in the future.
Anti-takeover Effect of Certain Provisions of Maryland Law and of
Our Charter and Bylaws
If the applicable exemption in our bylaws is repealed
and the applicable resolution of our board of directors is repealed, the control share acquisition provisions and the business combination
provisions of the MGCL, respectively, as well as the provisions in our charter and bylaws, as applicable, on removal of directors and
the filling of director vacancies and the restrictions on ownership and transfer of stock, together with the advance notice and stockholder-requested
special meeting provisions of our bylaws, alone or in combination, could serve to delay, deter or prevent a transaction or a change in
our control that might involve a premium price for holders of our shares of common stock or otherwise be in their best interests.
Meetings of Stockholders
Pursuant to our charter and bylaws, a meeting
of our stockholders for the purpose of the election of directors and the transaction of any business will be held annually on a date and
at the time and place set by our board of directors. In addition, our Chairman, Chief Executive Officer, President or board of directors
may call a special meeting of our stockholders. Our bylaws provide that a special meeting of our stockholders to act on any matter that
may properly be considered at a meeting of our stockholders must also be called by our Secretary upon the written request of stockholders
entitled to cast not less than a majority of all the votes entitled to be cast on such matter at the meeting complying with our bylaws
and containing the information required by our bylaws.
Mergers; Extraordinary Transactions
Under the MGCL, a Maryland corporation generally
cannot merge with another entity, dissolve, convert into or consolidate with another entity, sell all or substantially all of its assets,
or engage in a statutory share exchange unless advised by its board of directors and approved by the affirmative vote of stockholders
holding at least two-thirds of the shares entitled to vote on the matter unless a lesser percentage (but not less than a majority of all
of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides that these actions
may be taken only if such action is declared advisable by our board of directors and approved by the affirmative vote of stockholders
entitled to cast a majority of all the votes entitled to be cast on the matter.
Amendments to Our Charter and Bylaws
Under the MGCL, a Maryland corporation generally
cannot amend its charter unless advised by its board of directors and approved by the affirmative vote of stockholders entitled to cast
at least two-thirds of the votes entitled to be cast on the matter unless a different percentage (but not less than a majority of all
of the votes entitled to be cast on the matter) is set forth in the company’s charter. Our charter provides that except for amendments
to the provisions of our charter related to (i) the removal of directors, (ii) the restrictions on transferred ownership of
our capital stock and (iii) the vote required to amend such amendment provisions (each of which require the affirmative vote of the
holders of not less than two-thirds of all the votes entitled to be cast on the matter) and certain amendments that pursuant to the MGCL
require only approval by our board of directors, our charter may be amended only with the approval of our board of directors and the affirmative
vote of the holders of shares of not less than a majority of all of the votes entitled to be cast on the matter.
Generally, our board of directors and stockholders
have the power to adopt, alter or repeal any provision of our bylaws and to make new bylaws; provided, however, that certain
bylaws may only be altered or repealed by our board of directors.
Advance Notice of Director Nominations and New Business
Our bylaws provide that, with respect to an annual
meeting of stockholders, nominations of individuals for election to our board of directors at an annual meeting and the proposal of business
to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our
board of directors or (3) by a stockholder of record at the record date set by our board of directors for the purpose of determining
stockholders entitled to vote at the annual meeting, at the time of giving of notice by the stockholder and at the time of the annual
meeting (and any postponement or adjournment thereof), and who is entitled to vote at the meeting in the election of each individual so
nominated or on any such other business and has complied with the advance notice provisions set forth in our bylaws.
With respect to special meetings of stockholders,
only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to our
board of directors at a special meeting may be made only (1) by or at the direction of our board of directors or (2) provided
that our board of directors has determined that directors will be elected at such meeting, by a stockholder of record at the record date
set by our board of directors for the purpose of determining stockholders entitled to vote at the special meeting, at the time of the
giving of notice by the stockholder and at the time of the special meeting (and any postponement or adjournment thereof), who is entitled
to vote at the meeting in the election of each individual so nominated and has complied with the advance notice provisions set forth in
our bylaws.
Limitation of Directors’ and Officers’ Liability and
Indemnification
Maryland law permits a Maryland corporation to
include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money
damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or
(b) active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. Our charter
contains a provision which eliminates our directors’ and officers’ liability to the maximum extent permitted by Maryland law.
Maryland law requires a Maryland corporation (unless
its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense
of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland
law permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened
to be made, a party by reason of their service in those or other capacities unless it is established that: (a) the act or omission
of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty; (b) the director or officer actually received an improper personal benefit in money,
property or services; or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that
the act or omission was unlawful.
However, under Maryland law, a Maryland corporation
may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition,
Maryland law permits a Maryland corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt
of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the
amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
Our charter authorizes us, to the maximum extent
permitted by Maryland law, to obligate ourselves, and our bylaws obligate us, to indemnify any present or former director or officer or
any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, partner,
trustee, member or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by
reason of his or her service in that capacity from and against any claim or liability to which that individual may become subject or which
that individual may incur by reason of his or her service in any of the foregoing capacities and to pay or reimburse his or her reasonable
expenses in advance of final disposition of a proceeding.
We have entered into indemnification agreements
with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law and
advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us. Our charter
and bylaws also permit us to indemnify and advance expenses to any individual who served a predecessor of our company in any of the capacities
described above and any employees or agents of our company or a predecessor of our company.
Exclusive Forum
Our bylaws provide that, unless we consent in
writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction,
the United States District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (a) any
derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our
directors, officers or other employees to us or to our stockholders, (c) any action asserting a claim against us or any of our directors,
officers or other employees arising pursuant to any provision of the MGCL, our charter or our bylaws or (d) any action asserting
a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. This provision
does not cover claims made by stockholders pursuant to the securities laws of the United States, or any rules or regulations promulgated
thereunder.
REIT Qualification
Our charter provides that our board of directors
may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our
best interest to continue to qualify as a REIT.
Material
U.S. Federal Income Tax Considerations
This section summarizes the material U.S. federal
income tax considerations that you, as a prospective holder of our securities, may consider relevant in connection with the purchase,
ownership and disposition of our securities. Vinson & Elkins L.L.P. has acted as our counsel, has reviewed this summary, and
is of the opinion that the discussion contained herein is accurate in all material respects. Because this section is a summary, it does
not address all aspects of taxation that may be relevant to particular holders of our securities in light of their personal investment
or tax circumstances, or to certain types of holders that are subject to special treatment under the U.S. federal income tax laws, such
as:
| · | tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Stockholders” below); |
| · | financial institutions or broker-dealers; |
| · | non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Stockholders”
below); |
| · | persons who mark-to-market our securities; |
| · | subchapter S corporations; |
| · | U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar; |
| · | regulated investment companies and REITs; |
| · | persons who receive our securities through the exercise of employee stock options or otherwise as compensation; |
| · | persons holding our securities as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic
security” or other integrated investment; |
| · | persons subject to the alternative minimum tax provisions of the Code; |
| · | persons subject to special tax accounting rules as a result of their use of applicable financial statements within the meaning
of Section 451(b)(3) of the Code; and |
| · | persons holding our securities through a partnership or similar pass-through entity. |
This summary assumes that holders hold our securities
as capital assets for U.S. federal income tax purposes, which generally means property held for investment.
The statements in this section are not intended
to be, and should not be construed as, tax advice. The statements in this section are based on the Code, final, temporary and proposed
Treasury regulations, the legislative history of the Code, current administrative interpretations and practices of the Internal Revenue
Service (“IRS”), and court decisions. The reference to IRS interpretations and practices includes the IRS practices and policies
endorsed in private letter rulings, which are not binding on the IRS except with respect to the taxpayer that receives the ruling. In
each case, these sources are relied upon as they exist on the date of this discussion. Future legislation, Treasury regulations, administrative
interpretations and court decisions could change the current law or adversely affect existing interpretations of current law on which
the information in this section is based. Any such change could apply retroactively. We have not received any rulings from the IRS concerning
our qualification as a REIT. Accordingly, even if there is no change in the applicable law, no assurance can be provided that the statements
made in the following discussion, which do not bind the IRS or the courts, will not be challenged by the IRS or will be sustained by a
court if so challenged.
WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING
THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR SECURITIES AND OF OUR ELECTION TO BE TAXED AS A
REIT. SPECIFICALLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, DISPOSITION, AND ELECTION, AND REGARDING POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
Taxation of Our Company
We were re-domesticated on January 6, 2014
as a Maryland corporation. 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 believe that, commencing with such taxable year, we have been organized and have operated in such a manner
as to qualify for taxation as a REIT under the U.S. federal income tax laws, and we intend to continue to operate in such a manner, but
no assurance can be given that we will operate in a manner so as to remain qualified as a REIT. This section discusses the laws governing
the U.S. federal income tax treatment of a REIT and its stockholders. These laws are highly technical and complex.
In the opinion of Vinson & Elkins L.L.P.,
we qualified to be taxed as a REIT under the U.S. federal income tax laws for our taxable years ended December 31, 2016 through December 31,
2022, and our organization and current and proposed method of operations will enable us to continue to qualify as a REIT for our taxable
years ending December 31, 2023, and thereafter. Investors should be aware that Vinson & Elkins L.L.P.’s opinion is
based upon various customary assumptions relating to our organization and operation, and is conditioned upon certain representations and
covenants made by our management as to factual matters, including representations regarding our organization, the nature of our assets
and income, and the conduct of our business operations. Vinson & Elkins L.L.P.’s opinion is not binding upon the IRS or
any court and speaks as of the date issued. In addition, Vinson & Elkins L.L.P.’s opinion is based on existing U.S. federal
income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively.
Moreover, our qualification and taxation as a
REIT depends upon our ability to meet, on a continuing basis, through actual annual operating results, certain qualification tests set
forth in the U.S. federal income tax laws. Those qualification tests involve the percentage of income that we earn from specified sources,
the percentage of our assets that fall within specified categories, the diversity of ownership of our stock, and the percentage of our
earnings that we distribute. Vinson & Elkins L.L.P. will not review our compliance with those tests on a continuing basis. Accordingly,
no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements. While
we intend to operate so that we will continue to qualify as a REIT, given the highly complex nature of the rules governing REITs,
the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given
by tax counsel or by us that we will qualify as a REIT for any particular year. Vinson & Elkins L.L.P.’s opinion does not
foreclose the possibility that we may have to use one or more of the REIT savings provisions described below, which could require us to
pay an excise or penalty tax (which could be material) in order for us to maintain our REIT qualification. For a discussion of the tax
consequences of our failure to qualify as a REIT, see “—Failure to Qualify.”
As long as we qualify as a REIT, we generally
will not be subject to U.S. federal income tax on the taxable income that we distribute to our stockholders. The benefit of that tax treatment
is that it avoids the “double taxation,” or taxation at both the corporate and stockholder levels, that generally applies
to distributions by a corporation to its stockholders. However, even if we qualify as a REIT, we will be subject to U.S. federal tax in
the following circumstances:
| · | We will pay U.S. federal income tax on any taxable income, including net capital gain, that we do not distribute to stockholders during,
or within a specified time period after, the calendar year in which the income is earned. |
| · | We will pay U.S. federal income tax at the highest corporate rate on: |
| · | net income from the sale or other disposition of property acquired through foreclosure (“Foreclosure Property”) that we
hold primarily for sale to customers in the ordinary course of business and have elected to treat as Foreclosure Property, and |
| · | other non-qualifying income from Foreclosure Property. |
| · | We will pay a 100% tax on our net income from sales or other dispositions of property, other than Foreclosure Property, that we hold
primarily for sale to customers in the ordinary course of business. |
| · | If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “—Gross
Income Tests,” and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on: |
| · | the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test,
in either case, multiplied by |
| · | a fraction intended to reflect our profitability. |
| · | If, during a calendar year, we fail to distribute at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95%
of our REIT capital gain net income for the year, and (3) any undistributed taxable income required to be distributed from earlier
periods, we will pay a 4% nondeductible excise tax on the excess of the required distribution over the amount we actually distributed. |
| · | We may elect to retain and pay U.S. federal income tax on our net long-term capital gain. In that case, a stockholder would be taxed
on its proportionate share of our undistributed long-term capital gain (to the extent that we made a timely designation of such gain to
the stockholders) and would receive a credit or refund for its proportionate share of the tax we paid. |
| · | We will be subject to a 100% excise tax on transactions with any TRS we may form in the future that are not conducted on an arm’s-length
basis. |
| · | If we fail to satisfy any of the asset tests, other than a de minimis failure of the 5% asset test, the 10% vote test or 10% value
test, as described below under “—Asset Tests,” as long as the failure was due to reasonable cause and not to willful
neglect, we file a schedule with the IRS describing each asset that caused such failure, and we dispose of the assets causing the failure
or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure, we will
pay a tax equal to the greater of $50,000 or the highest U.S. federal income tax rate then applicable to U.S. corporations (currently
21%) on the net income from the non-qualifying assets during the period in which we failed to satisfy the asset tests. |
| · | If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and
such failure is due to reasonable cause and not to willful neglect, we will be required to pay a penalty of $50,000 for each such failure. |
| · | If we acquire any asset from an entity treated as a C corporation (i.e., a corporation that generally is subject to full corporate-level
tax) in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to such entity’s
basis in the asset or to another asset, we will pay tax at the highest applicable regular U.S. federal corporate income tax rate (currently
21%) if we recognize gain on the sale or disposition of the asset during the five-year period after we acquire the asset provided no election
is made for the transaction to be taxable on a current basis. The amount of gain on which we will pay tax is the lesser of: |
| · | the amount of gain that we recognize at the time of the sale or disposition, and |
| · | the amount of gain that we would have recognized if we had sold the asset at the time we acquired the asset. |
| · | We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet recordkeeping requirements
intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “—Recordkeeping
Requirements.” |
| · | The earnings of our lower-tier entities that are treated as C corporations, including our TRS and any other TRS we may form in the
future, will be subject to U.S. federal corporate income tax. |
In addition, notwithstanding our qualification
as a REIT, we may also have to pay certain state and local income taxes because not all states and localities treat REITs in the same
manner that they are treated for U.S. federal income tax purposes. Moreover, as further described below, our TRS and any other TRS we
may form in the future will be subject to U.S. federal, state and local corporate income tax on its taxable income.
Requirements for Qualification
A REIT is a corporation, trust, or association
that meets each of the following requirements:
| 1. | It is managed by one or more trustees or directors. |
| 2. | Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest. |
| 3. | It would be taxable as a domestic corporation, but for the REIT provisions of the U.S. federal income tax laws. |
| 4. | It is neither a financial institution nor an insurance company subject to special provisions of the U.S. federal income tax laws. |
| 5. | At least 100 persons are beneficial owners of its shares or ownership certificates. |
| 6. | Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer
individuals, which the Code defines to include certain entities, during the last half of any taxable year. |
| 7. | It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative
requirements established by the IRS that must be met to elect and maintain REIT status. |
| 8. | It meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions
to stockholders. |
| 9. | It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the U.S. federal
income tax laws. |
| 10. | It has not been a party to a spin-off transaction that is tax-deferred under section 355 of the Code during the applicable period. |
We must meet requirements 1 through 4, 8 and 9
during our entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate
part of a taxable year of less than 12 months. Requirements 5 and 6 applied beginning with our 2017 taxable year. If we comply with all
the requirements for ascertaining the ownership of our outstanding shares in a taxable year and have no reason to know that we violated
requirement 6, we will be deemed to have satisfied requirement 6 for that taxable year. For purposes of determining shares ownership under
requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation,
or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally
does not include a trust that is a qualified employee pension or profit sharing trust under the U.S. federal income tax laws, and beneficiaries
of such a trust will be treated as holding stock in proportion to their actuarial interests in the trust for purposes of requirement 6.
Our charter provides restrictions regarding the
transfer and ownership of shares of our outstanding capital stock to assist us in maintaining our qualification as a REIT. See “Description
of Capital Stock—Restrictions on Ownership and Transfer.” We believe that we have issued sufficient stock with sufficient
diversity of ownership to satisfy requirements 5 and 6 above. The restrictions in our charter are intended (among other things) to assist
us in continuing to satisfy requirements 5 and 6 above. These restrictions, however, may not ensure that we will, in all cases, be able
to satisfy such share ownership requirements. If we fail to satisfy these share ownership requirements, our qualification as a REIT may
terminate.
Qualified
REIT Subsidiaries. A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate
from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary”
are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary”
is a corporation, all of the shares of which are owned by the REIT and for which no election has been made to treat such corporation as
a TRS. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and
all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and
items of income, deduction, and credit.
Other
Disregarded Entities and Partnerships. An unincorporated domestic entity, such as a partnership or limited liability company
that has a single owner for U.S. federal income tax purposes, generally is not treated as an entity separate from its owner for U.S. federal
income tax purposes. An unincorporated domestic entity with two or more owners for U.S. federal income tax purposes is generally treated
as a partnership for U.S. federal income tax purposes. In the case of a REIT that is a partner in a partnership that has other partners,
the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross
income of the partnership for purposes of the applicable REIT qualification tests. Our proportionate share for purposes of the 10% value
test (see “—Asset Tests”) is based on our proportionate interest in the equity interests and certain debt securities
issued by the partnership. For all of the other asset and income tests, our proportionate share is based on our proportionate interest
in the capital interests in the partnership. Our proportionate share of the assets, liabilities, and items of income of any partnership,
joint venture, or limited liability company that is treated as a partnership for U.S. federal income tax purposes in which we acquire
an equity interest, directly or indirectly, will be treated as our assets and gross income for purposes of applying the various REIT qualification
requirements.
We have control of our Operating Partnership and
intend to control any subsidiary partnerships and limited liability companies, and we intend to operate them in a manner consistent with
the requirements for our qualification as a REIT. We may from time to time be a limited partner or non-managing member in some of our
partnerships and limited liability companies. If a partnership or limited liability company in which we own an interest takes or expects
to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such
entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail
a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership
or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless
we were able to qualify for a statutory REIT “savings” provisions, which could require us to pay a significant penalty tax
to maintain our REIT qualification.
Taxable
REIT Subsidiaries. A REIT may own up to 100% of the shares of one or more TRSs. A TRS is a fully taxable corporation that may
earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect
to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value
of the securities will automatically be treated as a TRS. We will not be treated as holding the assets of a TRS or as receiving any income
that the TRS earns. Rather, the shares issued by a TRS to us will be an asset in our hands, and we will treat the distributions paid to
us from such TRS, if any, as income to the extent of the TRS’s earnings and profits. This treatment may affect our compliance with
the gross income and asset tests. Because we will not include the assets and gross income of TRSs in determining our compliance with the
REIT requirements, we may use such entities to undertake activities indirectly, such as earning fee income that the REIT rules might
otherwise preclude us from doing directly or through pass-through subsidiaries. Overall, no more than 20% of the value of a REIT’s
assets may consist of shares or securities of one or more TRSs.
Several provisions of the Code regarding the arrangements
between a REIT and its TRSs ensure that a TRS will be subject to an appropriate level of U.S. federal income taxation. For example, a
TRS is limited in its ability to deduct interest payments made to its parent REIT. In addition, a REIT will be subject to a 100% penalty
tax on certain payments received from, or on certain expenses deducted by, a TRS if that IRS were to successfully assert that the economic
arrangements between the REIT and the TRS were not comparable to similar arrangements among unrelated parties. Any income earned by a
TRS that is attributable to services provided to its parent REIT, or on behalf of any of its tenants, that is less than the amount that
would have been charged based upon arm’s-length negotiations, will also be subject to a 100% penalty tax.
A TRS may not directly or indirectly operate or
manage any health care facilities or lodging facilities or provide rights to any brand name under which any health care facility or lodging
facility is operated. A TRS is not considered to operate or manage a “qualified health care property” or “qualified
lodging facility” solely because the TRS directly or indirectly possesses a license, permit, or similar instrument enabling it to
do so.
Rent that we receive from a TRS will qualify as
“rents from real property” under two scenarios. Under the first scenario, rent we receive from a TRS will qualify as “rents
from real property” as long as (1) at least 90% of the leased space in the healthcare facility is leased to persons other than
TRSs and related-party tenants, and (2) the amount paid by the TRS to rent space at the healthcare facility is substantially comparable
to rents paid by other tenants of the healthcare facility for comparable space, as described in further detail below under “—Gross
Income Tests—Rents from Real Property.” If we lease space to a TRS in the future, we will seek to comply with these requirements.
Under the second scenario, rents that we receive
from a TRS will qualify as “rents from real property” if the TRS leases a healthcare facility from us that is a “qualified
health care property” and such healthcare facility is operated on behalf of the TRS by a person who qualifies as an “independent
contractor” and who is, or is related to a person who is, actively engaged in the trade or business of operating “qualified
health care properties” for any person unrelated to us and the TRS (an “Eligible Independent Contractor”). A “qualified
health care property” includes any real property and any personal property that is, or is necessary or incidental to the use of,
a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility, or other licensed
facility which extends medical or nursing or ancillary services to patients and which is operated by a provider of such services which
is eligible for participation in the Medicare program with respect to such facility. We do not currently intend to lease our healthcare
facilities to a TRS. However, we may lease healthcare facilities that we currently own or acquire to a TRS in the future, to the extent
such healthcare facilities qualify as “qualified health care properties.”
Gross Income Tests
We must satisfy two gross income tests annually
to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of
income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary
investment income. Qualifying income for purposes of the 75% gross income test generally includes:
| · | rents from real property; |
| · | interest on debt secured by mortgages on real property, or on interests in real property; |
| · | dividends or other distributions on, and gain from the sale of, shares in other REITs; |
| · | gain from the sale of real estate assets, other than: |
| · | property held primarily for sale to customers in the ordinary course of business; and |
| · | debt instruments issued by “publicly offered REITs” (i.e., REITs that are required to file annual and periodic reports
with the SEC under the Exchange Act), unless the debt instrument is secured by real property or an interest in real property; |
| · | income derived from the operation, and gain from the sale, of Foreclosure Property; |
| · | amounts (other than amounts the determination of which depends in whole or in part on the income or profits of any person) received
or accrued as consideration for entering into agreements to make loans secured by mortgages on real property or interests in real property
or to purchase or lease real property (including interests in real property and interests in mortgages on real property); and |
| · | income derived from the temporary investment of new capital that is attributable to the issuance of our stock or a public offering
of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which
we received such new capital. |
Second, in general, at least 95% of our gross
income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of
interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these. Cancellation of indebtedness
income and gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business are
excluded from both the numerator and the denominator in both gross income tests. In addition, income and gain from “hedging transactions”
that we enter into to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely
identified as such will be excluded from both the numerator and the denominator for purposes of the 75% and 95% gross income tests. See
“—Hedging Transactions.” In addition, certain foreign currency gains will be excluded from gross income for purposes
of one or both of the gross income tests. See “—Foreign Currency Gain.” The following paragraphs discuss the specific
application of the gross income tests to us.
Rents
from Real Property. “Rents from real property” is qualifying income for both 75% and 95% gross income tests. Our
leases generally are on a “triple-net” basis, requiring the tenant-operators to pay substantially all expenses associated
with the operation of the healthcare facilities, such as real estate taxes, insurance, utilities, services, maintenance and other operating
expenses and any ground lease payments. Rents under our leases will constitute “rents from real property” only if the leases
are treated as “true leases” for U.S. federal income tax purposes and are not treated as service contracts, joint ventures,
financing arrangements or some other type of arrangement. The determination of whether a lease is a true lease depends on an analysis
of all surrounding facts and circumstances. In making such a determination, courts have considered a variety of factors, including the
following:
| · | the intent of the parties; |
| · | the form of the agreement; |
| · | the degree of control over the property that is retained by the property owner (e.g., whether the tenant has substantial control over
the operation of the property or whether the tenant was required simply to use its best efforts to perform its obligations under the agreement); |
| · | the extent to which the property owner retains the risk of loss with respect to the operation of the property (e.g., whether the tenant
bears the risk of increases in operating expenses or the risk of damage to the property); and |
| · | the extent to which the property owner retains the burdens and benefits of ownership of the property. |
We believe that each of our leases will be treated
as a “true lease” for U.S. federal income tax purposes. Such belief is based, in part, on the following facts:
| · | we and the tenants intend for each relationship between them to be that of a lessor and lessee and such relationship will be documented
by lease agreements; |
| · | the tenants have the right to exclusive possession and use and quiet enjoyment of the property during the term of the leases; |
| · | the tenants bear the cost of, and are responsible for, day-to-day maintenance and repair of the property, and will dictate how the
properties are operated, maintained and improved; |
| · | the tenants bear all of the costs and expenses of operating the healthcare facilities during the terms of the leases; |
| · | the tenants benefit from any savings in the costs of operating the property during the terms of the leases; |
| · | the tenants generally are required to indemnify us against all liabilities imposed on us during the term of the leases by reason of
(a) injury to persons or damage to property occurring at the property, or (b) the use, management, maintenance or repair of
the property; |
| · | the tenants are obligated to pay rent for the period of use of the property; |
| · | the tenants stand to reap substantial gains (or incur substantial losses) depending on how successfully they operate the property; |
| · | the useful lives of the property are significantly longer than the terms of the leases; and |
| · | we will receive the benefit of increases in value, and will bear the risk of decreases in value, of the properties during the terms
of the leases. |
If the IRS were to challenge successfully the
characterization of our leases as true leases, we would not be treated as the owner of the healthcare facility in question for U.S. federal
income tax purposes. There are no controlling Treasury regulations, published rulings, or judicial decisions involving leases with terms
substantially similar to those contained in our leases that address whether such leases constitute true leases for U.S. federal income
tax purposes. If our leases are recharacterized as partnership agreements, rather than true leases, part or all of the payments that we
receive from the tenant-operators may not be considered rent or may not otherwise be treated as qualifying income. In that case, we likely
would not be able to satisfy either the 75% or 95% gross income tests and, as a result, could lose REIT qualification. If any of our leases
from a sale-leaseback transaction is recharacterized as a financing transaction or loan for U.S. federal income tax purposes, the seller-lessee
would be the owner of the healthcare facility and the IRS would disallow our deductions for depreciation and cost recovery relating to
the leased healthcare facilities. As a result, the amount of our REIT taxable income could be recalculated, which might cause us to fail
to meet the distribution requirement required for REIT qualification. See “—Distribution Requirements.”
We will continue to use our best efforts to structure
any leasing transaction, including leasing transactions from our sale-leaseback transactions, so that the lease will be characterized
as a true lease and we will be treated as the owner of the healthcare facility in question for U.S. federal income tax purposes. We will
not seek an advance ruling from the IRS and do not intend to seek opinions of counsel that our leases will be treated as the owner of
any other leased healthcare facilities for U.S. federal income tax purposes, and thus there can be no assurance that our leases will be
treated as true leases for U.S. federal income tax purposes.
In addition, rent received on a lease that is
respected as a true lease will qualify as “rents from real property” only if each of the following conditions is met:
| · | First, the rent must not be based, in whole or in part, on the income or profits of any person, but may be based on a fixed percentage
or percentages of receipts or sales. |
| · | Second, neither we nor a direct or indirect owner of 10% or more of our stock may own, actually or constructively, 10% or more of
a tenant from whom we receive rent, other than a TRS. |
| · | Third, if the rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total
rent received under the lease, then the rent attributable to personal property will qualify as rents from real property. The allocation
of rent between real and personal property is based on the relative fair market values of the real and personal property. However, if
the 15% threshold is exceeded, the rent attributable to personal property will not qualify as rents from real property. |
| · | Fourth, we generally must not operate or manage our real property or furnish or render services to our tenants, other than through
an “independent contractor” who is adequately compensated and from whom we do not derive revenue. However, we need not provide
services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are
“usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided
for the tenants’ convenience. In addition, we may provide a minimal amount of “non-customary” services to the tenants
of a property, other than through an independent contractor, as long as our income from the services (valued at not less than 150% of
our direct cost of performing such services) does not exceed 1% of our income from the related property. Furthermore, we may own up to
100% of the shares of a TRS which may provide customary and non-customary services to our tenants without tainting our rental income from
the related properties. |
If a portion of the rent that we receive from
a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of
the total rent for a taxable year, the portion of the rent that is attributable to personal property will not be qualifying income for
purposes of either the 75% or 95% gross income test. Thus, if such rent attributable to personal property, plus any other income that
is non-qualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during the year,
we would lose our REIT qualification. If, however, the rent from a particular healthcare facility does not qualify as “rents from
real property” because either (1) the rent is considered based on the income or profits of the related tenant, (2) the
tenant either is a related party tenant or fails to qualify for the exceptions to the related party tenant rule for TRSs or (3) we
furnish non-customary services to the tenant-operators of the healthcare facility in excess of the one percent threshold, or manage or
operate the healthcare facility, other than through a qualifying independent contractor or a TRS, none of the rent from that healthcare
facility would qualify as “rents from real property.”
Currently, we do not lease significant amounts
of personal property pursuant to our leases nor do we lease our properties to related party tenants. None of the rental provisions of
our lease terms are based, in whole or in part, on the income or profits of any person. Moreover, we do not currently perform any services
other than customary ones for our tenant-operators, unless such services are provided through independent contractors from whom we do
not receive or derive income or a TRS. Accordingly, we believe that our leases generally produce rent that qualifies as “rents from
real property” for purposes of the 75% and 95% gross income tests.
In addition to the rent, the tenant-operators
may be required to pay certain additional charges. To the extent that such additional charges represent reimbursements of amounts that
we are obligated to pay to third parties such charges generally will qualify as “rents from real property.” To the extent
such additional charges represent penalties for nonpayment or late payment of such amounts, such charges should qualify as “rents
from real property.” However, to the extent that late charges do not qualify as “rents from real property,” they instead
will be treated as interest that qualifies for the 95% gross income test.
As described above, we may own up to 100% of the
shares of one or more TRSs. There are two exceptions to the related-party tenant rule described above for TRSs. Under the first exception,
rent that we receive from a TRS will qualify as “rents from real property” as long as (1) at least 90% of the leased
space in the healthcare facility is leased to persons other than TRSs and related-party tenants, and (2) the amount paid by the TRS
to rent space at the healthcare facility is substantially comparable to rents paid by other tenant-operators of the healthcare facility
for comparable space. The “substantially comparable” requirement must be satisfied when the lease is entered into, when it
is extended, and when the lease is modified, if the modification increases the rent paid by the TRS. If the requirement that at least
90% of the leased space in the related property is rented to unrelated tenants is met when a lease is entered into, extended, or modified,
such requirement will continue to be met as long as there is no increase in the space leased to any TRS or related party tenant. Any increased
rent attributable to a modification of a lease with a TRS in which we own directly or indirectly more than 50% of the voting power or
value of the stock will not be treated as “rents from real property.” If in the future we receive rent from a TRS, we will
seek to comply with this exception.
Under the second exception, a TRS is permitted
to lease properties from the related REIT as long as it does not directly or indirectly operate or manage any health care facilities or
provide rights to any brand name under which any health care facility is operated. Rent that we receive from a TRS will qualify as “rents
from real property” as long as the “qualified health care property” is operated on behalf of the TRS by an Eligible
Independent Contractor. We do not currently intend to lease healthcare facilities to a TRS. However, we may lease healthcare facilities
that we currently own or acquire to a TRS in the future, to the extent such properties qualify as “qualified health care properties.”
Interest.
The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination
of such amount depends in whole or in part on the income or profits of any person. However, interest generally includes the following:
| · | an amount that is based on a fixed percentage or percentages of gross receipts or sales; and |
| · | an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the
real property securing the debt by leasing substantially all of its interest in the property, and only to the extent that the amounts
received by the debtor would be qualifying “rents from real property” if received directly by a REIT. |
If a loan contains a provision that entitles a
REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation
in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale
of the property securing the loan, which generally is qualifying income for purposes of both gross income tests.
Interest on debt secured by a mortgage on real
property or on interests in real property generally is qualifying income for purposes of the 75% gross income test. Other than to the
extent described below, if a loan is secured by real property and other property and the highest principal amount of a loan outstanding
during a taxable year exceeds the fair market value of the real property securing the loan as of the date the REIT agreed to originate
or acquire the loan (or, if the loan has experienced a “significant modification” since its origination or acquisition by
the REIT, then as of the date of that “significant modification”), a portion of the interest income from such loan will not
be qualifying income for purposes of the 75% gross income test, but will be qualifying income for purposes of the 95% gross income test.
The portion of the interest income that will not be qualifying income for purposes of the 75% gross income test will be equal to the interest
income attributable to the portion of the principal amount of the loan that is not secured by real property, that is, the amount by which
the loan exceeds the value of the real estate that is security for the loan. However, in the case of a loan that is secured by both real
property and personal property, if the fair market value of such personal property does not exceed 15% of the total fair market value
of all property securing the loan, then the personal property securing the loan will be treated as real property for purposes of determining
the interest on such loan is qualifying income for purposes of the 75% gross income test.
Dividends.
Our share of any dividends received from any corporation (including any TRS, but excluding any REIT) in which we own an equity interest
will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our share of any dividends received
from any other REIT in which we own an equity interest, if any, will be qualifying income for purposes of both gross income tests.
Prohibited
Transactions. A REIT will incur a 100% tax on the net income (including foreign currency gain) derived from any sale or other
disposition of property, other than Foreclosure Property, that the REIT holds primarily for sale to customers in the ordinary course of
a trade or business. We believe that none of our healthcare facilities have been or will be held primarily for sale to customers and that
any sales of our healthcare facilities have not been and will not be in the ordinary course of our business. Whether a REIT holds a property
“primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances
in effect from time to time, including those related to a particular property. A safe harbor to the characterization of the sale of real
property by a REIT as a prohibited transaction and the 100% prohibited transaction tax is available if the following requirements are
met:
| · | the REIT has held the property for not less than two years; |
| · | the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale
that are includable in the basis of the property do not exceed 30% of the net selling price of the property; |
| · | either (1) during the year in question, the REIT did not make more than seven sales of property other than Foreclosure Property
or sales to which Section 1033 of the Code applies, (2) the aggregate adjusted bases of all such properties sold by the REIT
during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year, (3) the
aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value
of all of the assets of the REIT at the beginning of the year, (4) (i) the aggregate adjusted bases of all such property sold
by the REIT during the year did not exceed 20% of the aggregate adjusted bases of all property of the REIT at the beginning of the year
and (ii) the average annual percentage of properties sold by the REIT compared to all the REIT’s properties (measured by adjusted
bases) in the current and two prior years did not exceed 10% or (5) (i) the aggregate fair market value of all such property
sold by the REIT during the year did not exceed 20% of the aggregate fair market value of all property of the REIT at the beginning of
the year and (ii) the average annual percentage of properties sold by the REIT compared to all the REIT’s properties (measured
by fair market value) in the current and two prior years did not exceed 10%; |
| · | in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years
for the production of rental income; and |
| · | if the REIT has made more than seven sales of non-Foreclosure Property during the taxable year, substantially all of the marketing
and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income
or a TRS. |
We will attempt to comply with the terms of the
safe-harbor provisions in the U.S. federal income tax laws prescribing when a property sale will not be characterized as a prohibited
transaction. We cannot assure you, however, that we can comply with the safe harbor provisions or that we will avoid owning property that
may be characterized as property that we hold “primarily for sale to customers in the ordinary course of a trade or business.”
The 100% tax will not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such
income will be taxed to the TRS at regular U.S. federal corporate income tax rates.
Fee
Income. Fee income generally will not be qualifying income for purposes of either the 75% or 95% gross income tests. Any fees
earned by any TRS we form, such as fees for providing asset management and construction management services to third parties, will not
be included for purposes of the gross income tests. In addition, we will be subject to a 100% excise tax on any fees earned by a TRS for
services provided to us if such fees were pursuant to an agreement determined by the IRS to be not on an arm’s-length basis.
Foreclosure
Property. We will be subject to tax at the maximum U.S. federal corporate income tax rate (currently 21%) on any income from
Foreclosure Property, which includes certain foreign currency gains and related deductions, other than income that otherwise would be
qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However,
gross income from Foreclosure Property will qualify under the 75% and 95% gross income tests. Foreclosure Property is any real property,
including interests in real property, and any personal property incident to such real property:
| · | that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such
property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease
of such property or on indebtedness that such property secured; |
| · | for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and |
| · | for which the REIT makes a proper election to treat the property as Foreclosure Property. |
Foreclosure Property also includes certain “qualified
health care properties” (as defined above under “—Taxable REIT Subsidiaries”) acquired by a REIT as a result of
the termination or expiration of a lease of such property (other than by reason of a default, or the imminence of a default, on the lease).
A REIT will not be considered to have foreclosed
on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss
except as a creditor of the mortgagor. Property generally ceases to be Foreclosure Property at the end of the third taxable year (or,
with respect to qualified health care property, the second taxable year) following the taxable year in which the REIT acquired the property,
or longer if an extension is granted by the Secretary of the Treasury. However, this grace period terminates and Foreclosure Property
ceases to be Foreclosure Property on the first day:
| · | on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes
of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after
such day that will give rise to income that does not qualify for purposes of the 75% gross income test; |
| · | on which any construction takes place on the property, other than completion of a building or any other improvement where more than
10% of the construction was completed before default became imminent; or |
| · | which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which
is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income
or a TRS. |
Hedging
Transactions. From time to time, we or our Operating Partnership may enter into hedging transactions with respect to one or
more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to
purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from
gross income for purposes of both the 75% and 95% gross income tests provided we satisfy the identification requirements discussed below.
A “hedging transaction” means either (1) any transaction entered into in the normal course of our or our Operating Partnership’s
trade or business primarily to manage the risk of interest rate, price changes, or currency fluctuations with respect to borrowings made
or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, (2) any transaction entered
into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income
under the 75% or 95% gross income test (or any property which generates such income or gain), and (3) any transaction entered into
to “offset” transactions described in (1) or (2) if a portion of the hedged indebtedness is extinguished or the
related property disposed of. We are required to clearly identify any such hedging transaction before the close of the day on which it
was acquired, originated, or entered into and to satisfy other identification requirements. We intend to structure any hedging transactions
in a manner that does not jeopardize our qualification as a REIT.
Foreign
Currency Gain. Certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income
tests. “Real estate foreign exchange gain” will be excluded from gross income for purposes of the 75% and 95% gross income
tests. Real estate foreign exchange gain generally includes foreign currency gain attributable to any item of income or gain that is qualifying
income for purposes of the 75% gross income test, foreign currency gain attributable to the acquisition or ownership of (or becoming or
being the obligor under) obligations secured by mortgages on real property or an interest in real property and certain foreign currency
gain attributable to certain “qualified business units” of a REIT. “Passive foreign exchange gain” will be excluded
from gross income for purposes of the 95% gross income test. Passive foreign exchange gain generally includes real estate foreign exchange
gain as described above, and also includes foreign currency gain attributable to any item of income or gain that is qualifying income
for purposes of the 95% gross income test and foreign currency gain attributable to the acquisition or ownership of (or becoming or being
the obligor under) obligations. These exclusions for real estate foreign exchange gain and passive foreign exchange gain do not apply
to any certain foreign currency gain derived from dealing, or engaging in substantial and regular trading, in securities. Such gain is
treated as non-qualifying income for purposes of both the 75% and 95% gross income tests.
Failure
to Satisfy Gross Income Tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless
may qualify as a REIT for that year if we qualify for relief under certain provisions of the U.S. federal income tax laws. Those relief
provisions are generally available if:
| · | our failure to meet those tests is due to reasonable cause and not to willful neglect; and |
| · | following such failure for any taxable year, we file a schedule of the sources of our income with the IRS in accordance with regulations
prescribed by the Secretary of the Treasury. |
We cannot predict, however, whether in all circumstances
we would qualify for the relief provisions. In addition, as discussed above in “—Taxation of Our Company,” even if the
relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amount by which we fail the
75% gross income test or the 95% gross income test multiplied, in either case, by a fraction intended to reflect our profitability.
Asset Tests
To maintain our qualification as a REIT, we also
must satisfy the following asset tests at the end of each quarter of each taxable year. First, at least 75% of the value of our total
assets must consist of:
| · | cash or cash items, including certain receivables and money market funds and, in certain circumstances, foreign currencies; |
| · | interests in real property, including leaseholds, options to acquire real property and leaseholds, and personal property, to the extent
such personal property is leased in connection with real property and rents attributable to such personal property are treated as “rents
from real property”; |
| · | interests in mortgage loans secured by real property; |
| · | shares (or transferable certificates of beneficial interest) in other REITs and debt instruments issued by “publicly offered
REITs”; and |
| · | investments in shares or debt instruments during the one-year period following our receipt of new capital that we raise through equity
offerings or public offerings of debt with at least a five-year term. |
Second, of our investments not included in the
75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets (the
“5% asset test”).
Third, of our investments not included in the
75% asset class, we may not own more than 10% of the voting power or 10% of the value of any one issuer’s outstanding securities
(the “10% vote test” and “10% value test,” respectively).
Fourth, no more than 20% of the value of our total
assets may consist of the securities of one or more TRSs.
Fifth, no more than 25% of the value of our total
assets may consist of the securities of TRSs, other non-TRS taxable subsidiaries, and other assets that are not qualifying assets for
purposes of the 75% asset test (the “25% securities test”).
Sixth, no more than 25% of the value of our total
assets may consist of debt instruments issued by “publicly offered REITs” to the extent not secured by real property or interests
in real property.
For purposes of the 5% asset test, the 10% vote
test and the 10% value test, the term “securities” does not include shares in another REIT, debt of “publicly offered
REITs”, equity or debt securities of a qualified REIT subsidiary or a TRS, mortgage loans that constitute real estate assets, or
equity interests in a partnership. The term “securities,” however, generally includes debt securities issued by a partnership
or another REIT (other than a “publicly offered REIT”), except that for purposes of the 10% value test, the term “securities”
does not include:
| · | “Straight debt” securities, which is defined as a written unconditional promise to pay on demand or on a specified date
a sum certain in money if (1) the debt is not convertible, directly or indirectly, into equity, and (2) the interest rate and
interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt”
securities do not include any securities issued by a partnership or a corporation in which we or any controlled TRS (i.e., a TRS in which
we own directly or indirectly more than 50% of the voting power or value of the shares) hold non-“straight debt” securities
that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities
include debt subject to the following contingencies: |
| · | a contingency relating to the time of payment of interest or principal, as long as either (1) there is no change to the effective
yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield,
or (2) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by us exceeds
$1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and |
| · | a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency
is consistent with customary commercial practice. |
| · | Any loan to an individual or an estate; |
| · | Any “Section 467 rental agreement,” other than an agreement with a related party tenant; |
| · | Any obligation to pay “rents from real property”; |
| · | Certain securities issued by governmental entities; |
| · | Any security issued by a REIT; |
| · | Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes in which we are a partner to
the extent of our proportionate interest in the equity and debt securities of the partnership; and |
| · | Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes not described in the preceding
bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income
for purposes of the 75% gross income test described above in “—Gross Income Tests.” |
For purposes of the 10% value test, our proportionate
share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the
securities described in the last two bullet points above.
We will monitor the status of our assets for purposes
of the various asset tests and will manage our portfolio in order to comply at all times with such tests. However, there is no assurance
that we will not inadvertently fail to comply with such tests. If we fail to satisfy the asset tests at the end of a calendar quarter,
we will not lose our REIT qualification if:
| · | we satisfied the asset tests at the end of the preceding calendar quarter; and |
| · | the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets
and was not wholly or partly caused by the acquisition of one or more non-qualifying assets. |
If we did not satisfy the condition described
in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the
calendar quarter in which it arose.
If we violate the 5% asset test, the 10% vote
test or the 10% value test described above at the end of any quarter of each taxable year, we will not lose our REIT qualification if
(1) the failure is de minimis (up to the lesser of 1% of the value of our assets or $10 million) and (2) we dispose of assets
causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify
such failure. In the event of a failure of any of the asset tests (other than de minimis failures described in the preceding sentence),
as long as the failure was due to reasonable cause and not to willful neglect, we will not lose our REIT qualification if we (1) dispose
of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we
identify the failure, (2) we file a schedule with the IRS describing each asset that caused the failure and (3) pay a tax equal
to the greater of $50,000 or 21% of the net income from the assets causing the failure during the period in which we failed to satisfy
the asset tests.
Currently, we believe that our assets satisfy
the foregoing asset test requirements. However, we will not obtain independent appraisals to support our conclusions as to the value of
our assets. Moreover, the values of some assets may not be susceptible to a precise determination. As a result, there can be no assurance
that the IRS will not contend that our ownership of assets violates one or more of the asset tests applicable to REITs.
Distribution Requirements
Each taxable year, we must distribute dividends,
other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least
equal to:
| · | 90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and our net capital gain or
loss, and |
| · | 90% of our after-tax net income, if any, from Foreclosure Property, minus |
| · | the sum of certain items of non-cash income. |
We must pay such distributions in the taxable
year to which they relate, or in the following taxable year if either (1) we declare the distribution before we timely file our U.S.
federal income tax return for the year, pay the distribution on or before the first regular dividend payment date after such declaration
and elect in our tax return to have a specified dollar amount of such distribution treated as if paid during the prior year or (2) we
declare the distribution in October, November or December of the taxable year, payable to stockholders of record on a specified
day in any such month, and we actually pay the dividend before the end of January of the following year. The distributions under
clause (1) are taxable to the stockholders in the year in which paid, and the distributions in clause (2) are treated as paid
on December 31st of the prior taxable year to the extent of our earnings and profits. In both instances, these distributions relate
to our prior taxable year for purposes of the 90% distribution requirement.
Further, to the extent we are not a “publicly
offered REIT,” in order for our distributions to be counted as satisfying the annual distribution requirement for REITs and to provide
us with the REIT-level tax deduction, such distributions must not be “preferential dividends.” A dividend is not a preferential
dividend if that distribution is (1) pro rata among all outstanding shares within a particular class and (2) in accordance with
the preferences among different classes of shares as set forth in our organizational documents. However, the preferential dividend rule does
not apply to “publicly offered REITs.” Currently, we are a “publicly offered REIT.”
In addition to the annual distribution requirement
described above, to continue to qualify as a REIT, we must not have any non-REIT accumulated earnings and profits, as measured for U.S.
federal income tax purposes, at the end of any REIT taxable year. We were required distribute any such non-REIT accumulated earnings and
profits that we had when we elected to be taxable as a REIT prior to the end of our first REIT taxable year, which ended December 31,
2016. We did not have any earnings and profits from prior years and we believe we made sufficient distributions in 2016 such that we did
not have any undistributed non-REIT earnings and profits at the end of 2016. However, no complete assurance can be provided that we accurately
determined our non-REIT earnings and profits or distributed those amounts before the end of our first REIT year. If it is subsequently
determined that we had undistributed non-REIT earnings and profits as of the end of our first REIT taxable year or at the end of any subsequent
taxable year, we could fail to qualify as a REIT.
We will pay U.S. federal income tax on taxable
income, including net capital gain that we do not distribute to stockholders. Furthermore, if we fail to distribute during a calendar
year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling
in the last three months of the calendar year, at least the sum of:
| · | 85% of our REIT ordinary income for such year, |
| · | 95% of our REIT capital gain income for such year, and |
| · | any undistributed taxable income (ordinary and capital gain) from all prior periods, |
we will incur a 4% nondeductible excise tax on the excess of such required
distribution over the amounts we actually distribute.
We may elect to retain and pay U.S. federal income
tax on the net long-term capital gain we receive in a taxable year. If we so elect, we will be treated as having distributed any such
retained amount for purposes of the 4% nondeductible excise tax described above. We intend to make timely distributions sufficient to
satisfy the annual distribution requirements and to avoid U.S. federal corporate income tax and the 4% nondeductible excise tax.
Limitations
on Deductions. It is possible that, from time to time, we may experience timing differences between the actual receipt of income
and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable
income. For example, we may not deduct recognized capital losses from our “REIT taxable income.” Further, it is possible that,
from time to time, we may be allocated a share of net capital gain attributable to the sale of depreciated property that exceeds our allocable
share of cash attributable to that sale. Additionally, we generally will be required to recognize certain amounts as income no later than
the time such amounts are reflected on certain financial statements.
A taxpayer’s net interest expense deduction
may be limited to 30% (adjusted, in the absence of an election otherwise, to 50% for non-partnership entities for their 2019 and 2020
taxable years and for partnerships for their 2020 taxable years under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the
“CARES Act”)) of the sum of adjusted taxable income, business interest, and certain other amounts. Adjusted taxable income
does not include items of income or expense not allocable to a trade or business, business interest or expense, the deduction for qualified
business income, net operating losses (“NOLs”), and for years prior to 2022, deductions for depreciation, amortization, or
depletion. Under the CARES Act, a taxpayer may have elected to use its adjusted taxable income from its 2019 taxable year for purposes
of calculating its limitation in its 2020 taxable year. For partnerships, the interest deduction limit is applied at the partnership level,
subject to certain adjustments to the partners for unused deduction limitation at the partnership level. Disallowed interest expense is
carried forward indefinitely (subject to special rules for partnerships, including, under the CARES Act, the ability for a partner
allocated disallowed interest with respect to the partnership’s 2019 taxable year to deduct 50% of such amount in its 2020 taxable
year).
A “real property trade or business”
may elect out of this interest limit so long as it uses a 40-year recovery period for nonresidential real property, a 30-year recovery
period for residential real property, and a 20-year recovery period for related improvements described below. For this purpose, a real
property trade or business is any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental,
operating, management, leasing, or brokerage trade or business. We believe this definition encompasses our business and thus will have
elected to opt out of the limits on interest deductibility.
In addition, for taxable years beginning after
December 31, 2020, the NOL deduction is generally limited to 80% of taxable income (before the deduction). REITs may indefinitely
carryforward (but not carryback) unused NOLs.
As a result of the foregoing, we may have less
cash than is necessary to distribute taxable income sufficient to avoid U.S. federal corporate income tax and the excise tax imposed on
certain undistributed income or even to meet the 90% distribution requirement. In such a situation, we may need to borrow funds or, if
possible, pay taxable dividends of our stock or debt securities.
Elective
Cash/Stock Dividends. We may satisfy the 90% distribution test with taxable distributions of our stock or debt securities.
The IRS has issued Revenue Procedure 2017-45 authorizing elective cash/stock dividends to be made by “publicly offered REITs.”
Pursuant to Revenue Procedure 2017-45, the IRS will treat the distribution of stock pursuant to an elective cash/stock dividend as a distribution
of property under Section 301 of the Code (i.e., a dividend), as long as at least 20% of the total dividend is available in cash
and certain other parameters detailed in the Revenue Procedure are satisfied. Although we do not currently intend to pay dividends in
our stock, if in the future we choose to pay dividends in our stock, our stockholders may be required to pay tax in excess of the cash
that they receive.
Under certain circumstances, we may be able to
correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in
a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able
to avoid U.S. federal income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based
upon the amount of any deduction we take for deficiency dividends.
Recordkeeping Requirements
We must maintain certain records in order to qualify
and maintain our qualification as a REIT. In addition, to avoid a monetary penalty, we must request on an annual basis information from
our stockholders designed to disclose the actual ownership of our outstanding shares. We intend to comply with these requirements.
Failure to Qualify
If we fail to satisfy one or more requirements
for REIT qualification, other than the gross income tests and the asset tests, we could avoid disqualification if our failure is due to
reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. In addition, there are relief provisions
for a failure of the gross income tests and asset tests, as described in “—Gross Income Tests” and “—Asset
Tests.”
If we fail to qualify as a REIT in any taxable
year, and no relief provision applies, we would be subject to U.S. federal corporate income tax. In addition, we may be required to pay
penalties and/or interest with respect to such tax. In calculating our taxable income in a year in which we fail to qualify as a REIT,
we would not be able to deduct amounts paid out to stockholders. In fact, we would not be required to distribute any amounts to stockholders
in that year. In such event, to the extent of our current and accumulated earnings and profits, distributions to stockholders generally
would be taxable as ordinary dividend income. Subject to certain limitations of the U.S. federal income tax laws, corporate stockholders
may be eligible for the dividends received deduction and stockholders taxed at individual rates may be eligible for the reduced U.S. federal
income tax rate of up to 20% on such dividends. Unless we qualified for relief under specific statutory provisions, we also would be disqualified
from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether
we would qualify for such statutory relief in all circumstances.
Taxation of Taxable U.S. Stockholders
This section is a summary of the rules governing
the U.S. federal income taxation of U.S. stockholders and is for general information only. We urge you to consult your tax advisors
to determine the impact of U.S. federal, state, and local income tax laws on the purchase, ownership and disposition of our stock.
As used herein, the term “U.S. stockholder”
means a beneficial owner of our capital stock that for U.S. federal income tax purposes is:
| · | a citizen or resident of the United States; |
| · | a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under
the laws of the United States, any of its states or the District of Columbia; |
| · | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| · | any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more United
States persons (as defined in Code Section 7701(a)(30)) have the authority to control all substantial decisions of the trust or (2) it
has a valid election in place to be treated as a United States person. |
If a partnership, entity or arrangement treated
as a partnership for U.S. federal income tax purposes holds our stock, the U.S. federal income tax treatment of a partner in the partnership
will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership holding
our stock, you should consult your tax advisor regarding the consequences of the ownership and disposition of our stock by the partnership.
As long as we maintain our qualification as a
REIT, a taxable U.S. stockholder must generally take into account as ordinary income distributions made out of our current or accumulated
earnings and profits that we do not designate as capital gain dividends or retained long-term capital gain. For purposes of determining
whether a distribution is made out of our current or accumulated earnings and profits, our earnings and profits will be allocated first
to our preferred stock dividends and then to our common stock dividends. Individuals, trusts, and estates generally may deduct 20% of
the “qualified REIT dividends” (i.e., REIT dividends other than capital gain dividends and portions of REIT dividends designated
as “qualified dividend income,” which in each case are already eligible for capital gain tax rates) they receive. The deduction
for qualified REIT dividends is not subject to the wage and property basis limits that apply to other types of “qualified business
income” eligible for the 20% deduction. However, to qualify for this deduction, the U.S. stockholder receiving such dividends must
hold the dividend-paying REIT stock for at least 46 days (taking into account certain special holding period rules) of the 91-day period
beginning 45 days before the stock becomes ex-dividend and cannot be under an obligation to make related payments with respect to a position
in substantially similar or related property. The 20% deduction for qualified REIT dividends results in a maximum 29.6% U.S. federal income
tax rate on ordinary REIT dividends, not including the 3.8% Medicare tax, discussed below. Without further legislation, this deduction
will sunset after 2025.
A U.S. stockholder will not qualify for the dividends
received deduction generally available to corporations. Additionally, because we are not generally subject to U.S. federal income tax
on the portion of our REIT taxable income distributed to our stockholders (See “—Taxation of Our Company” above), our
dividends generally will not be eligible for the 20% U.S. federal income tax rate on “qualified dividend income” (generally,
dividends paid by domestic C corporations and certain qualified foreign corporations to U.S. stockholders that are taxed at individual
rates). As a result, our ordinary REIT dividends will be taxed at the higher tax rate applicable to ordinary income, reduced by the 20%
deduction described above.
However, the 20% tax rate for qualified dividend
income will apply to our ordinary REIT dividends, if any, that are (1) attributable to dividends received by us from non-REIT corporations,
such as any TRS of ours, and (2) attributable to income upon which we have paid U.S. federal corporate income tax (e.g., to the extent
that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income,
a stockholder must hold our stock for more than 60 days during the 121-day period beginning on the date that is 60 days before the date
on which our stock becomes ex-dividend.
Individuals, trusts, and estates whose income
exceeds certain thresholds are also subject to an additional 3.8% Medicare tax on dividends received from us. U.S. stockholders are urged
to consult their tax advisors regarding the implications of the additional Medicare tax resulting from an investment in our shares.
A U.S. stockholder generally will recognize distributions
that we designate as capital gain dividends without regard to how long the U.S. stockholder has held our stock. We generally will designate
our capital gain dividends as either 20% or 25% rate distributions. See “—Capital Gains and Losses.”
We may elect to retain and pay U.S. federal income
tax on the net long-term capital gain that we recognize in a taxable year. In that case, to the extent that we designate such amount in
a timely notice to such stockholder, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital
gain. The U.S. stockholder would receive a credit for its proportionate share of the tax we paid. The U.S. stockholder would increase
the basis in its shares by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the tax
we paid.
A U.S. stockholder will not incur tax on a distribution
in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. stockholder’s
stock. Instead, the distribution will reduce the U.S. stockholder’s adjusted basis in such shares. A U.S. stockholder will recognize
a distribution in excess of both our current and accumulated earnings and profits and the U.S. stockholder’s adjusted basis in his
or her shares as long-term capital gain, or short-term capital gain if the shares have been held for one year or less, assuming the shares
are a capital asset in the hands of the U.S. stockholder. In addition, if we declare a distribution in October, November, or December of
any year that is payable to a U.S. stockholder of record on a specified date in any such month, such distribution will be treated as both
paid by us and received by the U.S. stockholder on December 31 of such year, provided that we actually pay the distribution during
January of the following calendar year.
U.S. stockholders may not include in their individual
U.S. federal income tax returns any of our NOLs or capital losses. Instead, these losses are generally carried over by us for potential
offset against our future income. Taxable distributions from us and gain from the disposition of our stock will not be treated as passive
activity income and, therefore, stockholders generally will not be able to apply any “passive activity losses,” such as losses
from certain types of limited partnerships in which the U.S. stockholder is a limited partner, against such income or gain. In addition,
taxable distributions from us and gain from the disposition of our stock generally will be treated as investment income for purposes of
the investment interest limitations. We will notify U.S. stockholders after the close of our taxable year as to the portions of the distributions
attributable to that year that constitute ordinary income, return of capital and capital gain.
Taxation of U.S. Stockholders on the Disposition of Capital Stock
A U.S. stockholder who is not a dealer in securities
must generally treat any gain or loss realized upon a taxable disposition of our stock as long-term capital gain or loss if the U.S. stockholder
has held our stock for more than one year and otherwise as short-term capital gain or loss. In general, a U.S. stockholder will realize
gain or loss in an amount equal to the difference between the sum of the fair market value of any property and the amount of cash received
in such disposition and the U.S. stockholder’s adjusted tax basis. A stockholder’s adjusted tax basis generally will equal
the U.S. stockholder’s acquisition cost, increased by the excess of net capital gains deemed distributed to the U.S. stockholder
(discussed above) less tax deemed paid on such gains and reduced by any returns of capital. However, a U.S. stockholder must treat any
loss upon a sale or exchange of stock held by such stockholder for six months or less as a long-term capital loss to the extent of capital
gain dividends and any other actual or deemed distributions from us that such U.S. stockholder treats as long-term capital gain. All or
a portion of any loss that a U.S. stockholder realizes upon a taxable disposition of our stock may be disallowed if the U.S. stockholder
purchases substantially identical stock within 30 days before or after the disposition.
Taxation of U.S. Stockholders on a Conversion of Preferred Stock
Except as provided below, (i) a U.S. stockholder
generally will not recognize gain or loss upon the conversion of preferred stock into our common stock, and (ii) a U.S. stockholder’s
basis and holding period in our common stock received upon conversion generally will be the same as those of the converted shares of preferred
stock (but the basis will be reduced by the portion of adjusted tax basis allocated to any fractional share exchanged for cash). Any of
our shares of common stock received in conversion that are attributable to accumulated and unpaid dividends on the converted shares of
preferred stock will be treated as a distribution that is potentially taxable as a dividend. Cash received upon conversion in lieu of
a fractional share generally will be treated as payment in exchange for such fractional share, and gain or loss will be recognized on
the receipt of cash in an amount equal to the difference between the amount of cash received and the adjusted tax basis allocable to the
fractional share deemed exchanged. This gain or loss will be long-term capital gain or loss if the U.S. stockholder has held the preferred
stock for more than one year at the time of conversion. U.S. stockholders are urged to consult with their tax advisors regarding the U.S.
federal income tax consequences of any transaction by which such U.S. stockholder exchanges our commons stock received on a conversion
of preferred stock for cash or other property.
Taxation of U.S. Stockholders on a Redemption of Preferred Stock
In general, a redemption of any preferred stock
will be treated under Section 302 of the Code as a distribution that is taxable at ordinary U.S. federal income tax rates as a dividend
(to the extent of our current or accumulated earnings and profits), unless the redemption satisfies certain tests set forth in Section 302(b) of
the Code enabling the redemption to be treated as a sale of the preferred stock (in which case the redemption will be treated in the same
manner as a sale described in “— Taxation of U.S. Stockholders on the Disposition of Capital Stock” above). The redemption
will satisfy such tests and be treated as a sale of the preferred stock if the redemption:
| · | is “substantially disproportionate” with respect to the U.S. stockholder’s interest in our stock; |
| · | results in a “complete termination” of the U.S. stockholder’s interest in all classes of our stock; or |
| · | is “not essentially equivalent to a dividend” with respect to the U.S. stockholder, all within the meaning of Section 302(b) of
the Code. |
In determining whether any of these tests have
been met, stock considered to be owned by the U.S. stockholder by reason of certain constructive ownership rules set forth in the
Code, as well as stock actually owned, generally must be taken into account. Because the determination as to whether any of the three
alternative tests of Section 302(b) of the Code described above will be satisfied with respect to any particular U.S. stockholder
of the preferred stock depends upon the facts and circumstances at the time that the determination must be made, prospective investors
are advised to consult their tax advisors to determine such tax treatment.
If a redemption of preferred stock does not meet
any of the three tests described above, the redemption proceeds will be treated as a distribution, as described in “—Taxation
of Taxable U.S. Stockholders” above. In that case, a U.S. stockholder’s adjusted tax basis in the redeemed preferred stock
will be transferred to such U.S. stockholder’s remaining stock holdings in our company. If the U.S. stockholder does not retain
any of our stock, such basis could be transferred to a related person that holds our stock or it may be lost.
Under previously proposed Treasury regulations,
if any portion of the amount received by a U.S. stockholder on a redemption of any class of our preferred stock is treated as a distribution
with respect to our stock but not as a taxable dividend, then such portion will be allocated to all shares of the redeemed class of stock
held by the redeemed stockholder just before the redemption on a pro-rata, share-by-share, basis. The amount applied to each share will
first reduce the redeemed U.S. stockholder’s basis in that share and any excess after the basis is reduced to zero will result in
taxable gain. If the redeemed stockholder has different bases in its stock, then the amount allocated could reduce some of the basis in
certain shares while reducing all the basis and giving rise to taxable gain in others. Thus, the redeemed U.S. stockholder could have
gain even if such U.S. stockholder’s basis in all its stock of the redeemed class exceeded such portion.
The previously proposed Treasury regulations would
permit the transfer of basis in the redeemed preferred stock to the redeemed U.S. stockholder’s remaining, unredeemed preferred
stock of the same class (if any), but not to any other class of stock held (directly or indirectly) by the redeemed U.S. stockholder.
Instead, any unrecovered basis in the redeemed preferred stock would be treated as a deferred loss to be recognized when certain conditions
are satisfied. On March 28, 2019, these proposed regulations were withdrawn. As a result, the treatment governing adjustments to
the basis of a U.S. holder’s preferred stock with respect to amounts treated as a distribution with respect to preferred stock,
but not as a dividend, as well as the treatment of the basis of any unredeemed shares, may be less certain.
Capital Gains and Losses
A taxpayer generally must hold a capital asset
for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss. The highest
marginal individual U.S. federal income tax rate currently is 37%. The maximum U.S. federal income tax rate on long-term capital gain
applicable to taxpayers taxed at individual rates is 20% for sales and exchanges of assets held for more than one year. The maximum U.S.
federal income tax rate on long-term capital gain from the sale or exchange of “Section 1250 property,” or depreciable
real property, is 25%, which applies to the lesser of the total amount of the gain or the accumulated depreciation on the Section 1250
property.
Individuals, trusts and estates whose income exceeds
certain thresholds are also subject to an additional 3.8% Medicare tax on gain from the sale of our stock. U.S. stockholders are urged
to consult their tax advisors regarding the implications of the additional Medicare tax resulting from an investment in our stock.
With respect to distributions that we designate
as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution
is taxable at a 20% or 25% rate to our U.S. stockholders taxed at individual rates. Thus, the tax rate differential between capital gain
and ordinary income for those taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income
may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against
its ordinary income only up to a maximum annual amount of $3,000 ($1,500 for married individuals filing separate returns). A non-corporate
taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate
rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three
years and forward five years.
Taxation of Tax-Exempt Stockholders
This section is a summary of rules governing
the U.S. federal income taxation of U.S. stockholders that are tax-exempt entities and is for general information only. We urge tax-exempt
stockholders to consult their tax advisors to determine the impact of U.S. federal, state, and local income tax laws on the purchase,
ownership and disposition of our stock, including any reporting requirements.
Tax-exempt entities, including qualified employee
pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. However,
they are subject to taxation on their unrelated business taxable income (“UBTI”). Although many investments in real estate
generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute
UBTI so long as the exempt employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or business of the
pension trust. Based on that ruling, amounts that we distribute to tax-exempt stockholders generally should not constitute UBTI. However,
if a tax-exempt stockholder were to finance (or be deemed to finance) its acquisition of our stock with debt, a portion of the income
that it receives from us would constitute UBTI pursuant to the “debt-financed property” rules. Moreover, social clubs, voluntary
employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from
taxation under special provisions of the U.S. federal income tax laws are subject to different UBTI rules, which generally will require
them to characterize distributions that they receive from us as UBTI. Finally, in certain circumstances, a qualified employee pension
or profit sharing trust that owns more than 10% of our shares of stock must treat a percentage of the dividends that it receives from
us as UBTI. Such percentage is equal to the gross income we derive from an unrelated trade or business, determined as if we were a pension
trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding
more than 10% of our shares of stock only if:
| · | the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%; |
| · | we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our shares of stock be owned
by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our shares of stock in proportion
to their actuarial interests in the pension trust; and |
| · | one pension trust owns more than 25% of the value of our shares of stock; or |
| · | a group of pension trusts individually holding more than 10% of the value of our shares of stock collectively owns more than 50% of
the value of our shares of stock. |
Taxation of Non-U.S. Stockholders
This section is a summary of the rules governing
the U.S. federal income taxation of non-U.S. stockholders. The term “non-U.S. stockholder” means a beneficial owner of our
stock that is not a U.S. stockholder, a partnership (or entity treated as a partnership for U.S. federal income tax purposes) or a tax-exempt
stockholder. The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships,
and other foreign stockholders are complex, and this summary is for general information only. We urge non-U.S. stockholders to consult
their tax advisors to determine the impact of U.S. federal, state, and local income tax laws on the purchase, ownership and disposition
of our stock, including any reporting requirements.
Distributions
A non-U.S. stockholder that receives a distribution
that is not attributable to gain from our sale or exchange of a “United States real property interest” (“USRPI”),
as defined below, and that we do not designate as a capital gain dividend or retained capital gain will recognize ordinary income to the
extent that we pay such distribution out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross
amount of the distribution ordinarily will apply to such distribution unless an applicable tax treaty reduces or eliminates the tax.
However, if a distribution is treated as effectively
connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject
to U.S. federal income tax on the distribution at graduated rates, in the same manner as U.S. stockholders are taxed with respect to such
distribution, and a non-U.S. stockholder that is a corporation also may be subject to a 30% branch profits tax with respect to that distribution.
The branch profits tax may be reduced by an applicable tax treaty. We plan to withhold U.S. federal income tax at the rate of 30% on the
gross amount of any such distribution paid to a non-U.S. stockholder unless either:
| · | a lower treaty rate applies and the non-U.S. stockholder provides us with an IRS Form W-8BEN or W-8BEN-E, as applicable, evidencing
eligibility for that reduced rate; |
| · | the non-U.S. stockholder provides us with an IRS Form W-8ECI claiming that the distribution is effectively connected with the
conduct of a U.S. trade or business; or |
| · | the distribution is treated as attributable to a sale of a USRPI under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”)
(discussed below). |
A non-U.S. stockholder will not incur U.S. tax
on a distribution in excess of our current and accumulated earnings and profits if the excess portion of such distribution does not exceed
the adjusted basis of its stock. Instead, the excess portion of such distribution will reduce the adjusted basis of the non-U.S. stockholder
in such shares. A non-U.S. stockholder will be subject to tax on a distribution that exceeds both our current and accumulated earnings
and profits and the adjusted basis of its stock, if the non-U.S. stockholder otherwise would be subject to tax on gain from the sale or
disposition of its stock, as described below. We must withhold 15% of any distribution that exceeds our current and accumulated earnings
and profits. Consequently, although we intend to withhold at a rate of 30% on the entire amount of any distribution, to the extent that
we do not do so, we will withhold at a rate of 15% on any portion of a distribution not subject to withholding at a rate of 30%. Because
we generally cannot determine at the time we make a distribution whether the distribution will exceed our current and accumulated earnings
and profits, we normally will withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend.
However, by filing a U.S. tax return, a non-U.S. stockholder may claim a refund of amounts that we withhold if we later determine that
a distribution in fact exceeded our current and accumulated earnings and profits.
For any year in which we qualify as a REIT, a
non-U.S. stockholder may incur tax on distributions that are attributable to gain from our sale or exchange of a USRPI under FIRPTA. A
USRPI includes certain interests in real property and shares in corporations at least 50% of whose assets consist of interests in real
property. Under FIRPTA, subject to the exceptions discussed below for (1) distributions on a class of shares that is regularly traded
on an established securities market to a less-than-10% holder of such shares and (2) distributions to “qualified shareholders”
and a “qualified foreign pension funds,” a non-U.S. stockholder is taxed on distributions attributable to gain from sales
of USRPIs as if such gain were effectively connected with a U.S. business of the non-U.S. stockholder. A non-U.S. stockholder thus would
be taxed on such a distribution at the normal capital gains rates applicable to U.S. stockholders, subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of a nonresident alien individual. A non-U.S. corporate stockholder not entitled
to treaty relief or exemption also may be subject to the 30% branch profits tax on such a distribution. Unless the exception described
in the next paragraph applies, we must withhold 21% of any distribution that we could designate as a capital gain dividend. A non-U.S.
stockholder may receive a credit against its tax liability for the amount we withhold.
However, if the applicable class of our stock
is regularly traded on an established securities market in the United States, capital gain distributions on such class of stock that are
attributable to our sale of a USRPI will be treated as ordinary dividends rather than as gain from the sale of a USRPI, as long as the
non-U.S. stockholder did not own more than 10% of the applicable class of our stock at any time during the one-year period preceding the
distribution or the non-U.S. stockholder was treated as a “qualified shareholder” and “qualified foreign pension fund.”
In such a case, non-U.S. stockholders generally will be subject to withholding tax on such capital gain distributions in the same manner
as they are subject to withholding tax on ordinary dividends. We believe that our common stock is regularly traded on an established securities
market in the United States. If our common stock is not regularly traded on an established securities market in the United States, capital
gain distributions that are attributable to our sale of USRPIs will be subject to tax under FIRPTA, as described above. In that case,
we must withhold 21% of any distribution that we could designate as a capital gain dividend. A non-U.S. stockholder may receive a credit
against its tax liability for the amount we withhold.
Moreover, if a non-U.S. stockholder disposes of
our common stock during the 30-day period preceding a dividend payment, and such non-U.S. stockholder (or a person related to such non-U.S.
stockholder) acquires or enters into a contract or option to acquire our common stock within 61 days of the first day of the 30-day period
described above, and any portion of such dividend payment would, but for the disposition, be treated as a USRPI capital gain to such non-U.S.
stockholder, then such non-U.S. stockholder will be treated as having USRPI capital gain in an amount that, but for the disposition, would
have been treated as USRPI capital gain.
Qualified
Shareholders. Subject to the exception discussed below, any distribution to a “qualified shareholder” who holds
our stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income tax as income effectively
connected with a U.S. trade or business, and thus will not be subject to FIRPTA withholding as described above. However, while a “qualified
shareholder” will not be subject to FIRPTA withholding on our distributions, non-U.S. persons who hold interests in the “qualified
shareholder” (other than interests solely as a creditor) and hold more than 10% of our stock, either through the “qualified
shareholder” or otherwise, will still be subject to FIRPTA withholding.
A “qualified shareholder” is a foreign
person that (1) either is eligible for the benefits of a comprehensive income tax treaty that includes an exchange of information
program and whose principal class of interests is listed and regularly traded on one or more recognized stock exchanges (as defined in
such income tax treaty), or is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction
that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership
units that represents more than 50% of the value of all of the partnership’s units and is regularly traded on the NYSE or NASDAQ
markets, (2) is a “qualified collective investment vehicle” (as defined below), and (3) maintains records of the
identity of each person who, at any time during the foreign person’s taxable year, is the direct owner of 5% or more of the class
of interests or units (as applicable) described in (1), above.
A “qualified collective investment vehicle”
is a foreign person that (1) would be eligible for a reduced rate of withholding under the comprehensive income tax treaty described
above, even if such entity owns more than 10% of the stock of the REIT, (2) is publicly traded, is treated as a partnership under
the Code, is a withholding foreign partnership, and would be treated as “United States real property holding corporation”
under FIRPTA if it were a domestic corporation, or (3) is designated as such by the Secretary of the Treasury and is either (a) “fiscally
transparent” within the meaning of Section 894 of the Code or (b) required to include dividends in its gross income, but
is entitled to a deduction for distributions to its investors.
Qualified
Foreign Pension Funds. Any distribution to a “qualified foreign pension fund” or an entity all of the interests
of which are held by a “qualified foreign pension fund” who holds our stock directly or indirectly (through one or more partnerships)
will not be subject to U.S. federal income tax as income effectively connected with the a U.S. trade or business, and thus will not be
subject to FIRPTA withholding as described above.
A “qualified foreign pension fund”
is any trust, corporation, or other organization or arrangement (1) which is created or organized under the laws of a country other
than the United States, (2) which is established to provide retirement or pension benefits to participants or beneficiaries that
are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered,
(3) which does not have a single participant or beneficiary with a right to more than 5% of its assets or income, (4) which
is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities
in the country in which it is established or operates, and (5) with respect to which, under the laws of the country in which it is
established or operates, (a) contributions to such organization or arrangement that would otherwise be subject to tax under such
laws are deductible or excluded from the gross income of such entity or taxed at a reduced rate or (b) taxation of any investment
income of such organization or arrangement is deferred or such income is taxed at a reduced rate.
FATCA.
Under the Foreign Account Tax Compliance Act (“FATCA”), a U.S. withholding tax at a 30% rate will be imposed on dividends
paid to certain non-U.S. stockholders if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. If payment
of withholding taxes is required, non-U.S. stockholders that are otherwise eligible for an exemption from, or reduction of, U.S. withholding
taxes with respect to such dividends will be required to seek a refund from the IRS to obtain the benefit of such exemption or reduction.
We will not pay any additional amounts in respect of any amounts withheld.
Dispositions
Subject to the discussion below regarding dispositions
by “qualified shareholders” and “qualified foreign pension funds,” non-U.S. stockholders could incur tax under
FIRPTA with respect to gain realized upon a disposition of our stock if we are a United States real property holding corporation (“USRPHC”)
during a specified testing period. If at least 50% of a REIT’s assets are USRPIs, then the REIT will be a USRPHC. We believe that
we are a USRPHC based on our investment strategy. However, even if we are a USRPHC, a non-U.S. stockholder generally would not incur tax
under FIRPTA on gain from the sale of our stock if we are a “domestically controlled qualified investment entity.”
A “domestically controlled qualified investment
entity” includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares are held
directly or indirectly by non-U.S. stockholders. We cannot assure you that this test has been or will be met.
If the applicable class of our stock is regularly
traded on an established securities market, an additional exception to the tax under FIRPTA will be available with respect to a non-U.S.
stockholder’s disposition of such stock, even if we do not qualify as a domestically controlled qualified investment entity at the
time the non-U.S. stockholder sells such stock. Under this additional exception, the gain from such a sale by a non-U.S. stockholder will
not be subject to tax under FIRPTA if (1) the applicable class of our stock is treated as being regularly traded on an established
securities market under applicable Treasury Regulations and (2) the non-U.S. stockholder owned, actually or constructively, 10% or
less of that class of stock at all times during a specified testing period. We believe that our common stock is regularly traded on an
established securities market.
In addition, a sale of our stock by a “qualified
shareholder” or a “qualified foreign pension fund” who holds our stock directly or indirectly (through one or more partnerships)
will not be subject to U.S. federal income tax under FIRPTA. However, while a “qualified shareholder” will not be subject
to FIRPTA withholding on a sale of our stock, non-United States persons who hold interests in the “qualified shareholder”
(other than interests solely as a creditor) and hold more than 10% of our stock, either through the “qualified shareholder”
or otherwise, will still be subject to FIRPTA withholding.
If the gain on the sale of our stock were taxed
under FIRPTA, a non-U.S. stockholder would be taxed on that gain in the same manner as U.S. stockholders, subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. In addition, distributions that are subject
to tax under FIRPTA also may be subject to a 30% branch profits tax when made to a non-U.S. stockholder treated as a corporation (under
U.S. federal income tax principles) that is not otherwise entitled to treaty exemption. Finally, if we are not a domestically controlled
qualified investment entity at the time our shares of stock are sold and the non-U.S. stockholder does not qualify for the exemptions
described in the preceding paragraph, under FIRPTA the purchaser of our stock also may be required to withhold 15% of the purchase price
and remit this amount to the IRS on behalf of the selling non-U.S. stockholder.
With respect to individual non-U.S. stockholders,
even if not subject to FIRPTA, capital gains recognized from the sale of our stock will be taxable to such non-U.S. stockholder if (1) the
gain is effectively connected with a U.S. trade or business of the non-U.S. stockholder, in which case the non-U.S. stockholder will be
subject to the same treatment as U.S. stockholders with respect to such gain, or (2) he or she is a non-resident alien individual
who is present in the United States for 183 days or more during the taxable year and some other conditions apply, in which case the non-resident
alien individual may be subject to a U.S. federal income tax on his or her U.S. source capital gain.
Information Reporting Requirements and Withholding
We will report to our stockholders and to the
IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding
rules, a stockholder may be subject to backup withholding at a rate of 24% with respect to distributions unless the stockholder:
| · | is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or |
| · | provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with
the applicable requirements of the backup withholding rules. |
A stockholder who does not provide us with its
correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will
be creditable against the stockholder’s U.S. federal income tax liability. In addition, we may be required to withhold a portion
of capital gain distributions to any stockholders who fail to certify their non-foreign status to us.
Backup withholding will generally not apply to
payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder provided that the non-U.S.
stockholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN,
W-8BEN-E or W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or
our paying agent has actual knowledge, or reason to know, that the holder is a United States person that is not an exempt recipient. Payments
of the proceeds from a disposition or a redemption effected outside the United States by a non-U.S. stockholder made by or through a foreign
office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not
backup withholding) generally will apply to such a payment if the broker has certain connections with the United States unless the broker
has documentary evidence in its records that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption
is otherwise established. Payment of the proceeds from a disposition by a non-U.S. stockholder of stock made by or through the U.S. office
of a broker is generally subject to information reporting and backup withholding unless the non-U.S. stockholder certifies under penalties
of perjury that it is not a United States person and satisfies certain other requirements, or otherwise establishes an exemption from
information reporting and backup withholding.
Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules may be refunded or credited against the stockholder’s U.S. federal income
tax liability if certain required information is furnished to the IRS. Stockholders should consult their tax advisors regarding application
of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.
Under FATCA, a U.S. withholding tax at a 30% rate
will be imposed on dividends paid to U.S. stockholders who own our shares of stock through foreign accounts or foreign intermediaries
if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. We will not pay any additional amounts in
respect of amounts withheld.
Other Tax Consequences
Tax Aspects of Our Investments in Our Operating Partnership and
Subsidiary Partnerships
The following discussion summarizes certain U.S.
federal income tax considerations applicable to our direct or indirect investments in our Operating Partnership and any subsidiary partnerships
or limited liability companies that we form or acquire (each individually a “Partnership” and, collectively, the “Partnerships”).
The discussion does not cover state or local tax laws or any U.S. federal tax laws other than income tax laws.
Classification
as Partnerships. We will include in our income our distributive share of each Partnership’s income and deduct our distributive
share of each Partnership’s losses only if such Partnership is classified for U.S. federal income tax purposes as a partnership
(or an entity that is disregarded for U.S. federal income tax purposes if the entity is treated as having only one owner for U.S. federal
income tax purposes) rather than as a corporation or an association taxable as a corporation. An unincorporated entity with at least two
owners or members will be classified as a partnership, rather than as a corporation, for U.S. federal income tax purposes if it:
| · | is treated as a partnership under the Treasury Regulations relating to entity classification (the “Check-the-Box Regulations”);
and |
| · | is not a “publicly traded partnership.” |
Under the Check-the-Box Regulations, an unincorporated
entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership.
If such an entity does not make an election, it will generally be treated as a partnership (or an entity that is disregarded for U.S.
federal income tax purposes if the entity is treated as having only one owner or member for U.S. federal income tax purposes) for U.S.
federal income tax purposes. Our Operating Partnership intends to be classified as a partnership for U.S. federal income tax purposes
and will not elect to be treated as an association taxable as a corporation under the Check-the-Box Regulations.
A publicly traded partnership is a partnership
whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent
thereof. A publicly traded partnership will not, however, be treated as a corporation for any taxable year if, for each taxable year beginning
after December 31, 1987 in which it was classified as a publicly traded partnership, 90% or more of the partnership’s gross
income for such year consists of certain passive-type income, including real property rents, gains from the sale or other disposition
of real property, interest, and dividends. Treasury Regulations provide limited safe harbors from the definition of a publicly traded
partnership. Pursuant to one of those safe harbors (the “Private Placement Exclusion”), interests in a partnership will not
be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership
were issued in a transaction or transactions that were not required to be registered under the Securities Act of 1933, as amended, and
(2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining
the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest
in the partnership is treated as a partner in such partnership only if (1) substantially all of the value of the owner’s interest
in the entity is attributable to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of
the use of the entity is to permit the partnership to satisfy the 100-partner limitation. We believe that our Operating Partnership and
each other Partnership in which we own an interest qualifies for the Private Placement Exclusion.
We have not requested, and do not intend to request,
a ruling from the IRS that our Operating Partnership will be classified as a partnership for U.S. federal income tax purposes. If for
any reason our Operating Partnership were taxable as a corporation, rather than as a partnership, for U.S. federal income tax purposes,
we likely would not be able to qualify as a REIT unless we qualified for certain relief provisions. See “—Gross Income Tests”
and “—Asset Tests.” In addition, any change in a Partnership’s status for U.S. federal income tax purposes might
be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. Further, items of income
and deduction of such Partnership would not pass through to its partners, and its partners would be treated as stockholders for tax purposes.
Consequently, such Partnership would be required to pay U.S. federal income tax at corporate rates on its net income, and distributions
to its partners would constitute dividends that would not be deductible in computing such Partnership’s taxable income.
Income Taxation of the Partnerships and their Partners
Partners,
Not the Partnerships, Subject to Tax. A partnership is generally not a taxable entity for U.S. federal income tax purposes.
Rather, we are required to take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits
for any taxable year of such Partnership ending within or with our taxable year, without regard to whether we have received or will receive
any distribution from such Partnership. However, as discussed below, the tax liability for adjustments to a partnership’s tax returns
made as a result of an audit by the IRS will be imposed on the partnership itself in certain circumstances absent an election to the contrary.
Partnership
Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners,
such allocations will be disregarded for tax purposes if they do not comply with the provisions of the U.S. federal income tax laws governing
partnership allocations. If an allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will
be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all
of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s
allocations of taxable income, gain, and loss are intended to comply with the requirements of the U.S. federal income tax laws governing
partnership allocations.
Tax
Allocations with Respect to Partnership Properties. Income, gain, loss, and deduction attributable to appreciated or depreciated
property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the
contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property
at the time of the contribution (the “704(c) Allocations”). The amount of the unrealized gain or unrealized loss (“Built-in
Gain” or “Built-in Loss”) is generally equal to the difference between the fair market value of the contributed property
at the time of contribution and the adjusted tax basis of such property at the time of contribution (a “Book-Tax Difference”).
Any property purchased for cash initially will have an adjusted tax basis equal to its fair market value, resulting in no Book-Tax Difference.
A book-tax difference generally is decreased on an annual basis as a result of depreciation deductions to the contributing partner for
book purposes but not for tax purposes. The 704(c) Allocations are solely for U.S. federal income tax purposes and do not affect
the book capital accounts or other economic or legal arrangements among the partners. In the future, our Operating Partnership may acquire
property that may have a Built-in Gain or a Built-in Loss in exchange for OP Units. Our Operating Partnership will have a carryover, rather
than a fair market value, adjusted tax basis in such contributed assets equal to the adjusted tax basis of the contributors in such assets,
resulting in a Book-Tax Difference. As a result of that Book-Tax Difference, we will have a lower adjusted tax basis with respect to that
portion of our Operating Partnership’s assets than we would have with respect to assets having a tax basis equal to fair market
value at the time of acquisition. This could result in lower depreciation deductions with respect to the portion of our Operating Partnership’s
assets attributable to such contributions.
The U.S. Treasury Department has issued regulations
requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a Book-Tax Difference
and outlining several reasonable allocation methods. Under certain available methods, the carryover basis of contributed properties in
the hands of our Operating Partnership (1) could cause us to be allocated lower amounts of depreciation deductions for U.S. federal
income tax purposes than would be allocated to us if all contributed properties were to have a tax basis equal to their fair market value
at the time of the contribution and (2) in the event of a sale of such properties, could cause us to be allocated taxable gain in
excess of the economic or book gain allocated to us as a result of such sale, with a corresponding benefit to the contributing partners.
An allocation described in (2) above might cause us to recognize taxable income in excess of cash proceeds in the event of a sale
or other disposition of property, which may adversely affect our ability to comply with the REIT distribution requirements and may result
in a greater portion of our distributions being taxed as dividends. We have not yet decided what method our Operating Partnership will
use to account for Book-Tax Differences.
Sale of a Partnership’s Property
Generally, any gain realized by a Partnership
on the sale of property held by the Partnership for more than one year will be long-term capital gain, except for any portion of such
gain that is treated as depreciation or cost recovery recapture. Under Section 704(c) of the Code, any gain or loss recognized
by a Partnership on the disposition of contributed properties will be allocated first to the partners of the Partnership who contributed
such properties to the extent of their Built-in Gain or Built-in Loss on those properties for U.S. federal income tax purposes. The partners’
Built-in Gain or Built-in Loss on such contributed properties will equal the difference between the partners’ proportionate share
of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution
as reduced for any decrease in the Book-Tax Difference.” See “—Income Taxation of the Partnerships and their Partners—Tax
Allocations with Respect to Partnership Properties.” Any remaining gain or loss recognized by the Partnership on the disposition
of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties, will be
allocated among the partners in accordance with their respective percentage interests in the Partnership.
Our share of any gain realized by a Partnership
on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers in the ordinary
course of the Partnership’s trade or business will be treated as income from a prohibited transaction that is subject to a 100%
penalty tax. Such prohibited transaction income may have an adverse effect upon our ability to satisfy the income tests for REIT status.
See “—Gross Income Tests.” We do not presently intend to acquire or hold or to allow any Partnership to acquire or hold
any property that represents inventory or other property held primarily for sale to customers in the ordinary course of our or such Partnership’s
trade or business.
Partnership Audit Rules
Under the rules applicable to U.S. federal
income tax audits of partnerships, any audit adjustment to items of income, gain, loss, deduction or credit of a partnership (and any
partner’s distributive share thereof) is determined, and taxes, interest or penalties attributable thereto are assessed and collected,
at the partnership level. The partnership itself may be liable for a hypothetical increase in partner-level taxes (including interest
and penalties) resulting from an adjustment of “partnership-related items” on the audit (the “imputed adjustment amount”),
regardless of changes in the composition of the partners (or their relative ownership) between the year under audit and the year of the
adjustment (and thus potentially causing the partners at the time of the audit adjustment to bear taxes attributable to former partners).
The rules also include an elective alternative method under which the additional taxes resulting from the adjustment are assessed
against the affected partners (often referred to as a “push-out election”), subject to a higher rate of interest than otherwise
would apply. These partnership audit rules could increase the U.S. federal income tax, interest, and/or penalties otherwise borne
by us in the event of a U.S. federal income tax audit of any of the Partnerships. Investors are urged to consult their tax advisors with
respect to these changes and their potential impact on their investment in our securities.
Legislative or Other Actions Affecting REITs
The present U.S. federal income tax treatment
of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could
affect the U.S. federal income tax treatment of an investment in us. The REIT rules are constantly under review by persons involved
in the legislative process and by the IRS and the U.S. Treasury Department, which may result in statutory changes as well as revisions
to regulations and interpretations. Additionally, several of the tax considerations described herein are currently under review and are
subject to change. Prospective securityholders are urged to consult their tax advisors regarding the effect of potential changes to the
U.S. federal tax laws on an investment in our securities.
State and Local Taxes
We and/or our securityholders may be subject to
taxation by various states and localities, including those in which we or a securityholder transacts business, owns property or resides.
The state and local tax treatment may differ from the U.S. federal income tax treatment described above. Consequently, prospective securityholders
should consult their tax advisors regarding the effect of state and local tax laws upon an investment in our securities.
Plan
of Distribution
We may sell the securities being offered hereby
in one or more of the following ways from time to time:
| · | through agents to the public or to investors; |
| · | to underwriters or dealers for resale to the public or to investors; |
| · | in “at the market offerings,” within the meaning of Rule 415 of the Securities Act; |
| · | through a combination of any of these methods of sale; or |
| · | in any manner, as provided in the accompanying prospectus supplement. |
We may also effect a distribution of the securities
offered hereby through the issuance of derivative securities, including without limitation, warrants, forward delivery contracts and the
writing of options. In addition, the manner in which we may sell some or all of the securities covered by this prospectus includes, without
limitation, through:
| · | a block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal,
in order to facilitate the transaction; |
| · | purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account; |
| · | ordinary brokerage transactions and transactions in which a broker solicits purchasers; or |
| · | privately negotiated transactions. |
Subject to maintaining our qualification as a
REIT, we may also enter into hedging transactions. For example, we may:
| · | enter into transactions with a broker-dealer or affiliate thereof in connection with which such broker-dealer or affiliate will engage
in short sales of securities offered pursuant to this prospectus, in which case such broker-dealer or affiliate may use securities issued
pursuant to this prospectus to close out its short positions; |
| · | sell securities short and redeliver such shares to close out our short positions; |
| · | enter into option or other types of transactions that require us to deliver securities to a broker-dealer or an affiliate thereof,
who will then resell or transfer securities under this prospectus; or |
| · | loan or pledge securities to a broker-dealer or an affiliate thereof, who may sell the loaned securities or, in an event of default
in the case of a pledge, sell the pledged securities pursuant to this prospectus. |
We will set forth in a prospectus supplement the
terms of the offering of securities, including:
| · | the name or names of any agents or underwriters; |
| · | the purchase price of the securities being offered and the proceeds we will receive from the sale; |
| · | the terms of the securities offered; |
| · | any over-allotment options under which underwriters or agents may purchase or place additional securities; |
| · | any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; |
| · | any public offering price; |
| · | any discounts or concessions allowed or reallowed or paid to dealers; and |
| · | any securities exchanges on which such securities may be listed. |
Agents
We may designate agents who agree to use their
reasonable efforts to solicit purchases for the period of their appointment or to sell the securities being offered hereby on a continuing
basis, unless otherwise provided in a prospectus supplement.
We may from time to time engage a broker-dealer
to act as our offering agent for one or more offerings of our securities. If we reach agreement with an offering agent with respect to
a specific offering, including the number of securities and any minimum price below which sales may not be made, then the offering agent
will try to sell such common stock on the agreed terms. The offering agent could make sales in privately negotiated transactions and/or
any other method permitted by law, including sales deemed to be an “at the market offering” as defined in Rule 415 promulgated
under the Securities Act, including sales made directly on the NYSE. The offering agent may be deemed to be an “underwriter”
within the meaning of the Securities Act, with respect to any sales effected through an “at the market offering.”
Underwriters
If we use underwriters for a sale of securities,
the underwriters will acquire the securities, and may resell the securities in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase
the securities will be subject to the conditions set forth in the applicable underwriting agreement. We may change from time to time any
public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We may use underwriters with
whom we have a material relationship. We will describe in the prospectus supplement naming the underwriter the nature of any such relationship.
Institutional Purchasers
We may authorize underwriters, dealers or agents
to solicit certain institutional investors, approved by us, to purchase our securities on a delayed delivery basis or pursuant to delayed
delivery contracts provided for payment and delivery on a specified future date. These institutions may include commercial and savings
banks, insurance companies, pension funds, investment companies and educational and charitable institutions. We will describe in the prospectus
supplement details of any such arrangement, including the offering price and applicable sales commissions payable on such solicitations.
Direct Sales
We may also sell securities directly to one or
more purchasers without using underwriters or agents. Underwriters, dealers and agents that participate in the distribution of the securities
may be underwriters as defined in the Securities Act and any discounts or commissions they receive from us and any profit on their resale
of the securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify in the accompanying
prospectus supplement any underwriters, dealers or agents and will describe their compensation. We may have agreements with the underwriters,
dealers and agents to indemnify them against specified civil liabilities, including liabilities under the Securities Act. Underwriters,
dealers and agents may engage in transactions with or perform services for us in the ordinary course of their businesses from time to
time.
Underwriting Compensation
Any underwriting compensation paid by us to underwriters,
dealers or agents in connection with the offering of securities, and any discounts, concessions or commissions allowed by underwriters
to participating dealers, will be set forth in the applicable prospectus supplement. Dealers and agents participating in the distribution
of the securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them
on resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. In the event that FINRA
Rule 5121 applies to any such offering due to the presence of a “conflict of interest” (as that term is defined in FINRA
Rule 5121), the prospectus supplement for that offering will contain prominent disclosure with respect to such conflict of interest
as required by that rule. Underwriters, dealers and agents may be entitled, under agreements entered into with us and our operating partnership,
to indemnification against and contribution toward civil liabilities, including liabilities under the Securities Act. We will describe
any indemnification agreement in the applicable prospectus supplement.
Trading Markets and Listing of Securities
Unless otherwise specified in the accompanying
prospectus supplement, each class or series of securities covered by this prospectus will be a new issue with no established trading market,
other than our common stock and our Series A Preferred Stock, which are listed on the NYSE. We may elect to list any other class
or series of securities on any exchange, but we are not obligated to do so. It is possible that one or more underwriters may make a market
in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at any time
without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
Stabilization Activities
In accordance with Regulation M under the Exchange
Act, underwriters may engage in over-allotment, stabilizing or short covering transactions or penalty bids in connection with an offering
of our securities. Over-allotment transactions involve sales in excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price.
Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the
dealer are purchased in a covering transaction to cover short positions. Those activities may cause the price of the securities to be
higher than they would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time.
Legal
Matters
Certain legal matters in connection with the offering
of securities covered by this prospectus will be passed upon for us by Vinson & Elkins L.L.P. and, with respect to certain matters
of Maryland law, Venable LLP. Additional legal matters may be passed on for us, or any underwriters, dealers or agents, by counsel that
we will name in the applicable prospectus supplement.
Experts
The
consolidated financial statements, and the related financial statement schedule, of the Company as of December 31, 2022 and 2021,
and for each of the three years in the period ended December 31, 2022, incorporated by reference in this Prospectus by reference
to the Company’s annual report on Form 10-K for the year ended December 31, 2022, and the effectiveness of the Company’s
internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting
firm, as stated in their reports. Such financial statements and financial statement schedule have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in accounting and auditing.
Up to $300,000,000
Common Stock
PROSPECTUS SUPPLEMENT
| BMO Capital Markets |
B. Riley Securities |
Baird |
Berenberg |
Colliers Securities LLC |
| Compass Point |
Janney Montgomery Scott |
Citizens JMP |
J.P. Morgan |
| KeyBanc Capital Markets |
Ramirez & Co., Inc. |
Stifel |
Truist Securities |
Wells Fargo Securities |
February 27, 2024
Global Med REIT (NYSE:GMRE-A)
過去 株価チャート
から 11 2024 まで 12 2024
Global Med REIT (NYSE:GMRE-A)
過去 株価チャート
から 12 2023 まで 12 2024
