Filed Pursuant to Rule 424b(4)
Registration No. 333-210566

PROSPECTUS

Common Stock
13,043,479 Shares

 

Global Medical REIT Inc. is a Maryland corporation engaged primarily in the acquisition of licensed, state-of-the-art, purpose-built healthcare facilities and the leasing of these facilities to leading clinical operators with dominant market share. We intend to produce increasing, reliable rental revenue by leasing each of our healthcare facilities to a single market-leading operator under a long-term triple-net lease. We are externally managed and advised by Inter-American Management LLC. Our management team has significant healthcare, real estate and public real estate investment trust, or REIT, experience and has long-established relationships with a wide range of healthcare providers, which we believe will provide a competitive advantage in sourcing our growth opportunities to produce attractive risk-adjusted returns.

This is the initial public offering of Global Medical REIT Inc. We are offering 13,043,479 shares of our common stock, $0.001 par value per share for an initial public offering price of $10.00 per share. Currently, our common stock is quoted on the OTC under the symbol “GMRE.” The last reported sales price of our common stock on the OTC, reported on February 1, 2016, was $0.125. Our common stock has been approved for listing, subject to official notice of issuance, on the New York Stock Exchange, or NYSE, under the symbol “GMRE.” The last reported sale price of our common stock on the OTC may not be indicative of the public offering price of our common stock in this offering or the market price for our common stock on the NYSE.

We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending 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.

 

We are an “emerging growth company” under the Jumpstart Our Business Startups Act and will be subject to reduced public company reporting requirements.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 26 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

		Per Share				Total
Public offering price		$	10.00			$	130,434,790.00
Underwriting discounts, advisory fee and commissions		$	0.70			$	9,130,435.30
Proceeds, before expenses, to us		$	9.30			$	121,304,354.70

We have granted the underwriters an option to purchase up to 1,956,521 additional shares of common stock at the public offering price, less the underwriting discount, solely to cover over-allotments, if any. If the underwriters exercise this option in full, the total underwriting discounts, advisory fee and commissions will be $10,500,000 and our total proceeds, before expenses, will be $139,500,000.

Delivery of the shares of our common stock in book-entry form is expected to be made on or about July 1, 2016.

 

Book-Running Managers

Wunderlich		Oppenheimer & Co.

Co-Lead Managers

BB&T Capital Markets		Compass Point		D.A. Davidson & Co.

June 28, 2016

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You should rely only upon the information contained in this prospectus and any free writing prospectus provided or approved by us. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock.

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PROSPECTUS SUMMARY			1
SUMMARY FINANCIAL DATA			22
RISK FACTORS			26
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			56
USE OF PROCEEDS			58
DISTRIBUTION POLICY			59
CAPITALIZATION			60
MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK			61
DILUTION			62
SELECTED FINANCIAL DATA			63
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION			65
OUR INDUSTRY AND MARKET OPPORTUNITY			78
OUR BUSINESS AND HEALTHCARE FACILITIES			80
MANAGEMENT			90
OUR ADVISOR AND THE MANAGEMENT AGREEMENT			109
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			114
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES			115
STRUCTURE AND FORMATION OF OUR COMPANY			121
DESCRIPTION OF THE PARTNERSHIP AGREEMENT OF GLOBAL MEDICAL REIT LP			122
PRINCIPAL STOCKHOLDERS			128
DESCRIPTION OF OUR CAPITAL STOCK			130
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS			135
SHARES ELIGIBLE FOR FUTURE SALE			140
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS			142
ERISA CONSIDERATIONS			168
UNDERWRITING			170
LEGAL MATTERS			178
EXPERTS			178
WHERE YOU CAN FIND MORE INFORMATION			178
INDEX TO FINANCIAL STATEMENTS			F-1

INDUSTRY AND MARKET DATA

We use industry forecasts and projections and market data throughout this prospectus, including data from publicly available information and industry publications. The forecasts and projections are based on industry surveys and the preparers’ experience in the industry and there can be no assurance that any of the projections will be achieved. We believe that the surveys and market research others have performed are reliable, but we have not independently verified this information and the accuracy and completeness of the information are not guaranteed.

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PROSPECTUS SUMMARY

This summary highlights key aspects of this offering. This summary is not complete and does not contain all of the information that you should consider before making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including the more detailed information set forth under the caption “Risk Factors,” the historical and pro forma financial statements, including the related notes thereto, appearing elsewhere in this prospectus, and any free writing prospectus provided or approved by us.

Unless the context otherwise requires or indicates, references in this prospectus to “we,” “us,” “our,” “our company,” and “Global Medical” refer to Global Medial REIT Inc., a Maryland corporation, together with its consolidated subsidiaries, including Global Medical REIT LP, a Delaware limited partnership, which we refer to in this prospectus as our “Operating Partnership” or “OP.” We refer to Inter-American Management LLC, a Delaware limited liability company and our external manager, as “our advisor.” Upon completion of this offering, we will enter into an amended and restated management agreement with our advisor, which we refer to in this prospectus as the “management agreement.” Descriptions of the terms of the management agreement between us and our advisor in this prospectus refer to the terms of the amended and restated management agreement that will be in effect upon completion of this offering. Additionally, references in this prospectus to our “current portfolio” refer to the 12 healthcare facilities, six of which are leased to the same tenant-operator, identified in this prospectus under the caption “Our Business — Our Current Portfolio.”

Unless the context otherwise requires or indicates, the information set forth in this prospectus assumes that (i) the underwriters’ option to acquire additional shares of our common stock will not be exercised, (ii) the shares of our common stock to be sold in this offering will be sold at an initial public offering price of $10.00 per share, and (iii) $10,000,000 of our outstanding convertible debentures will be repaid out of the net proceeds of this offering and the remaining $15,030,134 of our outstanding convertible debentures, excluding approximately $1.67 million of accrued interest, will be converted at a conversion price of $12.748 per share into 1,179,019 shares of our common stock representing, together with the other 1,425,481 shares of our common stock that are owned by the holder of the convertible debentures, 16.6% of our outstanding shares of common stock upon completion of this offering.

Overview

We are a Maryland corporation engaged primarily in the acquisition of licensed, state-of-the-art, purpose-built healthcare facilities and the leasing of these facilities to leading clinical operators with dominant market share. We are externally managed and advised by Inter-American Management LLC, our advisor. Our management team has significant healthcare, real estate and public REIT experience and has long-established relationships with a wide range of healthcare providers, which we believe will provide us a competitive advantage in sourcing growth opportunities that produce attractive risk-adjusted returns.

We believe that the aging of America in conjunction with the expansion of health insurance is increasing the need for specialized healthcare facilities leased to premier practice groups, healthcare systems and corporate providers that will capture the growth in age-related procedures. These leading medical operators require state-of-the-art facilities that through their technology and design enhance the quality of care provided and improve clinical outcomes for patients. We seek to invest in these purpose-built, specialized facilities, such as surgery centers, specialty hospitals and outpatient treatment centers, in order to align with contemporary trends in the delivery of best healthcare practices. Our healthcare facilities are leased to established providers that, through clinical expertise and strong management, operate sustainable and dominant practices. We target markets with high demand for premium healthcare services, and within those markets, assets that are strategically located to take advantage of the decentralization of healthcare. We believe that our investment in the confluence of state-of-the-art medical facilities, market dominant tenant-operators and strategic sub-markets enhances clinical outcomes and provides attractive risk-adjusted returns to our stockholders.

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Our healthcare facilities are typically fully leased, or under contract to be leased, under long-term triple-net leases on the date of purchase. We may acquire existing healthcare facilities under sale-leaseback or similar arrangements, or we may contract to purchase facilities under development that are being built to an operator’s specifications. Our tenant-operators are physician groups, community hospital operators or corporate medical treatment chain operators that are leading clinical operators in the markets they serve.

Our current portfolio consists of 12 healthcare facilities, six of which are leased to the same tenant-operator, located in eight states with approximately 244,329 leasable square feet, which as of March 31, 2016 were 100% leased with a weighted average remaining lease term of 11 years. Our 12 healthcare facilities have a weighted average age of 10 years, which is the youngest in the listed healthcare REIT universe. 100% of our annualized base rent payments as of March 31, 2016 are from triple-net leases, pursuant to which our tenant-operators are responsible for all operating expenses relating to the healthcare facility, including but not limited to real estate taxes, utilities, property insurance, routine maintenance and repairs, and property management. This structure helps insulate us from increases in certain operating expenses and provides more predictable cash flow. Our triple-net leases typically include rent escalation provisions designed to provide us with annual growth in our rental revenues. As of March 31, 2016, leases representing 0%, 3.6% and 0% of leasable square feet in our current portfolio will expire in 2016, 2017 and 2018, respectively.

We believe that we will benefit from strong sponsorship from ZH International Holdings, Ltd. (“ZH International”) and its affiliate, Zensun Real Estate Co., Ltd (“Zensun”), both of which are under common control by Mr. Zhang Jingguo, a well-known Chinese real estate developer and investor. ZH International is the 85% owner of our advisor and the owner of our majority stockholder, ZH USA, LLC, as of the date of this prospectus. A public company traded on the Hong Kong exchange, ZH International is engaged in global real estate development, investment, management and sales and REIT management. Zensun has been involved in the development of more than 36 property development projects in Henan, Shandong and Hainan provinces in China with a total gross floor area of more than 150 million square feet. Zensun has been named one of the top 100 property development companies in China by China Index Academy, China’s most influential property research institute. Our relationship with ZH International and Zensun provides us with opportunities for international capital raising and their substantial investment in our company strongly aligns our advisor’s interests with those of our stockholders.

We intend to elect to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2016.

Our Objectives and Growth Strategy

Our principal business objective is to provide attractive risk-adjusted returns to our stockholders through a combination of (i) sustainable and increasing rental income that allows us to pay reliable, increasing dividends, and (ii) potential long-term appreciation in the value of our healthcare facilities and common stock. Our primary strategies to achieve our business objective are to:

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We believe that healthcare facilities with the following technological and design characteristics, which are generally consistent with our current portfolio, will enable us to achieve strong risk-adjusted returns:

Our Financing Strategy

The primary objective of our financing strategy is to maintain financial flexibility with a prudent capital structure using retained cash flows, long-term debt and the issuance of common and preferred stock to finance our growth. We seek to manage our balance sheet by maintaining prudent financial ratios and leverage levels. We intend to (i) achieve opportunistic and reasonable debt service with an initial targeted leverage ratio of approximately 60% of the fair market value of our healthcare facilities and a lower targeted leverage ratio as we grow our equity capital base, (ii) establish a secured revolving credit facility to finance acquisitions in concert with other debt instruments, (iii) create staggered debt maturities that are aligned to our expected average lease term, positioning us to re-price parts of our capital structure as our rental rates change with market conditions, (iv) efficiently access the equity capital markets using a shelf registration statement once we are eligible to use Form S-3, which we expect to occur in May 2017, and (v) access international capital to avoid market cycle shortages and enhance acquisition expediency. We are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate.

Upon completion of this offering, our current portfolio will be subject to a combination of fixed rate, “stand-alone” non-recourse debt secured by the healthcare facilities and a $32,097,400 portfolio commercial mortgage-backed securities loan with Cantor Commercial Real Estate Lending, LP (“CCRE”), which we entered into on March 31, 2016 through certain of our subsidiaries (the “Cantor Loan”). We expect to have no outstanding corporate-level indebtedness upon completion of this offering.

Healthcare Industry and Healthcare Real Estate Market Opportunity

We believe the U.S. healthcare industry is continuing its rapid pace of growth due to increasing healthcare expenditures, favorable demographic trends, evolving patient preferences and recently enacted government initiatives. Furthermore, we believe these factors are contributing to the increasing need for healthcare providers to enhance the delivery of healthcare by, among other things, integrating real estate solutions that focus on higher quality, more efficient and conveniently located patient care.

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U.S. Healthcare Spending Expected to Increase 5.8% per Year over Next Decade

According to the United States Department of Health and Human Services, or HHS, healthcare spending was approximately 17.5% of U.S. gross domestic product, or GDP, in 2014. The anticipated continuing increase in demand for healthcare services, together with an increasingly complex and costly regulatory environment, changes in medical technology and reductions in government reimbursements are expected to pressure capital-constrained healthcare providers to find cost effective solutions for their real estate needs.

We believe the demand by healthcare providers for healthcare facilities will increase as health spending in the United States continues to increase. As illustrated in the graph below, national healthcare expenditures continue to rise and are projected to grow from an estimated $3.0 trillion in 2014 to $5.4 trillion by 2024 representing an average annual rate of growth of 5.8%, reaching a projected 19.6% of GDP in 2024.

Annual U.S. Healthcare Expenditures

Source: Centers for Medicare & Medicaid Services, Office of the Actuary

Aging U.S. Population Driving Increase in Demand for Healthcare Services

The general aging of the population, driven by the Baby Boomer generation and advances in medical technology and services which increase life expectancy, is a key driver of the growth in healthcare expenditures. We believe that demographic trends in the United States, including in particular an aging population, will result in continued growth in the demand for healthcare services, which in turn we believe will increase the value of our existing facilities; we also believe this will lead to an increasing need for a greater supply of modern, well-located healthcare facilities.

Between 2015 and 2060, the U.S. population over 65 years of age is projected to more than double from 47.8 million to nearly 98.2 million and the 85 and older population is expected to more than triple, from 6.3 million to 19.7 million, as reflected in the chart below. The number of older Americans is also growing as a percentage of the total U.S. population with the number of persons older than 65 estimated to comprise 14.9% of the total U.S. population in 2015, which is projected to grow to 23.6% by 2060.

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These older demographics are highly significant because older people generally utilize healthcare at a rate well in excess of younger people. Nearly one-third of lifetime healthcare expenditures are incurred during middle age, and nearly one-half during senior years (over the age of 65). For individuals over the age of 85, more than one-third of their lifetime healthcare expenditures will accrue in their remaining years. These older demographics also utilize certain types of specialized care, such as cardiovascular treatment, cosmetic plastic surgery, eye surgery, gastroenterology, oncology treatment and orthopedics.

Aging of the U.S. Population, Projected

Source: U.S. Census Bureau, Population Division

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Affordable Care Act Driving Increase in Insured Americans

The Affordable Care Act represents a significant overhaul of many aspects of healthcare regulations and health insurance and requires every American to have health insurance or be subjected to a fee. As pictured in the chart below, the percentage of insured Americans has increased significantly since the enactment in 2010. The number of uninsured Americans decreased from 44.2 million in 2013 to 35.5 million in 2014, a decrease of 24.5%. HHS predicts that the Affordable Care Act will result in an additional 35 million Americans having health insurance by 2020, which we believe will increase the frequency of physician office visits. Accordingly, we believe the increased demand for healthcare services will result in the need for healthcare providers to invest in the expansion of outpatient and smaller specialty outpatient-oriented hospital facilities.

Percentage of U.S. Population Insured

Source: Centers for Medicare & Medicaid Services, Office of the Actuary

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Clinical Care Continues to Shift to Outpatient Facilities

We believe the continued shift in the delivery of healthcare services to outpatient facilities will increase the need for smaller, more specialized and efficient hospitals and outpatient facilities that more effectively accommodate those services. As shown in the graph below, procedures traditionally performed in hospitals, such as certain types of surgery, are increasingly moving to outpatient facilities driven by advances in clinical science, shifting consumer preferences, limited or inefficient space in existing hospitals and lower costs in the outpatient environment. Additionally, studies by the American Hospital Association show that outpatient visits per thousand have grown approximately 50.8% from 1993 to 2013, whereas inpatient admissions per thousand have declined 10.9%. This continuing shift in delivery of healthcare services to an outpatient environment increases the need for additional outpatient facilities such as ours.

Outpatient Visits		Inpatient Admissions

Source: American Hospital Association Annual Survey, for community hospitals

Evidence-Based Design Influencing Healthcare Real Estate

Evidence-based design, or EBD, is an increasingly recognized component of healthcare real estate. EBD demonstrates that there is interrelatedness between the design of a healthcare facility and patient outcomes. EBD research indicates that certain design elements, such as efficient layouts, infection-control HVAC, placement of sinks and bathrooms, orientation of furniture, size of hallways and uniformity of surgical rooms, have an important impact on productivity, safety, health and morale for both physicians and patients. Dr. Kirk Hamilton, associate professor with the Center for Health Systems and Design at Texas A&M University, notes that a “properly designed environment is part of the course of care.” In 2000, the Center for Health Systems and Design launched the Pebble Project, which has since aggregated thousands of pieces of research on the construction of healthcare facilities and the measurable effect of certain design elements on patient outcomes. The Pebble Project has produced studies that show a correlation between physical environment and “patient outcomes (e.g. anxiety), staff outcomes (e.g. productivity), and operational outcomes (e.g. workflow).”

We believe that as EBD research becomes more widely recognized and reproduced, healthcare facilities without these design principles will be disadvantaged. We believe that leading medical providers will increasingly desire and require modern, purpose-built facilities with state-of-the-art technology and efficient layouts, such as those that we own in our current portfolio. We believe that this positions us to outperform other healthcare facility owners over time.

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Our Current Portfolio

The table below sets forth certain information regarding our current portfolio of healthcare facilities as of March 31, 2016:

Facility		Metro Area				Facility Type				Year Built/ Renovated				% Owned				Leasable sq.ft.				Occupancy				Annualized Base Rent(2)				Annualized Base Rent per Leased sq.ft.				Tenant/ Guarantor
Omaha Facility			Omaha, NE				Acute-care hospital				2008				100	%			41,113				100	%		$	1,599,480			$	38.90				Select Specialty Hospital-Omaha, Inc./Select Medical Holdings Corporation
Gastro One Facilities (6 facilities)			Memphis, TN				Licensed patient treatment facilities				2001, 2003, 1984, 2011, 2009, 2006				100	%			52,266				100	%		$	1,300,000			$	24.87				Gastroenterology Center of the MidSouth, P.C.
Plano Facility			Dallas, Ft. Worth, TX				Acute-care hospital				2013				100	%			24,000				100	%		$	1,278,000			$	53.25				Star Medical Center, LLC/Lumin Health, LLC
Melbourne Facility			Melbourne, FL				Orthopedic rehabilitation facility				1994/ 2005				100	%			75,899				100	%		$	1,104,675			$	14.55				Marina Towers, LLC/First Choice Healthcare Solutions, Inc.
West Mifflin Facility			West Mifflin, PA				Ophthalmology surgery center				2007				100	%			27,193				100	%		$	783,653			$	28.82				Associates in Ophthalmology, Ltd. and Associates Surgery Centers, LLC
Michigan Facility			Westland, MI				Surgery center and medical office building				1974/ 2002/ 2009				100	%			15,018				100	%		$	380,000			$	25.30				Surgical Institute of Michigan, LLC/Surgical Management Professionals
Asheville Facility			Asheville, NC				Orthopedic surgery center				1981/ 2002				100	%			8,840				100	%		$	217,457			$	24.60				Orthopedic Surgery Center of Asheville LP/McKesson Corp.
Total/Weighted Average											2006	(1)			100	%			244,329				100	%		$	6,663,265			$	27.27

Properties Under Contract

Reading, Pennsylvania

On April 19, 2016, we entered into a purchase and sale contract to acquire a 6,500 square-foot eye surgery center and 17,000 square-foot medical office building located in Wyomissing, Pennsylvania, in the Reading, Pennsylvania metro area (the “Wyomissing Facilities”). Under the contract, we have the right to acquire both properties (including land, buildings, and above-ground parking) for an aggregate purchase price of $9,200,600. The surgery center, built in 2001, will be leased to Ridgewood Surgery Associates LLC and the medical office building, built in 1992 and renovated in 2008, will be leased back to Berks Eye Physicians & Surgeons, Ltd. each under a triple-net master lease agreement that will expire in 2026, subject to two successive five-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. The closing of this acquisition is subject to the completion of our due diligence to our satisfaction, prior to the expiration of the due diligence period under the purchase and sale contract on May 30, 2016.

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Properties Under Letter of Intent

Shelton, Connecticut

On March 27, 2016, we entered into a non-binding letter of intent to acquire a 40,000 square-foot medical clinic and licensed ambulatory surgery center located in Shelton, Connecticut with three operating rooms, an imaging center and procedural suites. Built in 2013, the property includes 13.62 acres, all necessary titled parking, and is licensed by the state of Connecticut. Under the letter of intent, we would acquire the property for a purchase price of $12,000,000. The medical clinic and surgery center would be leased back to Griffin Health Services Corporation under a triple-net master lease agreement that would expire in 2031, subject to two successive ten-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. The terms of the purchase contract are being negotiated and we have only completed preliminary due diligence on the facility and the operator. There is no assurance that we will enter into a definitive purchase contract for this facility or that we will close this acquisition.

Oakdale, Marksville and Winnfield, Louisiana

On June 9, 2016, we entered into a non-binding letter of intent to acquire three fully operational and licensed acute care hospital facilities located in Oakdale, Marksville, and Winnfield, Louisiana, each with fully functional operating rooms, laboratories, physical therapy center, physician offices and administration offices and aggregate square footage of 186,120. Built in 1972 and updated in 2007, 1979 and updated in 2004 and 1945 and updated in 1972, respectively, the acute care hospital facilities include approximately 43 acres, all necessary titled parking, and are licensed by the state of Louisiana. Under the letter of intent, we would acquire the acute care hospital facilities for a purchase price of $20,000,000. The acute care hospital facilities would be leased back to PCH Hospital LLC under a triple-net master lease agreement that would expire in 2031, subject to two successive five-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. The lease would be guaranteed by A People’s Choice Hospital, LLC. The terms of the purchase contract are being negotiated and we have only completed preliminary due diligence on the facility and the operator. There is no assurance that we will enter into a definitive purchase contract for this facility or that we will close this acquisition.

Our Investment Pipeline

We currently have 52 facilities in our investment pipeline, with approximately $486 million in aggregate value and approximately 1.7 million square feet of leasable space. We identified these acquisition opportunities through our management team’s industry contacts and our strategic marketing.

Consistent with our investment strategy, all of the properties in our investment pipeline are purpose-built, licensed facilities that would be leased under triple net leases to regionally dominant medical providers. We do not have any existing commercial relationship with the owners or operators of the facilities in our investment pipeline. We are in varying stages of negotiation and have completed only preliminary due diligence with respect to the properties in our investment pipeline. We cannot provide any assurance that we will be successful in completing the acquisition of any of these properties.

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We include a property in our investment pipeline if the property satisfies the following criteria: (i) the owner has advised us that the property is available for sale, (ii) we have had active discussions with the owner regarding a potential purchase of the property and such discussions have not been terminated by either party, (iii) we have performed preliminary due diligence on the property and on the tenant-operator in order to ascertain whether the property and tenant-operator appear to satisfy our investment criteria, and (iv) we have either delivered a written proposal to the owner or are considering the preparation of a written proposal for delivery to the owner regarding a potential purchase of the property.

Advanced Design and Technology Elements

The table below sets forth certain information regarding the advanced design and technology elements of the properties in our current portfolio, which we believe distinguish our portfolio from our peers:

Melbourne Facility

Gastro One Facilities

Omaha Facility

West Mifflin Facility

Plano Facility

Michigan Facility

Asheville Facility

State-of-the- Art Medical Technology

High efficiency operating room equipment

ü

ü

ü

ü

ü

ü

ü

State-of-the-art imaging technology

ü

ü

ü

ü

ü

ü

ü

Infection control HVAC filtration

ü

ü

ü

Efficient Treatment and Processing Design

Contiguous treatment and recovery areas

ü

ü

ü

ü

ü

ü

ü

Uniformity of surgical and treatment rooms

ü

ü

ü

ü

ü

ü

ü

Reduced FTE density requirements

ü

ü

ü

ü

Proximity to other major medical centers

ü

ü

ü

ü

ü

ü

ü

Advancing Building Engineering

Reflective solar efficient glass

ü

ü

ü

ü

ü

Polymer membrane roof materials

ü

ü

ü

ü

ü

ü

ü

Fiber optic cabling

ü

ü

ü

ü

ü

Modern generator and back-up generator

ü

ü

ü

ü

ü

ü

ü

Amenitized Patient and Visitor Environment

Admissions privacy

ü

ü

ü

ü

ü

ü

ü

Updated patient/visitor areas (cafés, TVs)

ü

ü

ü

ü

Inspections and Accreditations

AAAHC Accreditation

ü

ü

ü

ü

ü

ü

ü

Joint Commission Inspections

ü

ü

ü

ü

ü

ü

ü

Approval Accreditations

ü

ü

ü

ü

ü

ü

ü

Competitive Strengths

We believe our differentiated strategy and our management’s extensive healthcare experience distinguish us from many other real estate companies, both public and private. Specifically, our company’s competitive strengths include, among others:

We believe that the highest quality of patient care depends not only on the acumen of the medical provider but also on the technology and design of the healthcare real estate. Highly specialized medical technology embedded in facilities designed to improve treatment and patient morale is important to clinical outcomes. We focus on these types of state-of-the-art treatment facilities because we believe that patient satisfaction, tenant retention and clinical success are higher as compared to older, less specialized assets. Our current portfolio, composed of 12 healthcare facilities located in eight states, embodies these themes. The weighted average age of our portfolio is 10 years, which is the youngest in the listed healthcare REIT universe. We believe this is important because our more modern, efficient and technologically updated healthcare facilities will be better positioned to serve our healthcare tenant-operators and their patients. For more information regarding the advanced design and technology elements at our healthcare facilities, please see the table above under the heading “Advanced Design and Technology Elements.”

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The healthcare facilities in our current portfolio are each leased to a single, well-established market leader with demonstrated excellence in its clinical and business practices. These operators are characterized by cutting edge medical expertise, strong management, a going concern history in the market and stable or increasing market share within their clinical footprints. We target tenant-operators with indicators of sustainable practices going forward, including strong referral networks, mid-career average age of physicians, succession planning and in-network status with all major payors in the geographic market. Our existing tenant-operators’ average rent coverage ratio upon lease inception, EBITDARM/Rent, earnings before interest, taxes, depreciation, amortization, rent and management fees, divided by rent, of 7.3x is representative of the financial strength and cash flow of our tenant-operators. We focus on practice types that we believe will experience increased demand as the amount of insured increases and the population ages, such as cardiovascular treatment, cosmetic plastic surgery, eye surgery, gastroenterology, oncology treatment and orthopedics.

We are disciplined and selective about the investments we make and have a strong track record of identifying attractive markets in which to invest. We target middle market population centers, typically with a population between 200,000 and two million, with high demand for premium healthcare services. These markets are characterized by growth in healthcare spending, growth in healthcare employment and above-average per capita income. Within those markets, we focus on healthcare facilities that cater to the trend of decentralization in healthcare. For that reason, our current portfolio is comprised of smaller, specialized and efficient surgery centers and outpatient facilities that are conveniently located for doctors and patients. By focusing on markets and assets positioned to take advantage of current and future trends in healthcare, we believe our rental income will be sustainable and increasing.

The leases in our current portfolio and lease structures we plan to use on our future acquisitions position us to take advantage of an increasing, long-term stream of rental income. We typically seek to negotiate and enter into new triple-net leases rather than acquiring leased fee returns via acquisition of already rented healthcare facilities. Our ability to customize lease terms gives us a competitive advantage in securing acquisitions by incorporating key deal features requested by individual tenant-operators. We believe that it is not as practical for larger institutions, from a resource and expertise perspective, to create these types of tailored lease solutions that we typically use. Some examples of lease provisions include (i) accordion features on healthcare facility portfolio financings; (ii) follow-on capitalization clauses that provide a capital blueprint to expand healthcare facilities and add square footage; and (iii) substitution clauses that allow tenant-operators to eliminate obsolete facilities and add new location facilities under a portfolio lease. We believe these flexible lease features may in some cases allow us to negotiate more attractive capitalization rates than we would otherwise be able to obtain. Using these types of leases in our current portfolio, we have secured a weighted average lease term of 11 years with contractual annual rent escalators that average 2.5% as of March 31, 2016.

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Our senior management team is led by David Young, Chief Executive Officer, who has over 25 years of experience in medical and hospital real estate, including leading business development for Healthcare Property Investors (NYSE: HCP), growing assets from $300 million to over $3.5 billion. Jeffrey Busch, President and Chairman, has over 20 years of real estate and healthcare experience, including President of Safe Blood International Foundation, where he oversaw the establishment of medical facilities in 35 developing nations, funded by the U.S. CDC and USAID among others, and oversight of a HUD portfolio with a yearly budget of $3.2 billion. Our management team has the significant healthcare experience necessary to identify trends in the healthcare industry and apply those to the acquisition of purpose-built real estate that best serves the medical provider in delivering the highest quality care. Upon completion of this offering, our officers, directors and our primary sponsor, ZH International, will beneficially own in the aggregate approximately 18.3% of our outstanding common stock on a fully diluted basis, assuming conversion of all long-term incentive plan (“LTIP”) units held by them upon completion of this offering into shares of our common stock on a one-for-one basis, aligning their interests with those of our stockholders.

Selected Case Studies

Below are case studies of healthcare facilities in our current portfolio, which we believe are representative of the assets and investment strategies we intend to pursue in the future, with a focus on purpose-built facilities that can accommodate the latest technological advances in healthcare delivery and that are leased to the leading operators in the markets where the facilities are located. We believe all the other properties we currently own are also representative of the assets and investment strategies we intend to pursue in the future.

Gastro One Portfolio

In December 2015, we acquired a 52,266 square foot portfolio comprising six licensed patient treatment facilities (the “core assets”) from Gastroenterology Center of the MidSouth, P.C., the largest gastroenterology physician practice in the Southeastern United States (“Gastro One”), for an aggregate purchase price of approximately $20 million (the “Gastro One Facilities”). In this transaction, we acquired a strategically located, state-of-the art healthcare portfolio and leased it to a regionally dominant tenant, which we believe positions the asset to outperform over time.

With an average age of only 12 years, the facilities represent the latest in gastroenterological medicine and building design. In order to aid in the rapid and accurate diagnosis and treatment of patient ailments, the facilities are equipped with state-of-the-art imaging and surgical devices, such as HD-video endoscopic equipment and specialized controls to maintain sterile procedure areas. Certain surgical areas are also equipped with positive pressure laminar flow air circulation to reduce airborne contaminants and infection rates. The floorplan and construction materials, including a polymer membrane roof and reflective solar efficient glass, increase the life of the building and augment the efficiency of physicians. We believe that by acquiring these facilities, we have secured the cutting edge, core assets vital to Gastro One for the delivery of best practices in healthcare.

The portfolio annually serves approximately 90% of the total caseload of gastroscopic, colonoscopy, and liver scan procedures in the Memphis, Tennessee MSA. Gastro One runs an excellent business practice, evidenced by a growing market share and a superb rent coverage ratio of 10.5x, as of December 31, 2015. Upon closing, we entered into a new triple-net lease with Gastro One with an initial term of 12 years with contractual annual rent escalations of 1.75% and two automatic five-year renewals. We structured the lease creatively so that the tenant-operator may expand its footprint or potentially substitute a current portfolio location with a new company-approved location, if needed. By negotiating a long-term lease with Gastro One on these flexible terms, we believe that we have not only secured a dominant tenant-operator but also achieved rents at a rate in excess of what we may have otherwise achieved without the customization of lease terms.

With its six licensed patient treatment facilities in the Memphis MSA, the Gastro One Facilities are conveniently accessible to both patients and the 34 physicians that make up the practice. The Memphis MSA

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is experiencing growth in healthcare services, buoyed by the massive 14,000-acre downtown Memphis Medical Center District. The median household income in Germantown, TN, where the portfolio in concentrated, is $113,294 and the median average age is 45.7 years old, both of which significantly exceed the national average. In purchasing this asset, we have invested in an area primed for growth in demand for premium healthcare service.

Select Medical Acute Care Hospital

In June 2014, we purchased a 41,113 square foot long-term acute care hospital (LTACH) in Omaha, Nebraska for a price of approximately $22 million (the “Omaha Facility”). In this transaction, we acquired an asset located at an irreplaceable on-campus location with a lease guaranteed by B+ S&P and B1 Moody’s rated Select Medical Holdings Corporation, a leading operator of over 100 LTACHs nationwide.

Constructed in 2008 and expanded in 2010, this facility serves the vital purpose of maintaining and stabilizing severely compromised patients who cannot remain in short-term hospital beds due to government and insurer payment caps on short-term hospital treatment. Select Medical specializes in the treatment of pulmonary, wound care, cardiac and post-trauma. The highest quality of care in these areas requires a facility designed to efficiently process and treat the patients that continuously occupy the 52 intensive care beds. The facility features strategically positioned nursing stations, immediate proximity to operating rooms, imaging and other critical life support functionalities.

The Omaha Facility is the only LTACH in Omaha, as the U.S. federal government and Creighton University Medical School (CMS) have recently mandated a renewed moratorium on construction of these licensed acute care facilities. As a result, the facility serves 100% of the patients in its clinical service footprint. Our facility is operated by an affiliate of B+ S&P and B1 Moody’s rated Select Medical Holdings Corporation. (NYSE: SEM), which owns or operates over 110 hospitals in 28 states. The lease has an initial term of 15 years with annual rent escalations of up to 3.0% and 12 five-year renewal options. We believe that our facility will continue to be the only LTACH in Omaha for the foreseeable future, and we believe that this dominance by a strong tenant-operator enhances the value proposition for our stockholders. Select Medical Holdings Corporation is a guarantor of the tenant’s lease obligations.

This property also benefits from its strategic location within Omaha, NE, a city whose healthcare industry is expected to grow in the future. As of 2010, Omaha had a total of 38,530 employees in the healthcare industry, which is expected to grow 16.7% to 44,978 by 2020, according to the Omaha Chamber of Commerce. The facility is physically connected via indoor walkway to the largest and most prominent medical center in the region, Bergan Mercy Hospital, home to CMS. This hospital is one of 10 hospitals in the Alegant Creighton Health System, which has an investment grade rating and a staff of over 1,300 physicians and 9,000 employees. This strategic location solidifies the long term demand for the LTACH’s services with a steady stream of referrals that come from Bergan and its affiliated hospitals in the region.

Our Advisor and Management Agreement

We are externally managed and advised by our advisor pursuant to a management agreement, subject to the oversight of our board of directors. Our advisor provides substantially all of the services related to the operation of our company and business, including services related to the location, selection, acquisition and financing of healthcare facilities, the collection of rents, the payment of dividends, the preparation of reports to our investors, and the disposition of healthcare facilities. Under the management agreement, we will be the only investment vehicle our advisor will manage that focuses on the acquisition and leasing of licensed, purpose-built healthcare facilities. Each of our officers is an employee of our advisor. The executive personnel at our advisor have managed other net lease property investment programs, including programs that have been taken “full cycle” and liquidated and dissolved.

ZH International is the 85% owner of our advisor and the owner of our majority stockholder, ZH USA, LLC, as of the date of this prospectus, which we believe aligns the advisor’s interests with those of our stockholders. A public company traded on the Hong Kong exchange, ZH International is engaged in global real estate development, investment, management and sales and REIT management. Our President and Chairman, Mr. Jeffrey Busch, owns the remaining 15% of our advisor.

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The terms of the management agreement, including the fee arrangements, expense provisions and termination fee provisions as will be in effect upon completion of this offering are summarized below.

Type		Description
Base Management Fee		1.5% of our stockholders’ equity per annum, calculated quarterly for the most recently completed fiscal quarter and payable in quarterly installments in arrears.
		For purposes of calculating the base management fee, our stockholders’ equity means: (a) the sum of (1) our stockholders’ equity as of March 31, 2016, (2) the aggregate amount of the conversion price (including interest) for the conversion of our outstanding convertible debentures into our common stock and OP units upon completion of this offering and (3) the net proceeds from (or equity value assigned to) all issuances of our equity and equity equivalent securities (including common stock, common stock equivalents, preferred stock, LTIP units and OP units issued by us or our Operating Partnership) in this offering, or in any subsequent offering (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), less (b) any amount that we pay to repurchase shares of our common stock or equity securities of our OP. Our stockholders’ equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in our financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between our advisor and our independent directors and approval by a majority of our independent directors. As a result, our stockholders’ equity, for purposes of calculating the base management fee, could be greater or less than the amount of stockholders’ equity shown on our financial statements.
Incentive Compensation Fee		An incentive fee payable with respect to each calendar quarter (or part thereof that the management agreement is in effect) in arrears. The incentive fee will be an amount, not less than zero, equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) our AFFO (as defined below) for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in this offering and in future offerings and transactions of the Company and the Operating Partnership, multiplied by the weighted average number of all shares of common stock outstanding on a fully-diluted basis (including any restricted stock units, any restricted shares of common stock, OP units, LTIP unit awards and shares of common stock underlying awards granted under the Global Medical REIT Inc. 2016 Equity Incentive Plan (the “2016 Equity Incentive Plan”) or any future plan in the previous 12-month period, and (B) 8%, and (2) the sum of any incentive fee paid to our advisor with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any calendar quarter unless AFFO is greater than zero for the four most recently completed calendar quarters, or the number of completed calendar quarters since the closing date of this offering, whichever is less. For purposes of calculating the incentive fee during the first 12 months after completion of this offering, AFFO will be determined by annualizing the applicable period following completion of this offering.

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Type		Description
		AFFO is calculated by adjusting our funds from operations, or FFO, by adding back acquisition and disposition costs, stock based compensation expenses, amortization of deferred financing costs and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of our properties, and subtracting loss on extinguishment of debt, straight line rent adjustment, recurring tenant improvements, recurring leasing commissions and recurring capital expenditures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures — Funds from Operations” and “— Adjusted Funds from Operations” for additional information.
Expense Reimbursement		We are required to reimburse our advisor for operating expenses related to us that are incurred by our advisor, including expenses relating to legal, accounting, due diligence and other services. We will not reimburse any compensation expenses incurred by the advisor. Our reimbursement obligation is not subject to any dollar limitation. Expenses will be reimbursed in cash on a quarterly basis.
Termination Fee		Upon any termination of the management agreement by us, other than for cause, any non-renewal of the management agreement by us or any termination of the management agreement by our advisor due to our material breach of the management agreement, our advisor will be paid a termination fee equal to three times the average annual base management fee and the average annual incentive compensation with respect to the previous eight fiscal quarters ending on the last day of the fiscal quarter prior to termination.

In addition to the management fee payable to our advisor, our advisor’s personnel who provide services to us are eligible to receive equity-based awards under our 2016 Equity Incentive Plan in order to attract and retain these individuals and align their interests with the interests of our stockholders. See “Management —  2016 Equity Incentive Plan.”

See “Our Advisor and the Management Agreement — The Management Agreement” for a more detailed description of the terms of the management agreement.

Agreement to Evaluate Internalization

Prior to the end of the calendar quarter occurring immediately after the date in which our stockholders equity (as defined in our management agreement) exceeds $500 million, we have agreed with our advisor that our board of directors will establish a special committee of independent directors to discuss with our advisor whether it would be in our stockholders’ best interest to internalize management. If we elect to internalize management as a result of such discussions, we would expect to terminate the management agreement with our advisor and hire certain employees of our advisor while also potentially entering into other service agreements with our advisor that would allow us to continue to utilize certain personnel and resources of our advisor that would not be acquired by us in the internalization transaction. It is also possible that, as a result of such discussions between us and our advisor, we may elect to preserve our external management structure but with modifications to the terms of the management agreement between us and our advisor that, among other things, alter our expenses to mirror more closely what our expenses would be if we were internally managed.

To complete an internalization transaction, the special committee of our board and our advisor would need to negotiate and reach a mutually acceptable agreement relating to such transaction. We cannot assure you that such negotiations will result in a mutually acceptable agreement, that we will be able to complete any such a transaction, or on what terms it may be completed, including the amount of consideration we may be required to pay to our advisor. In addition, to the extent required under the listing rules of the New York Stock Exchange or other exchange upon which our shares of common stock are then listed, any such

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transaction may require the approval of our stockholders. Consequently, no assurance can be given that an agreement will be reached or that internalization of our advisor will be achieved.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act.” An emerging growth company may take advantage of specified reduced reporting requirements and are relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, among other things:

We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our common shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt securities over a three-year period. We may choose to take advantage of some but not all of these reduced burdens.

Summary Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks discussed below and under the caption “Risk Factors” beginning on page 26 of this prospectus before investing in our common stock.

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Formation of Our Company and Recent Structural Changes

We were incorporated in the state of Nevada on March 18, 2011 under the name Scoop Media, Inc. In September 2013, a majority of our shares of common stock were acquired by ZH International, previously known as Heng Fai Enterprises, Ltd. Effective January 6, 2014, we changed our name to Global Medical REIT Inc. in connection with our conversion to a Maryland corporation.

We formed our Operating Partnership in March 2016 and have contributed all of our healthcare facilities to the Operating Partnership in exchange for common units of limited partnership interest in the Operating Partnership. We own Global Medical REIT GP, LLC, a Delaware limited liability company, which is the sole general partner of our Operating Partnership.

As of March 31, 2016, ZH USA, LLC owned an aggregate of 1,425,481, or 99.9%, of our outstanding shares of common stock, and convertible debentures with an aggregate principal amount of $25,030,134. In connection with this offering, we have entered into an agreement with ZH International, our sponsor and the owner of our majority stockholder, ZH USA, LLC, to repay $10,000,000 of our outstanding convertible debentures out of the net proceeds of this offering and to convert the remaining $15,030,134 of our outstanding convertible debentures, excluding approximately $1.67 million of accrued interest, at a conversion price of $12.748 per share or unit into 1,179,019 shares of our common stock (the “Debenture Conversion”). Upon the completion of this offering and the completion of the Debenture Conversion, ZH USA, LLC will own 16.6% of our outstanding common stock.

ZH International is also the 85% owner of our advisor and Mr. Jeffrey Busch, our President and Chairman, owns the other 15% interest in our advisor. A public company traded on the Hong Kong exchange, ZH International is engaged in global real estate development, investment, management and sales and REIT management.

In connection with this offering, we expect to enter into an amended and restated management agreement with our advisor, which will substantially modify the terms of the existing agreement.

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Our Structure

Upon completion of this offering, we will be a holding company, and our primary assets will be the sole membership interest in the general partner of our Operating Partnership and limited partner interests in our Operating Partnership. The following diagram depicts our ownership structure upon completion of this offering:

Our Tax Status

We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2016. Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. We believe that we have been organized in conformity with the requirements for qualification as a REIT under the Code and that our current and proposed manner of operation will enable us to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2016. See “Material U.S. Federal Income Tax Considerations.”

Restrictions on Ownership of Our Stock

In order to help us qualify as a REIT, among other purposes, our charter, subject to certain exceptions, restricts the number of shares of our common 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 board of directors has approved a waiver of the 9.8% ownership limit in our charter allowing ZH USA, LLC to own up to 16.9% of our outstanding shares of common stock. A more complete description of our common stock, including restrictions upon the ownership thereof, is presented under the caption “Description of Our Capital Stock” in this prospectus.

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Conflicts of Interest

We are externally managed by our advisor. The management agreement requires our advisor to manage our business affairs in conformity with policies and investment guidelines that are approved and monitored by our board of directors. Jeffrey Busch, our President and Chairman, owns a significant interest in our advisor. Related parties participated in the negotiation of the management agreement and its terms, including fees payable to our advisor. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the management agreement because of our desire to maintain our ongoing relationship with our advisor. Pursuant to the management agreement, our advisor is obligated to supply us with our management team. However, our advisor is not obligated to dedicate any specific personnel exclusively to us, nor are the advisor’s personnel obligated to dedicate any specific portion of their time to the management of our business. In addition, subject to the direction and oversight of our board of directors, our advisor has significant discretion regarding the implementation of our operating policies and strategies, including our investment, finance and leverage and conflicts of interest policies. See “Conflicts of Interest Policies” and “Our Advisor and the Management Agreement.”

We are subject to conflicts of interest arising out of our relationship with our advisor and its affiliates, and the nature of these conflicts of interest may vary. These conflicts include:

Distribution Policy

We intend to pay regular quarterly dividends to our common stockholders. Generally, we expect to distribute 100% of our REIT taxable income so as to avoid the tax imposed upon undistributed REIT taxable income. Distributions made by us will be authorized by our board of directors in its sole discretion out of assets legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and our capital requirements.

Dividend Reinvestment Plan

In the future, we intend to adopt a dividend reinvestment plan that will permit stockholders who elect to participate in the plan to have their cash dividends reinvested in additional shares of our common stock.

Corporate Information

Our principal office is located at 4800 Montgomery Lane, Suite 450, Bethesda MD, 20814. Our telephone number is 202-524-6851. Our internet website is www.globalmedicalreit.com. The information contained on, or accessible through, this website, or any other website, is not incorporated by reference into this prospectus and should not be considered a part of this prospectus.

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The Offering

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SUMMARY FINANCIAL DATA

The following table presents summary consolidated historical and pro forma financial data for our Company.

You should read the following selected consolidated pro forma and historical financial data together with the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated pro forma financial data and historical financial statements and related notes thereto included elsewhere in this prospectus.

The Company’s historical financial data is not indicative of our future financial position or our results of operations. Furthermore, our pro forma financial information is not necessarily indicative of what our actual financial position and our results of operations would have been as of the dates and for the periods indicated, nor do our unaudited interim results and our pro forma financial information purport to represent our future financial position or our results of operations.

Consolidated Statements of Operations:

		Three Months Ended March 31, 2016(1)				Pro Forma For Three Months Ended March 31, 2016				Twelve Months Ended December 31, 2015				Pro Forma Twelve Months Ended December 31, 2015				Four Months Ended December 31, 2014				Twelve Months Ended August 31, 2014
Revenue
Rental revenue		$	1,298,978			$	1,935,497			$	2,049,196			$	7,551,113			$	596,585			$	379,678
Other income			15,081				15,081				12,471				12,471				71				727
Total revenue			1,314,059				1,950,578				2,061,667				7,563,584				596,656				380,405
Expenses
Management fees – related party			90,000				90,000				360,000				360,000				120,000				150,000
General and administrative			888,529				888,529				505,141				1,303,141				182,930				20,666
Acquisition fees – related party			754,000				754,000				627,000				1,381,000				48,400				434,200
Depreciation expense			398,830				587,075				659,671				2,335,095				200,499				129,081
Interest expense			1,129,263				1,536,790				1,519,102				5,499,214				454,697				298,664
Total expenses			3,260,622				3,856,394				3,670,914				10,605,450				1,006,526				1,032,611
Net loss		$	(1,946,563	)		$	(1,905,816	)		$	(1,609,247	)		$	(3,041,866	)		$	(409,870	)		$	(652,206	)
Net loss per share – Basic and Diluted		$	(3.11	)		$	(3.05	)		$	(6.44	)		$	(12.17	)		$	(1.64	)		$	(13.49	)
Weighted average shares outstanding – Basic and Diluted			624,978				624,978				250,000				250,000				250,000				48,356

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Consolidated Balance Sheets:

		As of March 31, 2016(1)				Pro Forma As of March 31, 2016				As of December 31, 2015				As of December 31, 2014				As of August 31, 2014
Investment in real estate:
Land		$	7,043,852			$	9,742,593			$	4,563,852			$	572,400			$	—
Building and improvements			87,040,410				93,542,269				51,574,271				23,801,362				21,867,065
			94,084,262				103,284,862				56,138,123				24,373,762				21,867,065
Less: accumulated depreciation			(1,388,081	)			(1,388,081	)			(989,251	)			(329,580	)			(129,081	)
Investment in real estate, net			92,696,181				101,896,781				55,148,872				24,044,182				21,737,984
Cash			507,281				84,733,307				9,184,270				88,806				25,484
Restricted cash			1,277,831				1,277,831				447,627				197,719				137,501
Tenant receivables			261,955				261,955				—				2,793				—
Prepaid assets			27,925				27,925				—				—				19,307
Escrow deposits			889,519				889,519				454,310				14,877				14,940
Deferred assets			436,068				436,068				93,646				—				309,543
Total assets		$	96,096,760			$	189,523,386			$	65,328,725			$	24,348,377			$	22,244,759
Liabilities and Stockholders’ Equity (Deficit)
Liabilities:
Accrued expenses		$	1,568,044			$	1,568,004			$	683,857			$	338,764			$	176,153
Security deposits			319,499				319,499				—				—				—
Due to (from) related party, net			1,068,562				(431,438	)			847,169				330,768				213,000
Convertible debenture, due to majority stockholder			25,030,134				—				40,030,134				5,446,102				4,536,102
Note payable to majority stockholder			421,000				421,000				421,000				38,195				38,195
Notes payable to related party			450,000				450,000				—				—				—
Notes payable, net of unamortized discount			54,488,884				39,953,441				23,485,173				16,468,309				15,060,000
Total liabilities			83,346,083				42,280,506				65,467,333				22,622,138				20,023,450
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding			—				—				—				—				—
Common stock $0.001 par value, 500,000,000 shares authorized at December 31, 2015; 1,426,656, 16,007,404, 250,000, 250,000 and 250,000 shares issued and outstanding at March 31, 2016, March 31, 2016 (pro forma), December 31, 2015, December 31, 2014 and August 31, 2014, respectively			1,427				16,008				250				250				250
Additional paid-in capital			18,010,613				156,202,951				3,011,790				3,011,790				3,011,790
Accumulated deficit			(5,261,363	)			(8,976,079	)			(3,150,648	)			(1,285,801	)			(790,731	)
Total stockholders’ equity (deficit)			12,750,677				147,242,880				(138,608	)			1,726,239				2,221,309
Non-controlling interest in operating partnership units			—				—				—				—				—
Total equity (deficit)			12,750,677				147,242,880				(138,608	)			1,726,239				2,221,309
Total liabilities and stockholders’ equity (deficit)		$	96,096,760			$	189,523,386			$	65,328,725				24,348,377				22,244,759

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Consolidated Other Data:

		Three Months Ended March 31, 2016(1)				Pro Forma Three Months Ended March 31, 2016				Twelve Months Ended December 31, 2015				Pro Forma Twelve Months Ended December 31, 2015				Four Months Ended December 31, 2014				Twelve Months Ended August 31, 2014
Funds from operations(2)		$	(1,547,733	)		$	(1,318,741	)		$	(949,576	)		$	(706,771	)		$	(209,371	)		$	(523,125	)
Funds from operations per share		$	(2.48	)		$	(2.11	)		$	(3.80	)		$	(2.83	)		$	(0.84	)		$	(10.82	)

The following is a reconciliation of net income (which we believe is the most comparable GAAP measure) to FFO, NFFO and AFFO.

		Three Months Ended March 31, 2016(1)				Pro Forma Three Months Ended March 31, 2016				Twelve Months Ended December 31, 2015				Pro Forma Twelve Months Ended December 31, 2015				Four Months Ended December 31, 2014				Twelve Months Ended August 31, 2014
Net Loss		$	(1,946,563	)		$	(1,905,816	)		$	(1,609,247	)		$	(3,041,866	)		$	(409,870	)		$	(652,206	)
Depreciation expense			398,830				587,075				659,671				2,335,095				200,499				129,081
Funds from operations(2)			(1,547,733	)			(1,318,741	)		$	(949,576	)			(706,771	)		$	(209,371	)		$	(523,125	)
Acquisition fees			754,000				754,000				627,000				1,381,000				48,400				434,200
Normalized funds from operations(2)			(793,733	)			(564,741	)			(322,576	)			674,229				(160,971	)			(88,925	)
Straight line deferred rental revenue			(49,773	)			(49,773	)			(23,295	)			(197,484	)			—				—
Amortization of deferred financing costs			90,241				116,161				126,535				283,494				39,429				26,443
Adjusted funds from operations(2)		$	(753,265	)		$	(498,355	)		$	(219,336	)		$	760,239			$	(121,542	)		$	(62,482	)

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Our FFO, NFFO and AFFO computations may not be comparable to FFO, NFFO and AFFO reported by other REITs that do not compute FFO in accordance with the White Paper definition or that interpret the White Paper definition differently than we do or that compute NFFO and AFFO in a different manner. The GAAP measure that we believe to be most directly comparable to FFO, net income (loss), includes depreciation and amortization expenses, gains or losses on sales and non-controlling interests. In computing FFO, NFFO and AFFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. In addition to all other information contained in this prospectus, you should carefully consider the following risk factors before purchasing our common stock. The occurrence of any of the following risks might cause you to lose all or part of your investment. The risks set forth below represent those risks and uncertainties that we believe are material to our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section captioned “Cautionary Statement Regarding Forward-Looking Statements.”

We have grouped these risk factors into the following general categories:

Risks Related to Our Business and Our Healthcare Facilities

We have a limited history of operations and cannot assure you that our business objectives will be met.

We converted to a Maryland corporation from a Nevada corporation in January 2014 and started our business. We acquired our first healthcare facility in June 2014. We have a limited history of operations of our healthcare facilities and our distributions to date have been primarily from invested cash. You should consider our prospects in light of the risks, uncertainties and difficulties frequently encountered by companies like ours that do not have a substantial operating history, many of which may be beyond our control. Such risks, uncertainties and difficulties include, among other things:

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We cannot guarantee in light of these risks, uncertainties and difficulties that we will succeed in achieving our goals and our failure to do so could have an adverse effect on our ability to pay distributions to our stockholders.

Our healthcare facilities are concentrated in medical hospitals, acute and post-acute care and other single-tenant-operator licensed healthcare-related facilities, making us more vulnerable economically than if our investments were diversified across different industries.

We acquire and own medical hospital, acute care and other single-tenant-operator licensed healthcare-related facilities. We are subject to risks inherent in concentrating investments in real estate, and the risks resulting from a lack of diversification become even greater as a result of our business strategy to concentrate our investments in the healthcare sector. Any adverse effects that result from these risks could be more pronounced than if we diversified our investments outside of licensed healthcare facilities. Given our concentration in this sector, our tenant-operator base is especially concentrated and dependent upon the healthcare industry generally, and any industry downturn could adversely affect the ability of our tenant-operators to make lease payments and our ability to maintain current rental and occupancy rates. Our tenant-operator mix could become even more concentrated if a significant portion of our tenant-operators practice in a particular medical field or are reliant upon a particular healthcare delivery system. Accordingly, a downturn in the healthcare industry generally, or a particular healthcare delivery system specifically, may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

The bankruptcy, insolvency or weakened financial position of any of our significant tenant-operators could seriously harm our operating results and financial condition.

We will receive substantially all of our revenue as rent payments from tenant-operators under triple-net leases of our healthcare facilities. Until we grow our asset base significantly, we will be dependent on a relatively small number of tenant-operators, some of which will account for a significant percentage of our rental revenue. As of March 31, 2016, four of our 12 healthcare facilities were leased to tenant-operators that were each responsible for more than 10% of our rental revenue. Select Specialty Hospital-Omaha, Inc. Gatroenterology Center of the MidSouth, P.C., Star Medical Center, LLC and Associates in Ophthalmology, Ltd. together with Associates Surgery Centers, LLC accounted for approximately 34%, 27%, 18% and 17% of our rental revenue, respectively. As of March 31, 2016, over 95% of our revenues resulted from five tenant-operators. We have no control over the success or failure of our tenant-operators’ businesses and, at any time, any of our tenant-operators may experience a downturn in its business that may weaken its financial condition. Additionally, private or governmental payors may lower the reimbursement rates paid to our tenant-operators for their healthcare services. For example, the Affordable Care Act provides for significant reductions to Medicare and Medicaid payments. As a result, our tenant-operators may fail to make rent payments when due or declare bankruptcy. Any lessee failure to make rent payments when due or tenant-operator bankruptcy could result in the termination of the tenant-operator’s lease and, particularly in the case of a large tenant-operator, or a significant number of tenant-operators, may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock. In addition, to the extent a tenant-operator vacates specialized space in one of our healthcare facilities (such as imaging space, ambulatory surgical space, or inpatient hospital space), re-leasing the vacated space could be more difficult than re-leasing more generic office space, as there are fewer users for such specialized healthcare space in a typical market than for more traditional office space. Tenant-operators also may not lease space at the quantity or rental rate levels projected.

Any bankruptcy filings by or relating to one of our tenant-operators could bar all efforts by us to collect pre-bankruptcy debts from that tenant-operator or seize its healthcare facility, unless we receive an order permitting us to do so from a bankruptcy court, which we may be unable to obtain. A tenant-operator bankruptcy could also delay our efforts to collect past due balances under the relevant leases and could ultimately preclude full collection of these sums. If a tenant-operator assumes the lease while in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. However, if a tenant-operator rejects the lease while in bankruptcy, we would have only a general unsecured claim for pre-petition damages. Any unsecured claim that we hold may be paid only to the extent that funds are available and only in the

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same percentage as is paid to all other holders of unsecured claims. It is possible that we may recover substantially less than the full value of any unsecured claims that we hold, if any, which may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock. Furthermore, dealing with a tenant-operator bankruptcy or other default may divert management’s attention and cause us to incur substantial legal and other costs.

Adverse economic or other conditions in the geographic markets in which we conduct business could negatively affect our occupancy levels and rental rates and therefore our operating results.

Our operating results depend upon our ability to maintain occupancy levels and rental rates at our healthcare facilities. Adverse economic or other conditions in the geographic markets in which we operate, including periods of economic slowdown or recession, industry slowdowns, periods of deflation, relocation of businesses, changing demographics, earthquakes and other natural disasters, fires, terrorist acts, civil disturbances or acts of war and other man-made disasters which may result in uninsured or underinsured losses, and changes in tax, real estate, zoning and other laws and regulations, may lower our occupancy levels and limit our ability to maintain rents or require us to offer rental concessions. The failure of our healthcare facilities to generate revenues sufficient to meet our cash requirements, including operating and other expenses, debt service and capital expenditures, may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

We may have difficulty finding suitable replacement tenant-operators in the event of a tenant-operator default or non-renewal of our leases, especially for our healthcare facilities located in smaller markets.

We cannot predict whether our tenant-operators will renew existing leases beyond their current terms. Nearly all of our healthcare facilities are subject to triple-net leases which have multi-year terms. As of March 31, 2016, leases representing 0%, 3.6% and 0% of leasable square feet in our current portfolio will expire in 2016, 2017 and 2018, respectively. If any of our leases are not renewed, we would attempt to lease those healthcare facilities to another tenant-operator. In case of non-renewal, we generally have advance notice before expiration of the lease term to arrange for repositioning of the healthcare facilities and our tenant-operators are required to continue to perform all of their obligations (including the payment of all rental amounts) for the non-renewed assets until such expiration. However, following expiration of a lease term or if we exercise our right to replace a tenant-operator in default, rental payments on the related healthcare facilities could decline or cease altogether while we reposition the healthcare facilities with a suitable replacement tenant. We also might not be successful in identifying suitable replacement tenant-operators or entering into triple-net leases with new tenant-operators on a timely basis or on terms as favorable to us as our current triple-net leases, or at all, and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of, and avoid the imposition of liens on, our healthcare facilities while they are being repositioned. Our ability to reposition our healthcare facilities with a suitable tenant-operator could be significantly delayed or limited by state licensing, receivership, certificate of need or other laws, as well as by the Medicare and Medicaid change-of-ownership rules. We could also incur substantial additional expenses in connection with any licensing, receivership or change-of-ownership proceedings. In addition, our ability to locate suitable replacement tenant-operators could be impaired by the specialized healthcare uses or contractual restrictions on use of the healthcare facilities, and we may be required to spend substantial amounts to adapt the healthcare facilities to other uses. Any such delays, limitations and expenses could adversely impact our ability to collect rent, obtain possession of leased healthcare facilities or otherwise exercise remedies for tenant-operator default and could have a material adverse effect on us.

All of these risks may be greater in the smaller markets, where there may be fewer potential replacement tenant-operators, making it more difficult to replace tenant-operators, especially for specialized space, like hospital or outpatient treatment facilities located in our healthcare facilities, and could have a material adverse effect on us.

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We may be unable to successfully enter into definitive purchase agreements for or close the acquisition of the properties in our investment pipeline.

There is no assurance that we will enter into definitive purchase agreements for the facilities in our investment pipeline. We could determine through a market analysis, a review of historical and projected financial statements of the property or the operator, a review of current insurance or other due diligence that the prospective facility does not meet our investment standards. We also may be unable to come to an agreement. Additionally, there is no assurance that we will successfully close an acquisition once a purchase agreement has been signed. After a purchase agreement has been signed, we typically have a due diligence period of 45 to 60 days. If we identify problems with the property or the operator during our due diligence review, we may terminate the purchase agreement and not close.

We may be unable to successfully acquire healthcare facilities and expand our operations into new or existing markets.

We intend to explore acquisitions of healthcare facilities in new and existing geographic markets. These acquisitions could divert management’s attention from our existing healthcare facilities, and we may be unable to retain key employees or attract highly qualified new employees. In addition, we may not possess familiarity with the dynamics and prevailing conditions of any new geographic markets which could adversely affect our ability to successfully expand into or operate within those markets. For example, new markets may have different insurance practices, reimbursement rates and local real estate, zoning and development regulations than those with which we are familiar. Our expansion into new markets could result in unexpected costs or delays and other adverse consequences. We may not be successful in identifying suitable healthcare facilities with suitable tenant-operators which meet our acquisition criteria or in consummating acquisitions on satisfactory terms or at all for a number of reasons, including, among other things, unsatisfactory results of our due diligence investigations, failure to obtain financing for the acquisition on favorable terms or at all, and our misjudgment of the value of the opportunities. If we are unsuccessful in expanding into new or our existing markets, it could adversely affect our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

We may not be successful in identifying and completing off-market acquisitions and other suitable acquisitions or investment opportunities, which may impede our growth and adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.

An important component of our growth strategy is to acquire healthcare facilities before they are widely marketed by the owners, or off-market. Facilities that are acquired off-market are typically more attractive to us as a purchaser because of the absence of a formal marketing process, which could lead to higher prices or other unattractive terms. If we cannot obtain off-market deal flow in the future, our ability to locate and acquire facilities at attractive prices could be adversely affected. We expect to compete with many other entities engaged in real estate investment activities for acquisitions of healthcare facilities, including national, regional and local operators, acquirers and developers of healthcare-related real estate properties. The competition for healthcare-related real estate properties may significantly increase the price that we must pay for healthcare facilities or other assets that we seek to acquire, and our competitors may succeed in acquiring those healthcare facilities or assets themselves. In addition, our potential acquisition targets may find our competitors to be more attractive because they may have greater resources, may be willing to pay more for the healthcare facilities or may have a more compatible operating philosophy. In particular, larger REITs targeting healthcare facilities may enjoy significant competitive advantages that result from, among other things, a lower cost of capital, enhanced operating efficiencies more personnel and market penetration and familiarity with markets. In addition, the number of entities and the amount of funds competing for suitable investment properties may increase. This competition will result in increased demand for these assets and therefore increased prices paid for them. Those higher prices for healthcare facilities or other assets may adversely affect our returns from our investments.

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Some of our healthcare facilities we acquire in the future are and may be subject to ground leases or other restrictions on the use of the space. If we are required to undertake significant capital expenditures to procure new tenant-operators, then our business and results of operations may suffer.

One of our healthcare facilities, representing approximately 16.8% of our total leasable square feet and 24% of our annualized base rent for the period ended March 31, 2016, is subject to a ground lease that contains certain restrictions. These restrictions include limits on our ability to re-let our healthcare facilities to tenant-operators not affiliated with the healthcare delivery system that owns the underlying healthcare facility, rights of purchase and rights of first offer and refusal with respect to sales of the healthcare facility and limits on the types of medical procedures that may be performed. In addition, lower than expected rental rates upon re-letting could impede our growth. We may not be able to re-let space on terms that are favorable to us or at all. Further, we may be required to undertake significant capital expenditures to renovate or reconfigure space to attract new tenant-operators. If we are unable to promptly re-let our healthcare facilities, if the rates upon such re-letting are significantly lower than expected or if we are required to undertake significant capital expenditures in connection with re-letting, our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock may be adversely affected.

Our healthcare facilities and our tenant-operators may be unable to compete successfully.

Our healthcare facilities often face competition from nearby hospitals and other healthcare facilities that provide comparable services. Similarly, our tenant-operators face competition from other medical practices and service providers at nearby hospitals and other healthcare facilities. From time to time and for reasons beyond our control, managed care organizations may change their lists of preferred hospitals or in-network physicians. Physicians also may change hospital affiliations. If competitors of our tenant-operators or competitors of the associated healthcare delivery systems with which our healthcare facilities are strategically aligned have greater geographic coverage, improve access and convenience to physicians and patients, provide or are perceived to provide higher quality services, recruit physicians to provide competing services at their facilities, expand or improve their services or obtain more favorable managed care contracts, our tenant-operators may not be able to successfully compete. Any reduction in rental revenues resulting from the inability of our tenant-operators or the associated healthcare delivery systems with which our healthcare facilities are strategically aligned to compete in providing medical services and/or receiving sufficient rates of reimbursement for healthcare services rendered may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

We may in the future make investments in joint ventures, which could be adversely affected by our lack of decision-making authority, our reliance upon our joint venture partners’ financial condition, any disputes that may arise between us and our joint venture partners and our exposure to potential losses from the actions of our joint venture partners.

We may in the future make co-investments with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for the management of the affairs of a healthcare facility, partnership, joint venture or other entity. Joint ventures generally involve risks not present with respect to our wholly-owned healthcare facilities, including the following:

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Joint venture investments involve risks that may not be present with other methods of ownership. In addition to those risks identified above, our partner might at any time have economic or other business interests or goals that are or become inconsistent with our interests or goals; that we could become engaged in a dispute with our partner, which could require us to expend additional resources to resolve such disputes and could have an adverse impact on the operations and profitability of the joint venture; and that our partner may be in a position to take action or withhold consent contrary to our instructions or requests. In addition, our ability to transfer our interest in a joint venture to a third party may be restricted. Although currently not applicable to our existing joint venture arrangements, in the future, in certain instances, we or our partner may have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partner’s interest, at a time when we otherwise would not have initiated such a transaction. Our ability to acquire our partner’s interest may be limited if we do not have sufficient cash, available borrowing capacity or other capital resources. In such event, we may be forced to sell our interest in the joint venture when we would otherwise prefer to retain it. Joint ventures may require us to share decision-making authority with our partners, which could limit our ability to control the healthcare facilities in the joint ventures. Even when we have a controlling interest, certain major decisions may require partner approval, such as the sale, acquisition or financing of a healthcare facility.

Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flows.

Our tenant-operators are required to maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), and extended coverage insurance with respect to our healthcare facilities. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots, acts of war or terrorism. Should an uninsured loss occur, or if there is a significant deductible to be paid and our tenant-operator is unable to fund such loss or deductible, we could lose both our investment in and anticipated profits and cash flows from a healthcare related facility. As a result, our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock may be adversely affected.

Environmental compliance costs and liabilities associated with owning, leasing, developing and operating our healthcare facilities may affect our results of operations.

Under various U.S. federal, state and local laws, ordinances and regulations, current and prior owners and tenant-operators of real estate may be jointly and severally liable for the costs of investigating, remediating and monitoring certain hazardous substances or other regulated materials on or in such healthcare facility. In addition to these costs, the past or present owner or tenant-operator of a healthcare facility from which a release emanates could be liable for any personal injury or property damage that results from such releases, including for the unauthorized release of asbestos-containing materials and other hazardous substances into the air, as well as any damages to natural resources or the environment that arise from such releases. These environmental laws often impose such liability without regard to whether the current or prior owner or tenant-operator knew of, or was responsible for, the presence or release of such substances or materials. Moreover, the release of hazardous substances or materials, or the failure to properly remediate such substances or materials, may adversely affect the owner’s or tenant’s ability to lease, sell, develop or rent such healthcare facility or to borrow by using such healthcare facility as collateral. Persons who transport or arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for

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the costs of removal or remediation of such substances at a disposal or treatment facility, regardless of whether or not such facility is owned or operated by such person.

Certain environmental laws impose compliance obligations on owners and tenant-operators of real property with respect to the management of hazardous substances and other regulated materials. For example, environmental laws govern the management and removal of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions. If we are held liable under these laws, our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock may be adversely affected.

Costs associated with complying with the Americans with Disabilities Act of 1990 may result in unanticipated expenses.

Under the Americans with Disabilities Act of 1990, or the ADA, all places of public accommodation are required to meet certain U.S. federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws may also require modifications to our healthcare facilities, or restrict certain further renovations of the buildings, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines, an award of damages to private litigants and/or an order to correct any non-complying feature which could result in substantial capital expenditures. Our leases provide that our tenant-operators shall maintain our healthcare facilities in compliance with such laws, however, we have not conducted a detailed audit or investigation of all of our healthcare facilities to determine such compliance, and we cannot predict the ultimate cost of compliance with the ADA or other legislation. If one or more of our healthcare facilities is not in compliance with the ADA or other related legislation, then our tenant-operators would be required to incur additional costs to bring the facility into compliance. These costs, if substantial, could have an adverse economic effect on our tenant-operators which could adversely affect our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock may be adversely affected.

We have now, and may have in the future, exposure to contingent rent escalators, which may hinder our growth and profitability.

We receive substantially all of our revenues by leasing our healthcare facilities under long-term triple-net leases in which the rental rate is generally fixed with annual escalations. Leases in the future may contain escalators contingent upon the achievement of specified revenue parameters or based on changes in the Consumer Price Index. If, as a result of weak economic conditions or other factors, the revenues generated by our triple-net leased healthcare facilities do not meet the specified parameters or the Consumer Price Index does not increase, our growth and profitability will be hindered by these triple-net leases.

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber-incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber-incident include operational interruption, damage to our relationship with our tenant-operators, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber-incident, do not guarantee that our financial results will not be negatively impacted by such an incident.

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Risks Related to the Healthcare Industry

The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could adversely impact our company and result in the inability of our tenant-operators to make rent payments to us.

The healthcare industry is heavily regulated by U.S. federal, state and local governmental authorities. Our tenant-operators generally will be subject to laws and regulations covering, among other things, licensure, certification for participation in government programs, billing for services, privacy and security of health information and relationships with physicians and other referral sources. In addition, new laws and regulations, changes in existing laws and regulations or changes in the interpretation of such laws or regulations could negatively affect our financial condition and the financial condition of our tenant-operators. These changes, in some cases, could apply retroactively. The enactment, timing or effect of legislative or regulatory changes cannot be predicted.

Many states regulate the construction of healthcare facilities, the expansion of healthcare facilities, the construction or expansion of certain services, including by way of example specific bed types and medical equipment, as well as certain capital expenditures through certificate of need, or CON, laws. Under such laws, the applicable state regulatory body must determine a need exists for a project before the project can be undertaken. If one of our tenant-operators seeks to undertake a CON-regulated project, but is not authorized by the applicable regulatory body to proceed with the project, the tenant-operator would be prevented from operating in its intended manner.

Failure to comply with these laws and regulations could adversely affect us directly and our tenant-operators’ ability to make rent payments to us which may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Adverse trends in healthcare provider operations may negatively affect our lease revenues and our ability to make distributions to our stockholders.

The healthcare industry is currently experiencing, among other things:

These factors may adversely affect the economic performance of some or all of our tenant-operators and, in turn, our lease revenues, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Reductions in reimbursement from third-party payors, including Medicare and Medicaid, could adversely affect the profitability of our tenant-operators and hinder their ability to make rent payments to us or renew their lease.

Sources of revenue for our tenant-operators typically include the U.S. federal Medicare program, state Medicaid programs, private insurance payors and health maintenance organizations. Healthcare providers continue to face increased government and private payor pressure to control or reduce healthcare costs and significant reductions in healthcare reimbursement, including reduced reimbursements and changes to payment methodologies under the Affordable Care Act. The Congressional Budget Office, or CBO, estimates the reductions required by the Affordable Care Act over the next ten years following enactment of the act will include $415 billion in cuts to Medicare fee-for-service payments, the majority of which will come from hospitals, and that some hospitals will become insolvent as a result of the reductions. In some cases, private insurers rely on all or portions of the Medicare payment systems to determine payment rates which may result

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in decreased reimbursement from private insurers. The Affordable Care Act will likely increase enrollment in plans offered by private insurers who choose to participate in state-run exchanges, but the Affordable Care Act also imposes new requirements for the health insurance industry, including prohibitions upon excluding individuals based upon pre-existing conditions which may increase private insurer costs and, thereby, cause private insurers to reduce their payment rates to providers. At this time, it is difficult to predict the full effects of the Affordable Care Act and its impact on our business, our revenues and financial condition and those of our tenant-operators due to the law’s complexity, lack of implementing regulations or interpretive guidance, gradual implementation and possible amendment. The Affordable Care Act could adversely affect the reimbursement rates received by our tenant-operators, the financial success of our tenant-operators and strategic partners and consequently us.

If the United States economy enters a recession or slower growth, this could negatively affect state budgets, thereby putting pressure on states to decrease spending on state programs including Medicaid. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in state Medicaid programs due to unemployment and declines in family incomes. Historically, states have often attempted to reduce Medicaid spending by limiting benefits and tightening Medicaid eligibility requirements. Many states have adopted, or are considering the adoption of, legislation designed to enroll Medicaid recipients in managed care programs and/or impose additional taxes on hospitals to help finance or expand the states’ Medicaid systems. Potential reductions to Medicaid program spending in response to state budgetary pressures could negatively impact the ability of our tenant-operators to successfully operate their businesses.

Efforts by payors to reduce healthcare costs will likely continue which may result in reductions or slower growth in reimbursement for certain services provided by some of our tenant-operators. A reduction in reimbursements to our tenant-operators from third-party payors for any reason could adversely affect our tenant-operators’ ability to make rent payments to us which may have a material adverse effect on our businesses, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Our tenant-operators and our company are subject to fraud and abuse laws, the violation of which by a tenant-operator may jeopardize the tenant-operator’s ability to make rent payments to us.

There are various U.S. federal and state laws prohibiting fraudulent and abusive business practices by healthcare providers who participate in, receive payments from or are in a position to make referrals in connection with government-sponsored healthcare programs, including the Medicare and Medicaid programs. Our lease arrangements with certain tenant-operators may also be subject to these fraud and abuse laws.

These laws include without limitation:

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Violations of these laws may result in criminal and/or civil penalties that range from punitive sanctions, damage assessments, penalties, imprisonment, denial of Medicare and Medicaid payments and/or exclusion from the Medicare and Medicaid programs. In addition, the Affordable Care Act clarifies that the submission of claims for items or services generated in violation of the Anti-Kickback Statute constitutes a false or fraudulent claim under the False Claims Act. The U.S. federal government has taken the position, and some courts have held that violations of other laws, such as the Stark Law, can also be a violation of the False Claims Act. Additionally, certain laws, such as the False Claims Act, allow for individuals to bring whistleblower actions on behalf of the government for violations thereof. Imposition of any of these penalties upon one of our tenant-operators or strategic partners could jeopardize that tenant-operator’s ability to operate or to make rent payments or affect the level of occupancy in our healthcare facilities, which may have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock. Further, we enter into leases and other financial relationships with healthcare delivery systems that are subject to or impacted by these laws. In the future we may have other investors who are healthcare providers in certain of our subsidiaries that own our healthcare facilities. If any of our relationships, including those related to the other investors in our subsidiaries, are found not to comply with these laws, we and our physician investors may be subject to civil and/or criminal penalties.

Our healthcare-related tenant-operators may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their rent payments to us, and we could be subject to healthcare industry violations.

As is typical in the healthcare industry, our tenant-operators may often become subject to claims that their services have resulted in patient injury or other adverse effects. Many of these tenant-operators may have experienced an increasing trend in the frequency and severity of professional liability and general liability insurance claims and litigation asserted against them. The insurance coverage maintained by these tenant-operators may not cover all claims made against them nor continue to be available at a reasonable cost, if at all. In some states, insurance coverage for the risk of punitive damages arising from professional liability and general liability claims and/or litigation may not, in certain cases, be available to these tenant-operators due to state law prohibitions or limitations of availability. As a result, these types of tenant-operators of our healthcare facilities and healthcare-related facilities operating in these states may be liable for punitive damage awards that are either not covered or are in excess of their insurance policy limits.

We also believe that there has been, and will continue to be, an increase in governmental investigations of certain healthcare providers, particularly in the area of Medicare/Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations. Insurance is not available to cover such losses. Any adverse determination in a legal proceeding or governmental investigation, any settlements of such proceedings or investigations in excess of insurance coverage, whether currently asserted or arising in the future, could have a material adverse effect on a tenant-operator’s financial condition. If a tenant-operator is unable to obtain or maintain insurance coverage, if judgments are obtained or settlements reached in excess of the insurance coverage, if a tenant-operator is required to pay uninsured punitive damages, or if a tenant-operator is subject to an uninsurable government enforcement action or investigation, the tenant-operator could be exposed to substantial additional liabilities, which may affect the tenant-operator’s ability to pay rent, which in turn could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the trading price of our common stock. We could also be subject to costly government investigations or other enforcement actions which could have a material adverse effect on our business, financial condition and results of operations, our ability to pay distributions to our stockholders and the trading price of our common stock.

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Risks Related to the Real Estate Industry

Our operating performance is subject to risks associated with the real estate industry.

Real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control. Certain events may decrease cash available for distributions as well as the value of our healthcare facilities. These events include, but are not limited to:

In addition, periods of economic slowdown or recession, such as the recent U.S. economic downturn, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. If we cannot lease our healthcare facilities to meet our financial expectations, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make distributions to our stockholders could be adversely affected.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our healthcare facilities.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more of our healthcare facilities in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any of our healthcare facilities for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of any of our healthcare facilities. We may be required to expend funds to correct defects or to make improvements before a healthcare facility can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements.

In acquiring a healthcare facility we may agree to transfer restrictions that materially restrict us from selling that healthcare facility for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that healthcare facility. These transfer restrictions would impede our ability to sell a healthcare facility even if we deem it necessary or appropriate. These facts and any others that would impede our ability to respond to adverse changes in the performance of our healthcare facilities may have an adverse effect on our business, financial condition, results of operations, or ability to make distributions to our stockholders and the trading price of our common stock.

Uncertain market conditions could cause us to sell our healthcare facilities at a loss in the future.

We intend to hold our various real estate investments until such time as we determine that a sale or other disposition appears to be advantageous to achieve our investment objectives. Our senior management team and our board of directors may exercise their discretion as to whether and when to sell a healthcare facility,

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and we will have no obligation to sell our buildings at any particular time. We generally intend to hold our healthcare facilities for an extended period of time, and we cannot predict with any certainty the various market conditions affecting real estate investments that will exist at any particular time in the future. Because of the uncertainty of market conditions that may affect the future disposition of our healthcare facilities, we may not be able to sell our buildings at a profit in the future or at all. We may incur prepayment penalties in the event that we sell a healthcare facility subject to a mortgage earlier than we otherwise had planned. Additionally, we could be forced to sell healthcare facilities at inopportune times which could result in us selling the affected building at a substantial loss. Accordingly, the extent to which you will receive cash distributions and realize potential appreciation on our real estate investments will, among other things, be dependent upon fluctuating market conditions. Any inability to sell a healthcare facility could adversely impact our ability to make debt payments and distributions to our stockholders.

Our assets may be subject to impairment charges.

We will periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, tenant-operator performance and legal structure. For example, the termination of a lease by a major tenant-operator may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations and FFO in the period in which the impairment charge is recorded.

Risks Related to Financings

Higher mortgage rates may make it more difficult for us to finance or refinance healthcare facilities, which could reduce the number of healthcare facilities we can acquire and the amount of cash available for distribution to our stockholders.

If mortgage debt is unavailable on reasonable terms as a result of increased interest rates or other factors, we may not be able to finance the purchase of additional healthcare facilities. In addition, if we place mortgage debt on our healthcare facilities, we run the risk of being unable to refinance such debt when the loans come due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to sell healthcare facilities on terms that are not advantageous to us, or could result in the foreclosure of such healthcare facilities. If any of these events occur, our cash flows would be reduced. This, in turn, would reduce cash available for distribution to our stockholders and may impact our ability to raise more capital by issuing securities or by borrowing more money.

Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our healthcare facilities or to pay the distributions currently contemplated or necessary to qualify as a REIT and may expose us to the risk of default under our debt obligations.

As of March 31, 2016, we have a total of $25,030,134 in convertible debentures outstanding to ZH USA. These convertible debentures accrue interest at an annual rate of 8% and are convertible at the holder’s option at $12.748 per share of common stock or OP unit of the company. Payment of the principal and interest of the convertible debentures is due on demand. Aggregate scheduled principal payments related to loans secured by properties in our current portfolio, excluding convertible debentures that will be repaid or converted into shares of our common stock or OP units upon closing of this offering, are as follows:

2016		$	284,191
2017			16,032,523
2018			22,044
2019			136,007
2020			7,219,449
Beyond 2020			32,097,400
		$	55,791,614

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We also expect to incur additional debt in connection with future investments. We do not anticipate that our internally generated cash flow will be adequate to repay our existing indebtedness upon maturity, and, therefore, we expect to repay our indebtedness through refinancings and future offerings of equity and debt securities, either of which we may be unable to secure on favorable terms or at all. Our level of debt and the limitations imposed upon us by our debt agreements could have adverse consequences, including the following:

The realization of any or all of these risks may have an adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

We will rely on external sources of capital to fund future capital needs, and, if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

In order to qualify as a REIT under the Code, we will be required, among other things, to distribute each year to our stockholders at least 90% of our taxable income, without regard to the deduction for dividends paid and excluding net capital gain. Because of this distribution requirement, we may not be able to fund all of our future capital needs from cash retained from operations, including capital needed to make investments and to satisfy or refinance maturing obligations. As a result, we expect to rely on external sources of capital, including debt and equity financing, to fund future capital needs. If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business or to meet our obligations and commitments as they mature. Our access to capital will depend upon a number of factors over which we have little or no control, including general market conditions, the market’s perception of our current and potential future earnings and cash distributions and the market price of the shares of our

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common stock. We may not be in a position to take advantage of attractive investment opportunities for growth if we are unable to access the capital markets on a timely basis on favorable terms.

We could become highly leveraged in the future because our organizational documents contain no limitations on the amount of debt that we may incur.

Our organizational documents contain no limitations on the amount of indebtedness that we or our Operating Partnership may incur. We could alter the balance between our total outstanding indebtedness and the value of our healthcare facilities at any time. If we become more highly leveraged, the resulting increase in outstanding debt could adversely affect our ability to make debt service payments, to pay our anticipated distributions and to make the distributions required to qualify as a REIT. The occurrence of any of the foregoing risks could adversely affect our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

In certain cases, we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements. Hedging involves risks, such as the risk that the counterparty may fail to honor its obligations under an arrangement, that the arrangements may not be effective in reducing our exposure to interest rate changes and that a court could rule that such an agreement is not legally enforceable. In addition, we may be limited in the type and amount of hedging transactions that we may use in the future by our need to satisfy the REIT income tests under the Code. Failure to hedge effectively against interest rate changes may have an adverse effect on our business, financial condition, results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Our ability to issue equity to expand our business will depend, in part, upon the market price of our common stock, and our failure to meet market expectations with respect to our business could negatively affect the market price of our common stock and thereby limit our ability to raise capital.

The availability of equity capital to us will depend, in part, upon the market price of our common stock which, in turn, will depend upon various market conditions and other factors that may change from time to time, including:

Our failure to meet the market’s expectation with regard to future earnings and cash distributions would likely adversely affect the market price of our common stock and, as a result, the cost and availability of equity capital to us.

Risks Related to Our Formation and Structure

We will have no direct operations and will rely on funds received from our Operating Partnership to meet our obligations.

We will conduct substantially all of our operations through our Operating Partnership. After giving effect to this offering, we will own approximately 97.8% of the OP units of our Operating Partnership and apart

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from this ownership interest, we will not have any independent operations. As a result, we will rely on distributions from our Operating Partnership to pay any dividends that we might declare on our common stock. We will also rely on distributions from our Operating Partnership to meet our obligations, including tax liability on taxable income allocated to us from our Operating Partnership (which might make distributions to us not equal to the tax on such allocated taxable income). Stockholders’ claims will consequently be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

We will be subject to the requirements of the Sarbanes-Oxley Act of 2002.

Management will be required to deliver a report that assesses the effectiveness of our internal controls over financial reporting, pursuant to Section 302 of the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act may require our auditors to deliver an attestation report on the effectiveness of our internal controls over financial reporting in conjunction with their opinion on our audited financial statements as of December 31, 2015 subsequent to the year in which the registration statement (of which this prospectus forms a part) relating to this offering becomes effective. Substantial work on our part is required to implement appropriate processes, document the system of internal control over key processes, assess their design, remediate any deficiencies identified and test their operation. This process is expected to be both costly and challenging. We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of Section 302 and 404 of the Sarbanes-Oxley Act. The existence of any material weakness described above would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting. Our management may be required to devote significant time and expense to remediate any material weaknesses that may be discovered and may not be able to remediate any material weakness in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, all of which could lead to a decline in the per share trading price of our common stock.

Our use of OP units as currency to acquire healthcare facilities in the future could result in stockholder dilution and/or limit our ability to sell such healthcare facilities, which could have a material adverse effect on us.

In the future we may acquire healthcare facilities or portfolios of healthcare facilities through tax-deferred contribution transactions in exchange for OP units, which may result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired healthcare facilities, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired healthcare facilities or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell healthcare facilities at a time, or on terms, that would be favorable absent such restrictions.

Conflicts of interest could arise as a result of our UPREIT structure.

Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our directors and officers have duties to us under applicable Maryland law in connection with their management of our company. At the same time, we, as general partner, have fiduciary duties to our Operating Partnership and to the limited partners under Delaware law in connection with the management of our Operating Partnership. Our duties, as general partner, to our Operating Partnership and its limited partners may come into conflict with the duties of our directors and officers.

Unless otherwise provided for in the relevant partnership agreement, Delaware law generally requires a general partner of a Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest duties of good faith, fairness and loyalty and which generally prohibits such general partner from taking any action or engaging in any transaction as to which it has a conflict of interest.

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Additionally, the partnership agreement expressly limits our liability by providing that we, as the sole member of the general partner of the Operating Partnership, and our directors or officers will not be liable or accountable in damages to our Operating Partnership, the limited partners or assignees for errors in judgment, mistakes of fact or law or for any act or omission if the general partner or such director or officer acted in good faith. In addition, our Operating Partnership is required to indemnify us, our affiliates and each of our respective officers and directors, to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Operating Partnership, provided that our Operating Partnership will not indemnify any such person for (1) acts or omissions committed in bad faith or that were the result of active and deliberate dishonesty, (2) any transaction for which such person received an improper personal benefit in money, healthcare facility or services, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful.

The provisions of Delaware law that allow the common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties that would be in effect under common law were it not for the partnership agreement.

Our charter restricts the ownership and transfer of our outstanding shares of stock which may have the effect of delaying, deferring or preventing a transaction or change of control of our company.

In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares of stock may be owned, beneficially or constructively, by five or fewer individuals at any time during the last half of each taxable year other than our initial REIT taxable year. Subject to certain exceptions, our charter prohibits any stockholder from owning actually or constructively more than 9.8% in value or number of shares, whichever is more restrictive, of any class or series of our outstanding shares. The constructive ownership rules under the Code are complex and may cause the outstanding shares owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of our outstanding shares of any class or series by an individual or entity could cause that individual or entity to own constructively in excess of 9.8% of any class or series of our outstanding beneficial interests and to be subject to our charter’s ownership limit. Our board of directors has approved a waiver of the 9.8% ownership limit in our charter allowing ZH USA, LLC to own up to 16.9% of our outstanding shares of common stock. Our charter also prohibits any person from owning shares of our beneficial interests that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT. Any attempt to own or transfer shares of our beneficial interest in violation of these restrictions may result in the shares being automatically transferred to a charitable trust or may be void.

Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests.

Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

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By resolution of our board of directors, we have opted out of the business combination provisions of the MGCL and provide that any business combination between us and any other person is exempt from the business combination 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 persons). In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt in to the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL in the future.

Certain provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. If implemented, these provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then current market price. Our charter contains a provision whereby we elect, at such time as we become eligible to do so, which we anticipate will occur upon the closing of this offering, to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws.”

We could increase the number of authorized shares, classify and reclassify unissued shares and issue shares without stockholder approval.

Our board of directors, without stockholder approval, has the power under our charter to amend our charter to increase or decrease the aggregate number of shares or the number of shares of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued shares of our common stock or preferred stock. In addition, under our charter, our board of directors has the power to classify or reclassify any unissued common or preferred stock into one or more classes or series of shares and set the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption for such newly classified or reclassified shares. See “Description of Our Capital Stock — Power to Increase or Decrease Authorized Shares of Stock and Issue Additional Shares of Common and Preferred Stock.” As a result, we may issue series or classes of common or preferred stock with preferences, dividends, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock. Although our board of directors has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for shares of our common stock or that our stockholders otherwise believe to be in their best interests.

We may change our business, investment and financing strategies without stockholder approval.

We may change our business, investment and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this prospectus. In particular, a change in our investment strategy, including the manner in which we allocate our resources across

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our portfolio or the types of assets in which we seek to invest, may increase our exposure to real estate market fluctuations. In addition, we may in the future increase the use of leverage at times and in amounts that we, in our discretion, deem prudent, and such decision would not be subject to stockholder approval. Furthermore, our board of directors may determine that healthcare facilities do not offer the potential for attractive risk-adjusted returns for an investment strategy. Changes to our strategies with regards to the foregoing could adversely affect our financial condition, results of operations and our ability to make distributions to our stockholders.

Our rights and the rights of our stockholders to take action against our directors and officers are limited which could limit your recourse in the event that we take certain actions which are not in your best interests.

Under Maryland law generally, a director is required to perform his or her duties in good faith, in a manner that he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Under Maryland law, directors are presumed to have acted with this standard of care. 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 established by a final judgment and which is material to the cause of action. Our charter contains such a provision which eliminates directors’ and officers’ liability to the maximum extent permitted by Maryland law.

Our charter authorizes us to indemnify our present and former directors and officers for actions taken by them in those and other capacities to the maximum extent permitted by Maryland law. Our bylaws obligate us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, 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 to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. We will also enter into indemnification agreements with our officers and directors granting them express indemnification rights. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter, bylaws and indemnification agreements or that might exist with other companies.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management and may prevent a change in control of our company that is in the best interests of our stockholders. Our charter provides that a director may only be removed for cause upon the affirmative vote of holders of two-thirds of all the votes entitled to be cast generally in the election of directors. Vacancies may be filled only by a majority of the remaining directors in office, even if less than a quorum, once our election to be subject to certain provisions of Title 3, subtitle 8 of the MGCL becomes effective. These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in control of our company that is in the best interests of our stockholders.

Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent unsolicited acquisitions of us.

Provisions in the partnership agreement of our Operating Partnership may delay, or make more difficult, unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable. These provisions include, among others:

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Our charter and bylaws, Maryland law and the partnership agreement of our Operating Partnership also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our shares of common stock or that our stockholders otherwise believe to be in their best interest. See “Description of the Partnership Agreement of Global Medical REIT LP — Restrictions on Transfers by the General Partner,” “Certain Provisions of Maryland Law and of Our Charter and Bylaws — Removal of Directors,” “— Control Share Acquisitions,” “— Advance Notice of Director Nominations and New Business” and “Description of the Partnership Agreement of Global Medical REIT LP”

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 could 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.

After giving effect to this offering, we will own 97.8% of the outstanding partnership interests in our Operating Partnership. Our Operating Partnership may, in connection with our acquisition of healthcare facilities or otherwise, issue additional OP units to third parties. Such issuances would reduce our ownership percentage in our Operating Partnership and could affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders. Holders of shares of our common stock will generally not have any voting rights with respect to activities of our Operating Partnership, including issuances of additional OP units in amounts that do not exceed 20% of our outstanding shares of common stock.

Risks Related to Our Relationship with Our Advisor and Other Conflicts of Interest

We have no employees and will be entirely dependent upon our advisor for all the services we require, and we cannot assure you that our advisor will allocate the resources necessary to meet our business objectives.

Because we are “externally managed,” we will not retain our own personnel, but will instead depend upon our advisor and its affiliates for virtually all of the services we require. Our advisor will select and manage the acquisition of our healthcare facilities; administer the collection of rents, monitor lease compliance and deal with vacancies and re-letting of our healthcare facilities; coordinate disposition of our healthcare facilities; provide financial and regulatory reporting services; communicate with our stockholders, pay distributions and provide transfer agent services; and provide all of our other administrative services. Accordingly, our success will likely be largely dependent upon the expertise and services of the executive officers and other key personnel of our advisor and its affiliates.

Our advisor may be unable to obtain or retain key personnel.

Our success depends to a significant degree upon the executive officers and other key personnel of our advisor. In particular, we rely on the services of David A. Young, our Chief Executive Officer, a member of our board of directors, and the Senior Vice President of our advisor, Jeffrey Busch, Chief Executive Officer of our advisor and chairman of our board of directors, Donald McClure, Chief Financial Officer of our company and our advisor, Alfonzo Leon, Chief Investment Officer of our company and our advisor, Danica Holley, Chief Operating Officer of our company, Allen Webb, the Senior Vice President, SEC Reporting and Technical Accounting and Conn Flanigan, the Secretary and General Counsel of our company and our advisor, to manage our operations. We cannot guarantee that all, or any particular one of these key personnel, will remain affiliated with us or our advisor. We do not separately maintain key person life insurance on any person. Failure of our advisor to retain key employees and retain highly skilled managerial, operational and marketing personnel could have a material adverse effect on our ability to achieve our investment objectives, lessen or

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eliminate the benefits of becoming self-managed and could result in us incurring excess costs and suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting.

The base management fees payable to our advisor will be payable regardless of the performance of our portfolio, which may reduce our advisor’s incentive to devote the time and effort to seeking profitable opportunities for our portfolio.

We pay our advisor base management fees, which may be substantial, based on our stockholders’ equity (as defined in the management agreement) regardless of the performance of our portfolio. The management fees take into account the net issuance proceeds of both common and preferred stock offerings. Our advisor’s entitlement to non-performance-based compensation might reduce its incentive to devote the time and effort of its professionals to seeking profitable opportunities for our portfolio, which could result in a lower performance of our portfolio and materially adversely affect our business, financial condition and results of operations.

The incentive fee payable to our advisor under the management agreement may cause our advisor to select investments in more risky assets to increase its incentive compensation.

Our advisor is entitled to receive incentive compensation based upon our achievement of targeted levels of AFFO (as defined in the management agreement). See “Our Advisor and the Management Agreement —  The Management Agreement — Management Fees, Incentive Fees and Reimbursement of Expenses.” In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on AFFO may lead our advisor to place undue emphasis on the maximization of AFFO at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.

There are conflicts of interest in our relationships with our advisor, which could result in outcomes that are not in the best interests of our stockholders.

We are subject to conflicts of interest arising out of our relationships with our advisor. Pursuant to the management agreement, our advisor is obligated to supply us with our management team. However, our advisor is not obligated to dedicate any specific personnel exclusively to us, nor are the advisor’s personnel obligated to dedicate any specific portion of their time to the management of our business. Additionally, our officers are employees of our advisor. As a result, our advisor, officers and directors may have conflicts between their duties to us and their duties to, and interests in our advisor.

In addition to our existing portfolio, we may acquire or sell healthcare facilities in which our advisor or its affiliates have or may have an interest. Similarly, our advisor or its affiliates may acquire or sell healthcare facilities in which we have or may have an interest. Although such acquisitions or dispositions may present conflicts of interest, we nonetheless may pursue and consummate such transactions. Additionally, we may engage in transactions directly with our advisor or its affiliates, including the purchase and sale of all or a portion of a portfolio asset.

In deciding whether to issue additional debt or equity securities, we will rely in part on recommendations made by our advisor. While such decisions are subject to the approval of our board of directors, our advisor earns management fees that are based on the total amount of our equity capital. Our advisor may have an incentive to recommend that we issue additional debt or equity securities. Future offerings of debt securities, which would rank senior to our common stock upon liquidation, and future offerings of equity securities which would dilute the common stock holdings of our existing stockholders and 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.

The officers of our advisor and its affiliates will devote as much time to us as our advisor deems appropriate, however, these officers may have conflicts in allocating their time and services between us. During turbulent conditions in the real estate industries or other times when we will need focused support and assistance from our advisor, may require greater focus and attention, placing our advisor’s resources in high demand. In such situations, we may not receive the necessary support and assistance we require or would otherwise receive if we were internally managed.

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The management agreement with our advisor was not negotiated on an arm’s-length basis, may not be as favorable to us as if it had been negotiated with an unaffiliated third party and may be costly and difficult to terminate.

The management agreement with our advisor was negotiated between related parties, and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

Termination of our management agreement without cause is subject to several conditions which may make such a termination difficult and costly. Termination of the management agreement with our advisor may require us to pay our advisor a substantial termination fee, which will increase the effective cost to us of terminating the management agreement, thereby making it more difficult for us to terminate our advisor without cause.

Our advisor’s failure to identify and acquire healthcare facilities that meet our investment criteria or perform its responsibilities under the management agreement could materially adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.

Our ability to achieve our objectives depends on our advisor’s ability to identify and acquire healthcare facilities that meet our investment criteria. Accomplishing our objectives is largely a function of our advisor’s structuring of our investment process, our access to financing on acceptable terms and general market conditions. Our stockholders will not have input into our investment decisions. All of these factors increase the uncertainty, and thus the risk, of investing in our common stock. The senior management team of our advisor has substantial responsibilities under the management agreement. In order to implement certain strategies, our advisor may need to hire, train, supervise and manage new employees successfully. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations, our ability to qualify and maintain our qualification as a REIT and our ability to make distributions to our stockholders.

Termination of the management agreement could be difficult and costly, including as a result of terminations fees, and may cause us to be unable to execute our business plan.

If we fail to renew the management agreement, or terminate the agreement, other than for a termination for cause, we will be obligated to pay our advisor a termination fee equal to three times the sum of the average base and incentive fees it has earned over the preceding two years. Such a payment would likely be a substantial one-time charge that could render unattractive, or not economically feasible, the termination of our advisor, even if it performed poorly.

If our advisor ceases to be our advisor pursuant to the management agreement, counterparties to our agreements may cease doing business with us.

If our advisor ceases to be our advisor, it could constitute an event of default or early termination event under the financing and hedging agreements we may enter into in the future, upon which our counterparties would have the right to terminate their agreements with us. If our advisor ceases to be our advisor for any reason, including upon the non-renewal of our management agreement, our business, financial condition and results of operations and our ability to make distributions to our stockholders may be materially adversely affected.

Risks Related to Our Qualification and Operation as a REIT

Failure to qualify as a REIT, or failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

We believe that our organization and current and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT commencing with our taxable year ending December 31, 2016. However, we cannot assure you that we will qualify and remain qualified as a REIT. In connection with this offering, we will receive an opinion from Vinson & Elkins L.L.P. that, commencing with our taxable year ending December 31, 2016, we have been organized in conformity with the requirements for

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qualification and taxation as a REIT under the U.S. federal income tax laws and our current and proposed method of operations will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2016 and subsequent taxable years. Investors should be aware that Vinson & Elkins L.L.P.’s opinion is based upon customary assumptions, will be conditioned upon certain representations made by us as to factual matters, including representations regarding the nature of our assets and the conduct of our business, is not binding upon the Internal Revenue Service, or the IRS, or any court and speaks as of the date issued. In addition, Vinson & Elkins L.L.P.’s opinion will be 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 depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the U.S. federal tax laws. 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.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because:

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our shares of common stock. See “Material U.S. Federal Income Tax Considerations” for a discussion of material U.S. federal income tax consequences relating to us and our shares of common stock.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, any taxable REIT subsidiary, or TRS, that we may form in the future will be subject to regular corporate U.S. federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders.

Failure to make required distributions would subject us to U.S. federal corporate income tax.

We intend to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the Code.

Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.

We have engaged, and expect to engage in the future, in transactions in which we purchase healthcare facilities and lease them back to the sellers of such healthcare facilities. Although we have structured, and intend to continue to structure, any such sale-leaseback transaction so that the lease will be characterized as a “true lease” for tax purposes, thereby allowing us to be treated as the owner of the healthcare facility for U.S. federal income tax purposes, we cannot assure you that the IRS will not challenge such characterization. If any sale-leaseback transaction is challenged as a partnership for U.S. federal income tax purposes, all of the

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payments that we receive from the tenant-operator may not be treated as qualifying income for the 75% or 95% gross income tests required for REIT qualification and we may fail to qualify as a REIT as a result. If any sale-leaseback transaction is challenged as a financing transaction or loan for U.S. federal income tax purposes, we would not be treated as the owner of the applicable healthcare facility and our deductions for depreciation and cost recovery relating to such healthcare facility would be disallowed. 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. Although we may be able to cure such failure by making a distribution in a subsequent taxable year and paying an interest change, no assurance can be provided that we will be able to make the required distribution or pay the required interest charge.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our shares of common stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.

In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities, securities of TRSs and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of the securities of any one issuer, no more than 25% (20% for taxable years beginning after December 31, 2017) of the value of our total assets can be represented by the securities of one or more TRSs, and no more than 25% of our assets can be represented by debt of “publicly offered” REITs that is not secured by real property or interests in real property. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Certain taxes may limit our ability to dispose of our healthcare facilities.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax equal to 100% of net gain upon a disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our healthcare facilities or may conduct such sales through any TRS that we may form, which would be subject to U.S. federal and state income taxation.

In addition, in the case of assets we owned as of January 1, 2016 (the start of our first REIT taxable year), we also will be subject to U.S. federal income tax at the highest regular corporate tax rate (currently 35%) on all or a portion of the gain recognized from a taxable disposition of any such asset occurring within the five-year period following January 1, 2016. The amount of the gain subject to tax would not exceed the difference between the fair market value of the asset sold as of January 1, 2016 and our adjusted tax basis in the asset on that date. Gain from a sale of such an asset occurring after the end of that five-year period will not be subject to this tax. We estimate that the aggregate amount of built-in gain in the assets we held at the start of our first REIT taxable year will not be significant. However, we are under no obligation to retain these assets to avoid this tax.

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If we fail to distribute our non-REIT earnings and profits, we will fail to qualify as a REIT.

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 treated as a C corporation prior to our first REIT year, which will be our taxable year ending December 31, 2016. Thus, we will be required to distribute any non-REIT accumulated earnings and profits attributable to our taxable years prior to our first REIT taxable year. We did not have any earnings and profits from those prior years, and we expect to make sufficient distributions in 2016 such that we will not have any undistributed non-REIT earnings and profits at the end of 2016. However, no complete assurance can be provided that we will be able to determine accurately our non-REIT earnings and profits or distribute 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, we could fail to qualify as a REIT.

We may pay taxable dividends in our common stock and cash, in which case stockholders may sell shares of our common stock to pay tax on such dividends, placing downward pressure on the market price of our common stock.

We may distribute taxable dividends that are payable in cash and common stock at the election of each stockholder. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in shares as taxable dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS issued a revenue procedure creating a temporary safe harbor that authorized publicly traded REITs to make elective cash/share dividends, but that temporary safe harbor has expired. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and common stock.

If we made a taxable dividend payable in cash and common stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, stockholders may be required to pay income tax with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the common stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. We do not currently intend to pay taxable dividends using both our common stock and cash, although we may choose to do so in the future.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

Any ownership of a TRS we may form in the future will be subject to limitations and our transactions with a TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

Overall, no more than 25% (20% for taxable years beginning after December 31, 2017) of the value of a REIT’s assets may consist of stock or securities of one or more TRS. In addition, the Code limits the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an

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appropriate level of corporate taxation. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. We will monitor the value of our respective investments in any TRS that we may form for the purpose of ensuring compliance with TRS ownership limitations and will structure our transactions with any TRS on terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 25% (20% for taxable years beginning after December 31, 2017) limitation or to avoid application of the 100% excise tax.

The formation of a TRS lessee would increase our overall tax liability.

We may, in the future, form one or more TRS lessees to lease “qualified health care properties” from us. Any TRS lessee we may form will be subject to U.S. federal and state income tax on its taxable income, which will consist of the revenues from the qualified healthcare facilities leased by the TRS lessee, net of the operating expenses for such healthcare facilities and rent payments to us. Accordingly, although our ownership of a TRS lessee would allow us to participate in the operating income from our healthcare facilities leased to the TRS lessee on an after tax basis in addition to receiving rent, that operating income would be fully subject to U.S. federal and state income tax. The after-tax net income of a TRS lessee would be available for distribution to us.

If leases of our healthcare facilities are not respected as true leases for U.S. federal income tax purposes, we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our stockholders.

To qualify as a REIT, we must satisfy two gross income tests, under which specified percentages of our gross income must be derived from certain sources, such as “rents from real property.” Rents paid to our Operating Partnership by third-party lessees and any TRS lessee that we may form in the future pursuant to the leases of our healthcare facilities will constitute substantially all of our gross income. In order for such rent to qualify as “rents from real property” for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. If our leases are not respected as true leases for U.S. federal income tax purposes, we would fail to qualify as a REIT.

If a TRS lessee failed to qualify as a TRS or the facility operators engaged by a TRS lessee did not qualify as “eligible independent contractors,” we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our stockholders.

Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. We may, in the future, lease certain of our healthcare facilities that qualify as “qualified health care properties” to a TRS lessee. So long as that TRS lessee qualifies as a TRS, it will not be treated as a “related party tenant” with respect to our healthcare facilities that are managed by an independent facility operator that qualifies as an “eligible independent contractor.” We would seek to structure any future arrangements with a TRS lessee such that the TRS lessee would qualify to be treated as a TRS for U.S. federal income tax purposes, but there can be no assurance that the IRS would not challenge the status of a TRS for U.S. federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in disqualifying a TRS lessee from treatment as a TRS, it is possible that we would fail to meet the asset tests applicable to REITs and a significant portion of our income would fail to qualify for the gross income tests. If we failed to meet either the asset or gross income tests, we would likely lose our REIT qualification for U.S. federal income tax purposes.

Additionally, if the facility operators engaged by a TRS lessee do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT. Each of the facility operators that would enter into a management contract with any TRS lessee must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by such a TRS lessee to be qualifying income for purposes of the REIT gross income tests. Among other requirements, in order to qualify as an eligible independent contractor a facility operator must not own, directly or indirectly, more than 35% of our outstanding shares and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the facility operator, taking into account certain ownership attribution rules. The ownership attribution rules

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that apply for purposes of these 35% thresholds are complex. Although we would monitor ownership of our shares of common stock by any facility operators and their owners, there can be no assurance that these ownership levels will not be exceeded.

You may be restricted from acquiring or transferring certain amounts of our common stock.

The stock ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities.

In order to qualify as a REIT for each taxable year after 2016, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding shares of capital stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our shares of capital stock under this requirement. Additionally, at least 100 persons must beneficially own our shares of capital stock during at least 335 days of a taxable year for each taxable year after 2016. To help insure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our shares of capital stock. Our board of directors may not grant an exemption from this restriction to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT. This as well as other restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are taxed at individual rates is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

If our Operating Partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.

We believe that our Operating Partnership will be treated as a partnership for U.S. federal income tax purposes. As a partnership, our Operating Partnership will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our Operating Partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our Operating Partnership or any other subsidiary partnership in which we own an interest as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating Partnership or any such other subsidiary partnership as an entity taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of our Operating Partnership or any subsidiary partnerships to

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qualify as a partnership could cause it to become subject to U.S. federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us.

Risks Related to This Offering

There has been no active trading market for our common stock prior to this offering and an active trading market for our common stock may not develop following this offering.

Currently, there is only a minimal public market for shares of our common stock and an active market may never develop. Although our common stock is currently quoted on the OTC, there is virtually no active trading market for the shares. Our common stock has been approved for listing, subject to official notice of issuance, on the NYSE upon completion of this offering. There can be no assurance that an active trading market will develop or be sustained or that our common stock will be resold at or above the public offering price. The public offering price of our common stock has been determined by agreement among us and the underwriters, but there can be no assurance that our common stock will not trade below the public offering price following the completion of this offering. In considering the proposed offering price, we took into account our historical and forecasted results of operations, the historical share prices of other publicly traded healthcare REITs and informal discussions with the underwriters. See “Underwriting.” The market value of our common stock could be substantially affected by general market conditions, including the extent to which a secondary market develops for our common stock following the completion of this offering, the extent of institutional investor interest in us, the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies), our financial performance and general stock and bond market conditions.

We may be unable to make distributions to our stockholders, which could result in a decrease in the market price of our common stock.

Except as necessary to satisfy the REIT distribution requirements for the year in which we make our REIT election, we do not have any specific plans to pay distributions to our stockholders prior to our anticipated REIT election. Once we elect and qualify to be treated as a REIT, we will pay dividends in an amount that is at least equal to the amount necessary for us to maintain our REIT qualification, but we cannot provide any assurance as to what our dividends will be.

All distributions will be made at the discretion of our board of directors and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as our board of directors may deem relevant from time to time. We may not be able to make distributions in the future and our inability to make distributions could result in a decrease in the market price of our common stock.

The market price and trading volume of our common stock may be volatile following this offering.

Even if an active trading market develops for our common stock, the per share trading price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur, and investors in our common stock may from time to time experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. If the per share trading price of our common stock declines significantly, you may be unable to resell your shares of common stock at or above the public offering price. We cannot assure you that the per share trading 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:

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In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us, including our financial condition, results of operations, cash flow and the per share trading price of our common stock.

We may use a portion of the net proceeds from this offering to make distributions to our stockholders, which would, among other things, reduce our cash available to develop or acquire healthcare facilities and may reduce the returns on your investment in our common stock.

Prior to the time we have fully invested the net proceeds of this offering, we may fund distributions to our stockholders out of the net proceeds of this offering, which would reduce the amount of cash we have available to acquire healthcare facilities and may reduce the returns on your investment in our common stock. The use of these net proceeds for distributions to stockholders could adversely affect our financial results. In addition, funding distributions from the net proceeds of this offering may constitute a return of capital to our stockholders, which would have the effect of reducing each stockholder’s tax basis in our common stock.

You will experience immediate and material dilution in connection with the purchase of our common stock in this offering.

As of March 31, 2016, our aggregate historical combined net tangible book value was approximately $12.75 million, or $8.94 per share of common stock. The pro forma net tangible book value per share of common stock, on a fully diluted basis, upon completion of this offering will be less than the initial public offering price. As a result, purchasers of shares of our common stock in this offering will experience immediate and substantial dilution of $0.80 per share in the pro forma net tangible book value per share of our common stock, based on the midpoint of the price range set forth on the front cover of this prospectus. See “Dilution.”

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Increases in market interest rates may have an adverse effect on the trading prices of our common stock as prospective purchasers of our common stock may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.

One of the factors that will influence the trading prices of our common stock will be the dividend yield on the common stock (as a percentage of the price of our common stock) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common stock to expect a higher dividend yield (with a resulting decline in the trading prices of our common stock) and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common stock to decrease.

Our issuance of equity securities, including OP units, or the perception that such issuances might occur could materially adversely affect us, including the per share trading price of our common stock.

The exercise of the underwriters’ over-allotment option, the redemption of OP units for common stock, the vesting of any restricted shares granted to certain directors, executive officers and other employees under our 2016 Equity Incentive Plan, the issuance of our common stock or OP units in connection with future healthcare facility, portfolio or business acquisitions and other issuances of our common stock could have an adverse effect on the per share trading price of our common stock, and the existence of units, options or our common stock issuable under our 2016 Equity Incentive Plan or upon redemption of OP units may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future issuances of our common stock may be dilutive to existing stockholders.

Future offerings of debt, which would be senior to our common stock upon liquidation, or preferred equity securities which may be senior to our common stock for purposes of dividend distributions or upon liquidation, may materially adversely affect us, including the per share trading price of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing our Operating Partnership to issue debt securities), including medium-term notes, senior or subordinated notes and classes or series of preferred stock. Upon liquidation, holders of our debt securities and preferred stock and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution to the holders of our common stock. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends 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, our stockholders bear the risk that our future offerings could reduce the per share trading price of our common stock and dilute their interest in us.

If securities analysts do not publish research or reports about our industry or if they downgrade our common stock or the healthcare-related real estate sector, the price of our common stock could decline.

The trading market for our common stock will rely in part upon the research and reports that industry or financial analysts publish about us or our industry. We have no control over these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our shares of common stock or our industry, or the stock of any of our competitors, the price of our common stock could decline. If one or more of these analysts ceases coverage of our company, we could lose attention in the market which in turn could cause the price of our common stock to decline.

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

Following this offering we will be subject to reporting and other obligations under the Exchange Act. The Jumpstart Our Business Startups Act, or JOBS Act contains provisions that, among other things, relax certain

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reporting requirements for “emerging growth companies,” including certain requirements relating to accounting standards and compensation disclosure. We expect to be an “emerging growth company” as defined in the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) comply with any new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies under Section 102(b)(1) of the JOBS Act, (iii) comply with any new requirements adopted by the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iv) comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, (v) provide certain disclosure regarding executive compensation required of larger public companies or (vi) hold stockholders advisory votes on executive compensation. We have elected to use an extended transition period for complying with new or revised accounting standards. We cannot predict whether investors will consequently find shares of our common stock less attractive, which may adversely affect the market price of our common stock.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this prospectus that are forward-looking statements within the meaning of the federal securities laws. In particular, statements pertaining to our capital resources, healthcare facility performance and results of operations contain forward-looking statements. Likewise, our pro forma financial statements and all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

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

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While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly 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. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section below entitled “Risk Factors.”

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USE OF PROCEEDS

After deducting the underwriting discount, advisory fee and commissions and estimated expenses of this offering payable by us, we expect to receive net proceeds from this offering of approximately $119.6 million, or approximately $137.8 million if the underwriters’ over-allotment option is exercised in full.

We intend to contribute the net proceeds of this offering to our Operating Partnership in exchange for OP units in our Operating Partnership, and our Operating Partnership intends use the net proceeds received from us as described below:

Pending application of net proceeds of this offering, we intend to invest the net proceeds in interest-bearing accounts, money market accounts and interest-bearing securities in a manner that is consistent with our intention to qualify for taxation as a REIT. Such investments may include, for example, government and government agency certificates, government bonds, certificates of deposit, interest-bearing bank deposits, money market accounts and mortgage loan participations.

See our pro forma financial statements elsewhere in this prospectus for additional information regarding the use of proceeds.

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DISTRIBUTION POLICY

We intend to make quarterly cash distributions to our stockholders, consistent with our intention to qualify as a REIT for U.S. federal income tax purposes. To qualify as a REIT, we must distribute annually to our stockholders an amount at least equal to 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain. We will be subject to income tax on our taxable income that is not distributed and to an excise tax to the extent that certain percentages of our taxable income are not distributed by specified dates. See “Material U.S. Federal Income Tax Considerations —  Distribution Requirements.” Income as computed for purposes of the foregoing tax rules will not necessarily correspond to our income as determined for financial reporting purposes.

The amount, timing and frequency of any distributions will be determined by our board of directors in its sole discretion. Our board of directors will consider such factors as it deems relevant when authorizing any distributions, which may include:

Any distributions we make in the future will depend significantly upon our actual results of operations, which may differ materially from our current expectations. For more information regarding risks that could materially and adversely affect our actual results of operations, see “Risk Factors.” We cannot assure you that distributions will be made or sustained or that our Board of Directors will not change our distribution policy in the future.

To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any shortfall, including selling certain of our assets, borrowing funds or using a portion of the net proceeds we receive in this offering or future offerings (and thus all or a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes). We also may elect to pay all or a portion of any distribution in the form of a taxable distribution of our stock or debt securities.

We anticipate that any distributions generally will be taxable as ordinary income to our stockholders, although a portion of any distributions may be designated by us as qualified dividend income or capital gain, or may constitute a return of capital. We will furnish annually to each of our stockholders a statement setting forth distributions paid during the preceding year and their characterization as ordinary income, return of capital, qualified dividend income or capital gain. For a more complete discussion of the tax treatment of distributions to holders of shares of our common stock, see “Material U.S. Federal Income Tax Considerations.”

Our charter allows us to issue preferred stock that could have a preference on distributions. We currently have no intention to issue any preferred stock, but, if we do, the distribution preference on the preferred stock could limit our ability to make distributions to the holders of our common stock.

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CAPITALIZATION

The following table sets forth (i) our historical capitalization as of March 31, 2016, (ii) our unaudited pro forma capitalization to give effect to the shares of common stock we have issued, acquisitions we have completed, the debt we have incurred and the convertible debentures we have converted into common stock since March 31, 2016, and (iii) our unaudited pro forma capitalization as adjusted to give effect to this offering, the use of a portion of the aggregate of approximately $119.6 million of the net proceeds of this offering to (a) redeem $10.0 million of our outstanding convertible debentures, (b) repay approximately $14.7 million of outstanding mortgage debt encumbering our Omaha Facility, and (c) fund the $9.2 million purchase of the Wyomissing Facilities that we have under contract, as set forth in “Use of Proceeds,” and the conversion of our remaining outstanding convertible debentures into shares of our common stock upon completion of this offering. You should read this table in conjunction with “Use of Proceeds,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our unaudited and audited historical consolidated financial statements and related notes, and our unaudited pro forma consolidated financial statements and related notes appearing elsewhere in this prospectus.

		As of March 31, 2016
		Historical				Pro Forma Adjustments				Pro Forma As Adjusted(1)
		(In thousands, except share amounts)
Mortgages and other secured loans, net of unamortized discount of $1,303 historical and $1,171 pro forma		$	54,489				(14,536	)			39,953
Stockholders’ equity:
Common stock, $0.001 par value per share, 500,000,000 historical shares authorized, 1,426,656 and 16,007,404 issued and outstanding on a historical and pro forma basis, respectively			1				15				16
Preferred stock, $0.001 par value per share, 10,000,000 historical shares authorized, none issued or outstanding			—				—				—
Additional paid-in capital			18,011				138,192				156,203
Accumulated deficit			(5,261	)			(3,715	)			(8,976	)
Total stockholders’ equity			12,751				134,492				147,243
Non-controlling interests in operating partnership units			—				—				—
Total equity			12,751				134,492				147,243
Total capitalization		$	67,240				119,956				187,196

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MARKET PRICE OF AND DIVIDENDS ON OUR COMMON STOCK

Our shares of common stock are currently quoted on the OTC under the symbol “GMRE.” As of March 31, 2016, we had 1,426,656 shares of common stock outstanding and 36 registered stockholders of record for our common stock. On March 31, 2016, the closing price of our common stock, as reported on the OTC, was $0.125. The following table sets forth, for the periods indicated, the high and low intraday sale prices of our common stock, as reported on the OTC, and the dividends paid by us with respect to those periods. In considering the proposed offering price, we took into account our historical and forecasted results of operations, the historical share prices of other publicly traded healthcare REITs and informal discussions with the underwriters.

Period		High				Low				Dividends Per Share
Quarter Ended March 31, 2016		$	3.58			$	0.125			$	0.2556
Quarter Ended December 31, 2015		$	3.58			$	3.58			$	0.2556
Quarter Ended September 30, 2015		$	3.58			$	3.58			$	0.2556
Quarter Ended June 30, 2015		$	3.58			$	3.58			$	0.2556
Quarter Ended March 31, 2015		$	3.58			$	3.58			$	0.2556
Four Months Ended December 31, 2014*		$	200.00	**		$	3.58			$	0.3408
Quarter Ended November 28, 2014		$	200.00	**		$	4.40			$	0.2556
Quarter Ended May 30, 2014		$	120.00	**		$	84.00				—

Pursuant to a previously declared dividend authorized by our Board of Directors and in compliance with applicable provisions of the Maryland General Corporation Law, we paid a monthly dividend of $0.0852 per share, an aggregate of $21,300 per month, each month during the twelve month period from January 1, 2015 through December 31, 2015. Accordingly, during the twelve months ended December 31, 2015, we paid total dividends to holders of its common stock in the amount of $255,600. During the four months ended December 31, 2014, we paid total dividends to holders of our common stock in the amount of $85,200. The Company paid a monthly dividend of $0.0852 per share in April 2016. No monthly dividend was declared for May or June 2016.

Fiscal Year

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DILUTION

Purchasers of shares of our common stock offered by this prospectus will experience an immediate and substantial dilution of the net tangible book value of shares of our common stock from the initial public offering price. At March 31, 2016, we had a combined net tangible book value of approximately $12.75 million, or $8.94 per share of our fully diluted common stock held by current investors. After giving effect to the sale of the shares of common stock in this offering, including the expected use of the net proceeds of this offering as described under “Use of Proceeds,” and the deduction of underwriting discounts and commissions and estimated offering expenses, the pro forma net tangible book value at March 31, 2016 attributable to common stockholders would have been $147.2 million, or $9.20 per share of our fully diluted common stock. This amount represents an immediate increase in net tangible book value of $0.26 per share to the current investors and an immediate decrease in pro forma net tangible book value of $0.80 per share from the initial public offering price of $10.00 per share of our common stock to new public investors. See “Risk Factors — Risks Related to this Offering — You will experience immediate and material dilution in connection with the purchase of shares of our common stock in this offering.” The following table illustrates this per share dilution:

Initial public offering price per share						$	10.00
Net tangible book value per share before this offering(1)		$	8.94
Increase in pro forma net tangible book value per share after this offering(2)		$	0.26
Pro forma net tangible book value per share after this offering(3)						$	9.20
Dilution in pro forma net tangible book value per share to new investors(4)						$	0.80

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SELECTED HISTORICAL FINANCIAL DATA

The following table presents selected consolidated historical financial data for our Company.

You should read the following selected consolidated historical financial data together with the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated pro forma financial data and historical financial statements and related notes thereto included elsewhere in this prospectus. The historical financial data for us is not indicative of our future financial position or our results of operations.

Global Medical REIT Inc.

		Three Months Ended March 31, 2016(1)				Twelve Months Ended December 31, 2015				Four Months Ended December 31,								Twelve Months Ended August 31,
										2014				2013				2014				2013
Revenue
Rental revenue		$	1,298,978			$	2,049,196				596,585				—				379,678				—
Other income			15,081				12,471				71				—				727				—
Total revenue			1,314,059				2,061,667				596,656				—				380,405				—
Expenses
Management fees – related party			90,000				360,000				120,000				—				150,000				—
General & administrative			888,529				505,141				182,930				12,182				20,666				—
Acquisition fees – related party			754,000				627,000				48,400				—				434,200				—
Depreciation expense			398,830				659,671				200,499				—				129,081				—
Interest expense			1,129,263				1,519,102				454,697				—				298,664				—
Total expenses			3,260,622				3,670,914				1,006,526				12,182				1,032,611				—
Loss from continuing operations			(1,946,563	)			(1,609,247	)			(409,870	)			(12,182	)			(652,206	)			—
Loss from discontinued operations			—				—				—				—				—				(45,338	)
Net loss		$	(1,946,563	)		$	(1,609,247	)			(409,870	)			(12,182	)			(652,206	)			(45,338	)
Net loss per share – basic and diluted
Continuing operations		$	(3.11	)		$	(6.44	)			(1.64	)			(0.61	)			(13.49	)			—
Discontinued operations			—				—				—				—				—				(2.32	)
Net loss per share – basic and diluted		$	(3.11	)		$	(6.44	)			(1.64	)			(0.61	)			(13.49	)			(2.32	)
Weighted average shares outstanding – Basic and Diluted			624,978				250,000				250,000				20,000				48,356				19,572
Non-GAAP Measures
FFO		$	(1,547,733	)		$	(949,576	)			(209,371	)			(12,182	)			(523,125	)			(45,338	)
AFFO			(753,265	)			(219,336	)			(121,542	)			(12,182	)			(62,482	)			(45,338	)
Cash Flow Data
Cash provided by (used in) operating activities		$	(1,115,647	)		$	(208,801	)			129,184				(5,567	)			(208,880	)			(33,794	)
Cash provided by (used in) investing activities		$	(37,573,329	)		$	(32,338,990	)			(2,549,550	)			—				(21,882,005	)			—
Cash provided by (used in) financing activities		$	30,011,987			$	41,643,255				2,483,688				5,514				22,112,850				25,000
Balance Sheet Data
Cash and cash equivalents		$	507,281			$	9,184,270				88,806				n/a				25,484				3,519
Third party debt, net of unamortized discount		$	54,488,884			$	23,485,173				16,468,309				n/a				15,060,000				—
Equity (deficit)		$	12,750,677			$	(138,608	)			1,726,239				n/a				2,221,309				(15,905	)

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The following is a reconciliation of net income (which we believe is the most comparable GAAP measure) to FFO, NFFO and AFFO.

		Three Months Ended March 31, 2016(1)				Twelve Months Ended December 31, 2015				Four Months Ended December 31, 2014				Twelve Months Ended August 31, 2014
Net Loss		$	(1,946,563	)		$	(1,609,247	)		$	(409,870	)		$	(652,206	)
Depreciation expense			398,830				659,671				200,499				129,081
Funds from operations(2)			(1,547,733	)		$	(949,576	)		$	(209,371	)		$	(523,125	)
Acquisition fees			754,000				627,000				48,400				434,200
Normalized funds from operations(2)			(793,733	)			(322,576	)			(160,971	)			(88,925	)
Straight line deferred rental revenue			(49,773	)			(23,295	)			—				—
Amortization of deferred financing costs			90,241				126,535				39,429				26,443
Adjusted funds from operations(2)		$	(753,265	)		$	(219,336	)		$	(121,542	)		$	(62,482	)

Our FFO, NFFO and AFFO computations may not be comparable to FFO, NFFO and AFFO reported by other REITs that do not compute FFO in accordance with the White Paper definition or that interpret the White Paper definition differently than we do or that compute NFFO and AFFO in a different manner. The GAAP measure that we believe to be most directly comparable to FFO, net income (loss), includes depreciation and amortization expenses, gains or losses on sales and non-controlling interests. In computing FFO, NFFO and AFFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Global Medical REIT Inc. (the “Company”) was incorporated in the state of Nevada on March 18, 2011 under the name Scoop Media, Inc. (“Scoop Media”), which was acquired in 2013 by ZH International Holdings Ltd. (formerly known as Heng Fai Enterprises, Ltd.), a Hong Kong limited company. ZH International is the 85% owner of our advisor and the owner of our majority stockholder, ZH USA, LLC, as of the date of this prospectus. A public company traded on the Hong Kong exchange, ZH International is engaged in global real estate development, investment, management and sales and REIT management. The Company converted to a Maryland corporation, effective January 6, 2014, and its principal investment strategy is to develop and manage a portfolio of real estate assets in the healthcare industry, which includes surgery centers, specialty hospitals, and outpatient treatment centers.

We formed our Operating Partnership in March 2016 and have contributed all of our healthcare facilities to the Operating Partnership in exchange for common units of limited partnership interest in the Operating Partnership. We own the sole general partner of our Operating Partnership.

In connection with this offering, we have entered into an agreement with ZH International, our sponsor and the owner of our majority stockholder, ZH USA, LLC, to repay $10.0 million of our outstanding convertible debentures out of the net proceeds of this offering and to convert the remaining $15,030,134 of our outstanding convertible debentures, excluding approximately $1.67 million of accrued interest, at a conversion price of $12.748 per share, into 1,179,019 shares of our common stock, representing, together with the other shares of our common stock owned by ZH USA, LLC, 16.6% of our outstanding shares of common stock upon completion of this offering.

Trends Which May Influence Results of Operations

We believe the following trends in the healthcare real estate market positively affect the acquisition, ownership, development and management of healthcare real estate:

For a more detailed discussion of these trends, see “Summary — Healthcare Industry and Healthcare Real Estate Market Opportunity” and “Industry and Market Opportunity.”

Components of Our Revenues, Expenses and Cash Flows

Revenues

Rental Revenues

The Company’s operations currently consist of rental revenue earned from its tenant-operators under leasing arrangements which provide for minimum rent, escalations, and charges to the tenant-operator for the real estate taxes and operating expenses. The leases have been accounted for as operating leases. For operating leases with contingent rental escalators, revenue is recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators are recognized on a straight-line

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basis over the initial lease period, subject to a collectability assessment. If the Company determines that collectability of rents is not reasonably assured, future revenue recognition is limited to amounts contractually owed and paid, and, when appropriate, an allowance for estimated losses is established.

Expenses

Management fees — related party

In accordance with the terms of the current management agreement, which the Company will amend upon completion of the offering, the Company will pay the advisor a base management fee equal to the greater of (a) 2.0% per annum of the Company’s net asset value (the value of the Company’s assets less the value of the Company’s liabilities), or (b) $30,000 per calendar month. Historically this fee has resulted in a monthly charge to the Company of $30,000.

General and administrative

General and administrative expense primarily includes professional fees and services (legal and accounting), general office expenses, ground rent related to the Omaha Facility, and travel and related expenses.

Acquisition fees — related party

Acquisition fees represent an expense incurred for a fee paid by us to the advisor for each acquisition in connection with the terms of the Management Agreement. Upon closing of the offering, we will not incur these fees.

Depreciation expense

Depreciation expense is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 40 years.

Interest expense

Interest expense is derived from interest incurred on the Company’s borrowings from third party institutional lenders as well as borrowings from its majority stockholder, including the convertible debenture, the funds of which were primarily used to fund acquisitions. Additionally, the amortization of deferred financing costs incurred to obtain third party financing is classified as interest expense.

Cash Flows

Cash flows from operating activities

Cash flows from operating activities primarily represent activities related to the Company conducting its normal business activities and generally reflect the impact of transactions that enter into the determination of the Company’s net income or loss.

Cash flows from investing activities

Cash flows from investing activities primarily represent activities related to the Company acquiring healthcare facilities, plants, and equipment and making and collecting loans from other entities.

Cash flows from financing activities

Cash flows from financing activities primarily represent activities related to the Company borrowing and subsequently repaying funds from other entities as well as providing stockholders with a return on investment primarily in the form of a dividend payment.

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Results of Operations

Discussion of our Consolidated Results of Operations

Unaudited Three Months Ended March 31, 2016 compared to Unaudited Three Months Ended March 31, 2015

The major factor that resulted in variances in our results of operations for each revenue and expense category for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 is due to the fact that as of March 31, 2016 our portfolio consisted of facilities from a total of seven acquisitions, whereas as of March 31, 2015 only two of the seven acquisitions had occurred.

As of March 31, 2016 the Company had the following properties in its portfolio from seven acquisitions:

As of March 31, 2015 the Company had the following properties in its portfolio from two acquisitions:

For the three months ended March 31, 2016 we incurred a consolidated net loss of $1,946,563, comprised of consolidated revenues of $1,314,059, less consolidated expenses of $3,260,622. For the three months ended March 31, 2015 we incurred a consolidated net loss of $188,547, comprised of consolidated revenues of $462,138, less consolidated expenses of $650,685.

Our revenues for these periods consisted of rent received from our healthcare facilities and our expenses consisted primarily of acquisition related expenses derived from those acquisitions as well as general and administrative expenses. Details regarding our revenues and expenses for the three months ended March 31, 2016 compared to the three months ended March 31, 2015, are as follows:

Details Regarding our Unaudited Revenues and Expenses for the Unaudited Periods Discussed Above

Revenues

Total revenue for the three months ended March 31, 2016 was $1,314,059, compared to $462,138 for the same period in 2015, an increase of $851,921. The increase is the result of rental revenue derived from the base rental receipts from the additional facilities that we acquired and were included as part of our portfolio during the current three month period.

Acquisition Fees — related party

Acquisition fees for the three months ended March 31, 2016 were $754,000, compared with no acquisition fees incurred for the same period in 2015, as no acquisitions occurred during the comparable prior three month period. The $754,000 of current three month period acquisition fees consisted of $350,000, $309,000 and $95,000 that were expensed in connection with the acquisitions of the Plano Facility, the Melbourne Facility, and the Michigan Facility, respectively. The acquisition fee is computed as 2% of the purchase price of the facility.

General and Administrative

General and administrative expenses for the three months ended March 31, 2016 were $888,529, compared with $64,307 for the same period in 2015, an increase of $824,222. The increase is primarily a result of a $500,000 development fee incurred in connection with the Plano Facility acquisition, increases in

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accounting and compliance costs primarily associated with audit requirements related to the acquired properties, and a general increase in this expense category as a result of the additional facilities that we acquired and were included as part of our portfolio during the current three month period.

Management Fees — related party

Management fees for the three months ended March 31, 2016 and the three months ended March 31, 2015 were $90,000. This management fee is based upon the terms of the Management Agreement we entered into with our advisor effective as of April 1, 2014. Upon completion of this offering, we will enter into an amended and restated management agreement with our advisor, which will set forth the calculation of management fees going forward.

Depreciation Expense

For the three months ended March 31, 2016 depreciation expense was $398,830, compared with $152,336 for the same period in 2015, an increase of $246,494. The increase is a result of depreciation expense incurred related to the additional facilities that we acquired and were included as part of our portfolio during the current three month period.

Interest Expense

For the three months ended March 31, 2016 interest expense was $1,129,263, compared with $344,042 for the same period in 2015, an increase of $785,221. The increase is primarily a result of interest expense incurred on the additional third party debt and borrowings from our majority stockholder that we procured during the current three month period related to the three facilities that we acquired. The increase also results from deferred financing cost amortization related to the additional deferred financing costs (recorded as debt discount) incurred on the debt we procured.

Cash Flow Information (Unaudited Periods)

Net cash used in operating activities for the three months ended March 31, 2016 was $1,115,647, compared with $139,427 for the same period in 2015. This increase was primarily derived from the payment of deferred costs related to the Company’s securities offering and an increase in tenant receivables during the period. This cash outflow was partially offset by noncash depreciation and deferred financing amortization expense and unpaid management fees.

Net cash used in investing activities for the three months ended March 31, 2016 was $37,573,329, which was primarily derived from the acquisitions of the Plano Facility, the Melbourne Facility, and the Michigan Facility. Cash flows used in investing activities are heavily dependent upon the investment in properties and real estate assets. We anticipate cash flows used in investing activities to increase as we acquire additional properties in the future. There were no cash flows from investing activities for the three months ended March 31, 2015.

Net cash provided by financing activities for the three months ended March 31, 2016 was $30,011,987, compared with $355,994 for the same period in 2015. Cash flows provided by financing activities for the current period were derived primarily from total loan proceeds of $32,097,400 received from the Cantor Loan, partially offset by the payment of deferred financing costs and third party loan principal repayments.

Audited Twelve Months Ended December 31, 2015 compared to Audited Four Months Ended December 31, 2014 compared to Audited Fiscal Twelve Months Ended August 31, 2014

We changed our fiscal year from August 31 to the calendar twelve months ending December 31, effective beginning with the prior year ended December 31, 2014. As a result our 2014 fiscal period was shortened from twelve months to an audited four-month transition period that ended on December 31, 2014. This change in fiscal year was in preparation for our anticipated election to be taxed as a REIT for U.S. federal income tax purposes. Accordingly, in order to present a full year of operating results for 2014 we are including information regarding the audited fiscal twelve months ended August 31, 2014 in the accompanying results of operations discussion.

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Based on the facts in the preceding paragraph, we do not believe that a comparison between the audited calendar year ended December 31, 2015 results of operations, the results of operations for the audited four-month period from September 1, 2014 through December 31, 2014, and the results of operations for the audited fiscal twelve months ended August 31, 2014; including a variance explanation related to those amounts presented in our consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flow would be meaningful to users.

As of December 31, 2015 the Company had the following properties in its portfolio:

As of December 31, 2014 the Company had the following properties in its portfolio:

As of August 31, 2014 the Company had the following property in its portfolio:

For the twelve months ended December 31, 2015 we incurred a consolidated net loss of $1,609,247, comprised of consolidated revenues of $2,061,667, less consolidated expenses of $3,670,914. For the four months ended December 31, 2014 we incurred a consolidated net loss of $409,870, comprised of consolidated revenues of $596,656, less consolidated expenses of $1,006,526. For the fiscal twelve months ended August 31, 2014 we incurred a consolidated net loss of $652,206, comprised of consolidated revenues of $380,405, less consolidated expenses of $1,032,611.

Our revenues for these periods consisted of rent received from our healthcare facilities and our expenses consisted primarily of acquisition related expenses derived from those acquisitions as well as general and administrative expenses. Details regarding our revenues and expenses for the twelve months ended December 31, 2015, the four months ended December 31, 2015, and the fiscal twelve months ended August 31, 2014, respectively, are as follows:

Details Regarding our Revenues and Expenses for the Audited Periods Discussed Above

Revenues

Total revenues for the twelve months ended December 31, 2015 were $2,061,667, which primarily consisted of $2,049,196 in rental revenue derived from our facilities.

Total revenues for the four months ended December 31, 2014 were $596,656, which primarily consisted of $596,585 in rental revenue derived from the base rental receipts from our Omaha Facility and Asheville Facility that were acquired in June 2014 and September 2014, respectively.

Total revenues for the fiscal twelve months ended August 31, 2014 were $380,405, which primarily consisted of $379,678 in rental revenue derived from the base rental receipts from our Omaha Facility.

Acquisition Fees — related party

Acquisition fees for the twelve months ended December 31, 2015 of $627,000 were comprised of $400,000 and 227,000 that were expensed in connection with the acquisitions of the Gastro One Facilities and West Mifflin Facility, respectively.

Acquisition fees for the four months ended December 31, 2014 were $48,400 that was expensed in connection with the acquisition of the Asheville facility in September 2014.

Acquisition fees for the fiscal twelve months ended August 31, 2014 were $434,200 that was expensed in connection with the acquisition of the Omaha Facility in June 2014.

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Following completion of this offering, we will not pay acquisition fees.

General and Administrative

General and administrative expenses for the twelve months ended December 31, 2015 were $505,141. This amount primarily included professional fees and services of $214,993, general office expenses of $81,894, ground rent related to the Omaha Facility of 79,892, and travel and related expenses of $74,523.

General and administrative expenses for the four months ended December 31, 2014 were $182,930. This amount included professional fees and services of $102,054, general office expenses of $67,707, and ground rent related to the Omaha Facility of 44,908.

General and administrative expenses for the fiscal twelve months ended August 31, 2014 were $20,666. This amount primarily was derived from general office expenses.

Management Fees — related party

Management fees for the twelve months ended December 31, 2015 were $360,000 incurred as provided for in the management agreement which became effective as of April 1, 2014.

Management fees for the four months ended December 31, 2014 were $120,000 incurred as provided for in the management agreement.

Management fees for the fiscal twelve months ended August 31, 2014 were $150,000 incurred as provided for in the management agreement.

Upon completion of this offering, we will enter into an amended and restated management agreement with our advisor, which will set forth the calculation of management fees going forward.

Depreciation Expense

Depreciation expense for the twelve months ended December 31, 2015 of $659,671 related to the West Mifflin Facility, the Asheville Facility and the Omaha Facility. No depreciation was incurred related to the Gastro One Facilities as the acquisition closed on December 31, 2015.

Depreciation expense for the four months ended December 31, 2014 of $200,499 related to the Omaha Facility and the Asheville Facility that were acquired in June 2014 and September 2014, respectively.

Depreciation expense for the fiscal twelve months ended August 31, 2014 of $129,081 related to the Omaha Facility.

Interest Expense

Interest expense for the twelve months ended December 31, 2015 of $1,519,102 results from interest incurred on our debt of $1,392,567 and the amortization of deferred financing costs in the amount of $126,535.

Interest expense for the four months ended December 30, 2014 of $454,697 results from interest incurred on our debt of $415,268 and the amortization of deferred financing costs in the amount of $39,429.

Interest expense for the fiscal twelve months ended August 31, 2014 of $298,664 results from interest incurred on our debt of $272,221 and the amortization of deferred financing costs in the amount of $26,443.

Cash Flow Information (Audited Periods)

Net cash used in operating activities for the twelve months ended December 31, 2015 was $208,801, which was primarily derived from the net loss during the fiscal year partially offset by depreciation and amortization expense, an increase in accrued expenses, and accrued management fees. Net cash provided by operating activities for the four months ended December 31, 2014 was $129,184. Net cash used in operating activities for the fiscal twelve months ended August 31, 2014 was $208,880.

Net cash used in investing activities for the twelve months ended December 31, 2015 was $32,338,990. Cash flows used in investing activities were derived primarily from funds used for the acquisition of our West Mifflin Facility and Gastro One Facilities. Cash flows used in investing activities are heavily dependent upon the investment in properties and real estate assets. We anticipate cash flows used in investing activities

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to increase as we acquire additional properties in the future. Net cash used on investing activities for the four months ended December 31, 2014 was $2,549,550. Net cash used in investing activities for the fiscal twelve months ended August 31, 2014 was $21,882,005.

Net cash provided by financing activities for the twelve months ended December 31, 2015 was $41,643,255. Cash flows provided by financing activities were derived primarily from the $34.6 million funded by our majority stockholder to fund acquisitions and a loan obtained from Capital One in the amount of $7.4 million to fund the West Mifflin Facility acquisition. We anticipate cash flows from financing activities to increase in the future as we raise additional funds from investors and incur debt to purchase properties. Net cash provided by financing activities for the four months ended December 31, 2014 was $2,483,688. Net cash provided by financing activities for the fiscal twelve months ended August 31, 2014 was $22,112,850.

Liquidity and Capital Resources

We believe that this offering will improve our financial position by reducing our leverage and increasing our stockholders’ equity and our available cash. Upon completion of this offering, we expect our ratio of debt to equity value to be approximately 27.7%, and we expect to have approximately $84.7 million of available cash (assuming no exercise of the underwriters’ over-allotment option). Our short-term liquidity requirements consist primarily of funds to pay for operating expenses and other expenditures directly associated with our properties, including:

In addition, we will require funds for future distributions expected to be paid to our common stockholders and OP unit holders in our operating partnership following completion of this offering.

We expect to satisfy our short-term liquidity requirements through our existing cash and cash equivalents, cash flow from operating activities, the proceeds of this offering, and future borrowings under any other debt instruments we may enter into.

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures, scheduled debt maturities and general and administrative expenses. We expect to satisfy our long-term liquidity needs through cash flow from operations, long-term secured and unsecured borrowings, sales of additional equity securities, and, in connection with acquisitions of additional properties, the issuance of OP units of our operating partnership, and proceeds from select property dispositions and joint venture transactions.

We intend to invest in additional properties as suitable opportunities arise and adequate sources of financing are available. We currently are evaluating additional potential acquisitions consistent with the normal course of our business. There can be no assurance as to whether or when any portion of these acquisitions will be completed. Our ability to complete acquisitions is subject to a number of risks and variables, including our ability to negotiate mutually agreeable terms with sellers and our ability to finance the acquisitions. We may not be successful in identifying and consummating suitable acquisitions, which may impede our growth and negatively affect our results of operations and may result in the use of a significant amount of management resources. We expect that future acquisitions of properties will depend on and will be financed, in whole or in part, by our existing cash, borrowings, including under any potential senior secured credit facility that we may enter into or the proceeds from additional issuances and sales of common stock, issuances and sales of preferred stock, issuances of OP units or the issuance and sale of other securities.

We currently do not expect to sell any of our properties to meet our liquidity needs, although we may do so in the future.

As of March 31, 2016, we have an aggregate of $25,030,134 of convertible debentures outstanding. We expect to repay a portion of these with proceeds of this offering.

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As of March 31, 2016, we had an outstanding mortgage loan of $14.67 million from Capital One encumbering our Omaha Facility. We expect to repay the $14.67 million loan in full with the proceeds of this offering.

On June 7, 2016, we had an outstanding interest free loan of $1.5 million from ZH USA, LLC. We expect to repay the $1.5 million loan in full with the proceeds of this offering.

As of March 31, 2016, we are under contract to purchase the Wyomissing Facilities. We expect to acquire these properties in full with the proceeds of this offering.

We currently are in compliance with all debt covenants in our outstanding indebtedness.

Indebtedness Outstanding as of March 31, 2016

As of March 31, 2016, we had total pro forma consolidated indebtedness of approximately $40.8 million. On a pro forma basis as of March 31, 2016, we had no outstanding long-term debt exposed to fluctuations in short-term interest rates.

Aggregate scheduled principal payments related to loans secured by properties in our current portfolio, excluding convertible debentures which will be repaid or converted into shares of our common stock upon closing of this offering, are as follows:

2016		$	284,191
2017			16,032,523
2018			22,044
2019			136,007
2020			7,219,449
Beyond 2020			32,097,400
		$	55,791,614

Commitments — Pre Offering

The following table sets forth our principal obligations and commitments, including periodic interest payments related to the indebtedness outstanding as of March 31, 2016, without giving effect to the use of proceeds of this offering:

2016		$	2,307,599
2017			18,438,836
2018			2,062,640
2019			2,177,202
2020			9,211,698
Beyond 2020			41,988,286
		$	76,186,261

Commitments — Post Offering

The following table sets forth our principal obligations and commitments, including periodic interest payments related to the pro forma indebtedness outstanding as of March 31, 2016, after the repayment of anticipated outstanding indebtedness on certain healthcare facilities using the proceeds of this offering and redemption and conversion of our remaining outstanding convertible debentures, including accrued interest, into shares of our common stock and OP units upon completion of this offering:

2016		$	1,516,955
2017			3,659,416
2018			2,062,640
2019			2,177,202
2020			9,211,698
Beyond 2020			41,988,286
		$	60,616,197

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Critical Accounting Policies

Our combined financial statements are prepared in conformity with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of our accounting policies that we believe are critical to the preparation of our combined financial statements. This summary should be read in conjunction with a more complete discussion of our accounting policies included in Note 2 to the financial statements in this prospectus.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Income Taxes

We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2016. As a REIT, we will generally not be subject to U.S. federal income taxes if we can satisfy certain qualification tests set forth in the U.S. federal income tax laws. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal and state income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate tax rates, and we may be ineligible to qualify as a REIT for subsequent tax years. Even if we qualify as a REIT, we may be subject to certain state or local income taxes, and if we create a TRS, the TRS will be subject to U.S. federal, state and local taxes on its income at regular corporate rates. We recognize the tax effects of uncertain tax positions only if the position is more likely than not to be sustained upon audit, based on the technical merits of the position. We have not identified any material uncertain tax positions and recognize interest and penalties in income tax expense, if applicable. We are currently not under examination by any income tax jurisdiction.

Purchase of Real Estate

Transactions in which real estate assets are purchased that are not subject to an existing significant lease or are attached or related to a major healthcare provider are treated as asset acquisitions, and as such are recorded at their purchase price, including acquisition fees, which is allocated to land and building based upon their relative fair values at the date of acquisition. Investment properties that are acquired either subject to a significant existing lease or as part of a portfolio level transaction with significant leasing activity are treated as a business combination under Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” which requires the purchase price of acquired healthcare facilities be allocated to the acquired tangible assets and liabilities, consisting of land, building, and any identified intangible assets. Acquisition fees are expensed as incurred. Fair value is determined based on expert third-party industry real estate appraisals, and on ASC Topic 820, “Fair Value Measurements and Disclosures,” primarily based on unobservable data inputs. In making estimates of fair values for purposes of allocating the purchase price of individually acquired healthcare facilities, the Company primarily uses expert appraisals, and also utilizes its own market knowledge and published market data. In this regard, the Company also utilizes information obtained from county tax assessment records to assist in the determination of the fair value of the land and building. The Company utilizes market comparable transactions such as price per square foot to assist in the determination of fair value for purposes of allocating the purchase price of healthcare facilities acquired as part of portfolio level transactions. The value of acquired leases, if applicable, is estimated based upon the costs we would have incurred to lease the healthcare facility under similar terms.

Impairment of Long Lived Assets

The Company evaluates its real estate assets for impairment periodically or whenever events or circumstances indicate that its carrying amount may not be recoverable. If an impairment indicator exists, the Company compares the expected future undiscounted cash flows against the carrying amount of an asset. If

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the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, the Company records an impairment loss for the difference between the estimated fair value and the carrying amount of the asset. As of December 31, 2015 and 2014 no impairment was recorded as it was not deemed necessary.

Revenue Recognition

The Company’s operations currently consist of rental revenue earned from seven tenant-operators under leasing arrangements which provide for minimum rent, escalations, and charges to the tenant-operator for the real estate taxes and operating expenses. The leases have been accounted for as operating leases. For operating leases with contingent rental escalators, revenue is recorded based on the contractual cash rental payments due during the period. Revenue from leases with fixed annual rental escalators (such as the Melbourne Facility, the Michigan Facility, the Gastro One Facilities and the West Mifflin Facility) is recognized on a straight-line basis over the initial lease period, subject to a collectability assessment. If the Company determines that collectability of rents is not reasonably assured, future revenue recognition is limited to amounts contractually owed and paid, and, when appropriate, an allowance for estimated losses is established.

The Company consistently assesses the need for an allowance for doubtful accounts, including an allowance for operating lease straight-line rent receivables, for estimated losses resulting from tenant-operator defaults, or the inability of tenant-operators to make contractual rent and tenant-operator recovery payments. The Company also monitors the liquidity and creditworthiness of its tenant-operators on a continuous basis. This evaluation considers industry and economic conditions, healthcare facility performance, credit enhancements and other factors. For operating lease straight-line rent amounts, the Company’s assessment is based on amounts estimated to be recoverable over the term of the lease. Additionally, the Company requires in its lease agreements that each tenant-operator provide periodic financial statements, which may include annual audits and quarterly compilations and comply with certain financial covenants. The financial covenants vary for each lease. As of December 31, 2015 and 2014 no allowance was recorded as it was not deemed necessary.

Fair Value of Financial Instruments

Fair value is a market-based measurement and should be determined based on the assumptions that market participants would use in pricing an asset or liability. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

The Company considers the carrying values of cash and cash equivalents, accounts and other receivables, accounts payable and accrued expenses to approximate their fair value due to the short period of time since origination or the short period of time between origination of the instruments and their expected realization. Due to the short-term nature of these instruments, Level 1 and Level 2 inputs are utilized to estimate the fair value of these financial instruments. The fair value of amounts due to or from related parties are deemed undeterminable due to their nature.

Emerging Growth Company

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to

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take advantage of the benefits of this extended transition period. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards.

Obligations of Certain Tenant-Operators Guaranteed

The Omaha Facility’s obligations under the sublease with Select Specialty Hospital — Omaha, Inc. are fully guaranteed by its parent company, Select Medical Corporation (NYSE: SEM). Select Medical Corporation’s filings with the Securities and Exchange Commission, which include its audited historical financial statements and other important information, are publicly available.

REIT Qualification Requirements

We will be subject to a number of operational and organizational requirements necessary to qualify and maintain our qualification as a REIT. If we fail to qualify as a REIT or fail to remain qualified as a REIT in any taxable year, our income would be subject to U.S. federal income tax at regular corporate rates and potentially increased state and local taxes and could incur substantial tax liabilities which could have an adverse impact upon our results of operations, liquidity and distributions to our stockholders.

We intend to elect to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2016.

Real Estate Taxes

Pursuant to our lease agreements, our tenant-operators generally are responsible, directly or indirectly, for the payment of all real estate taxes assessed on our healthcare facilities.

Non-GAAP Financial Measures

Following the completion of this offering, we expect to disclose to investors and discuss funds from operations, or FFO, normalized funds from operations, or NFFO, and adjusted funds from operations, or AFFO, which each meet the definition of “non-GAAP financial measure” set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result, we expect to be required to include in those disclosures and discussions a statement of why management believes that the presentation of such measures provides useful information to investors.

Funds from Operations (FFO)

FFO is a widely recognized measure of REIT performance. Although FFO is not computed in accordance with GAAP, we believe that information regarding FFO is helpful to stockholders and potential investors because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Because real estate values historically have increased or decreased with market conditions, we believe that FFO provides a meaningful supplemental measure of our performance.

We calculate FFO in accordance with the April 2002 National Policy Bulletin of NAREIT, or White Paper. The White Paper defines FFO as net income (computed in accordance with GAAP) before non-controlling interests of holders of OP units, excluding gains (or losses) on sales of depreciable operating property and extraordinary items (computed in accordance with GAAP), plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. Our FFO computation may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the White Paper definition or that interpret the White Paper definition differently than we do. The GAAP measure that we believe to be most directly comparable to FFO, net income (loss), includes depreciation and amortization expenses, gains or losses on sales and non-controlling interests. In computing FFO, we eliminate these items because, in our view, they are not indicative of the results from the operations of our properties.

To facilitate a clear understanding of our historical operating result, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this prospectus. FFO does not represent cash generated from operating activities in accordance with GAAP, should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to make cash distributions to stockholders.

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Normalized Funds from Operations (NFFO)

NFFO is a non-GAAP measure that we believe may be useful to management and investors to measure our operating performance as a public company (including the costs to finance our operating performance) by removing the effect of certain non-recurring items that do not reflect ongoing property operations. Due to the nature of how certain items may be recorded in our operating results going forward that we believe would not be reflective of our core operating performance, we expect that we may compute NFFO to provide investors with a different perspective on the same results. We expect that if we compute NFFO, we would do so by computing FFO and then adjusting it for certain non-recurring items, such as:

Adjusted Funds from Operations (AFFO)

AFFO is a non-GAAP measure that we believe may be useful to management and investors to measure our operating performance as a public company (including the costs to finance our operating performance) by removing the effect of certain non-cash and other items that do not reflect ongoing property operations. Due to the nature of how certain items may be recorded in our operating results going forward that we believe would not be reflective of our core operating performance, we expect that we may compute AFFO to provide investors with a different perspective on the same results. We also expect to use our definition of AFFO in the calculation of our incentive fee. We expect that if we compute AFFO, we would do so by computing NFFO, as above, and then adjusting it for certain non-cash and recurring items, such as:

Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO, NFFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, acquisition expenses and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, NFFO and AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO, NFFO and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. We also use AFFO for purposes of determining the quarterly incentive fee, if any, payable to our manager. See “Our Manager and Related Agreements — Management Agreement — Incentive Fee.”

Neither FFO, NFFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO, NFFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO, NFFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

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Inflation

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

Seasonality

Our business has not been and we do not expect it to become subject to material seasonal fluctuations.

Quantitative and Qualitative Disclosures about Market Risk

Our future income, cash flows, and fair values relevant to financial instruments are dependent on prevailing market interest rates. Interest rates are highly sensitive to several factors, including governmental monetary policies, domestic and global economic and political conditions and other factors which are beyond our control. We may incur additional variable rate debt in the future. In addition, decreases in interest rates may lead to additional competition for the acquisition of healthcare facilities and other real estate due to a reduction in attractive alternative income-producing investments. Increased competition for the acquisition of healthcare facilities may lead to future acquisitions being more costly and result in lower yields on healthcare facilities we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire healthcare facilities with rental rates high enough to offset the increase in interest rates on our borrowings.

Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. We expect to enter into such contracts only with major financial institutions based on their credit rating and other factors. No assurance can be given that any future hedging activities by us will have the desired beneficial effect on our results of operations or financial condition.

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OUR INDUSTRY AND MARKET OPPORTUNITY

The nature of healthcare delivery continues to evolve due to the impact of government programs, regulatory changes and consumer preferences. We believe these changes have increased the need for capital among healthcare providers and increased pressure on these providers to integrate more efficient real estate solutions in order enhance the delivery of quality healthcare. In particular, we believe the following factors and trends are creating an attractive environment in which to invest in healthcare facilities.

$3 Trillion Healthcare Industry Projected to Grow to $5.4 trillion (and 19.6% of U.S. GDP) by 2024

More medical procedures, both diagnostic and therapeutic are being performed in the U.S. every year due to a combination of trends including our aging population. More than two thirds of all procedures are applied to patients over 65 years of age, and two thirds of that amount is consumed by patients over 75 years. The rate of growth in this cohort is more than double the general population growth rate. Historically the majority of medical procedures were performed in centralized major hospitals and clinics. Increasingly, over the past several decades, more and more cases have been performed in outpatient surgery centers, imaging centers, and specialty clinics owned and operated by a myriad of medical operators (physician groups, national corporations with clinical niche centers, for profit hospitals in new locations, joint ventured hospitals with physician, corporate and hospital partnerships). Many newer hospitals have been constructed in newly populated geographies and many, as unrated credits, do not have direct access to traditional bond financing. Some are for profit status and as such do not have access to not for profit sources like tax exempt debt. Some can be funded off-balance sheet via REIT solutions.

The rate of facility growth is mirrored by the rate of healthcare industry employment, which has measurably outpaced overall national employment for several years. This trend is unlikely to change for many years and demonstrates the increasing role of medical treatment facilities in community economics and infrastructure across the entire country. In many locations, the principal medical provider is the dominant employer. We underwrite the sustainability of investment properties based on cash flows generated after employment compensation to all tenant-operator employees and before physician and owner distributions, which we require to be subordinated to payment of rent.

We have enjoyed rapid advancements in medical technology for diagnostic and therapeutic applications for several decades, spurred by generous government spending (Medicare and Medicaid have doubled overall healthcare spending and rates since 1968). Today, CMS pays for more than half of all medical procedures, followed by all other private payor insured and cash purchases combined. As new technology has birthed new procedures (CT, MRI, PET imaging and less invasive surgery and catheterizations, endoscopies are examples) thousands of new installations nationally have driven the development of thousands of new licensed medical facilities. We have also experienced constant re-purposing and conversion of obsolete facilities to modern applications and business models.

As the landscape of operator types and asset classes of licensed medical facilities has broadened, so too have regulations, payor rates and schedules that discriminate between the players and facility types. Medical operators have re-configured their businesses and real estate to accommodate these changes. They have also broadened their geographic footprint to enable competing with bordering operators, and to gain and hold market share. All of this has led to continuous evolution and development of new medical facilities with new technology, new utility and new locations. We refer to the combined trend phenomenon as “redistribution of care,” not to be confused with economic redistribution.

Our management team consists of seasoned healthcare industry leaders and members of our management team have participated in the long-term reshaping of medical delivery models, both at the operating level and at the corporate and financing level. Our investors benefit from unique advantages brought by our industry asset knowledge, relevance and sustainability of assets, economic justification of assets, and the strengths and weaknesses (competitive dynamics) of our tenant-operators’ businesses. Fundamental to our investment strategy is the prerequisite analysis and underwriting of our tenant-operators’ medical operations. We do not fund startup businesses, turn-arounds or restructurings. We do not finance real estate that is occupied by non-market leaders. We do not speculate in financing conversions without strong corporate guarantees. Most importantly, we only finance facilities where the licensed medical operator generates patient revenue.

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Our thesis is that we seek to own the “factory” where the medical treatment is delivered, not the discretionary or non-critical real estate where peripheral tasks or office rents are supporting the asset alone.

As CMS and other regulatory pressures impact the medical operator universe, including Affordable Care Act mandates, limitations, prohibitions, etc., we see these pressures as portals to market entry and to new financing solutions. We view Certificate of Need (CON) rules as useful control features that limit the market inventory of facilities in our niche. Exclusivity of our investments enhances sustainability and durability over the course of long-term leases. We do enjoy CON protections in some of our locations. Similarly, regulations that impact ownership of hospitals often initiate a cascade of events resulting in a necessary divestiture or refinancing of assets that had not been contemplated by an operator. This creates an investment opportunity for us as a disinterested (we have no involvement with operations) party.

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OUR BUSINESS AND HEALTHCARE FACILITIES

Overview

We are a Maryland corporation engaged in the business of acquiring licensed medical facility real estate assets. We focus on acquiring hospitals and other acute or post-acute medical treatment centers from leading clinical operators with dominant market share, and leasing each property to a single market leading operator under a long-term triple-net lease. We are externally managed and advised by Inter-American Management LLC, our advisor.

We target healthcare facilities that are fully leased, or under contract to be leased, under long-term triple-net leases on the date of purchase. We may acquire existing healthcare facilities under sale-leaseback or similar arrangements, or we may contract to purchase facilities under development that are being built to an operator’s specifications. Our tenant-operators are physician groups, community hospital operators, and corporate medical treatment chain operators that are leading clinical operators in the markets they serve.

Our current portfolio consists of 12 healthcare facilities, six of which are leased to the same tenant-operator, located in eight states with approximately 244,329 leasable square feet, which as of March 31, 2016 were 100% leased with a weighted average remaining lease term of 11 years. Our 12 healthcare facilities have a weighted average age of 10 years, which is the youngest in the listed healthcare REIT universe. 100% of our annualized base rent payments as of March 31, 2016 are from triple-net leases, pursuant to which our tenant-operators are responsible for all operating expenses relating to the healthcare facility, including but not limited to real estate taxes, utilities, property insurance, routine maintenance and repairs, and property management. This structure helps insulate us from increases in certain operating expenses and provides more predictable cash flow. Our triple-net leases typically include rent escalation provisions designed to provide us with annual growth in our rental revenues. As of March 31, 2016, leases representing 0%, 3.6% and 0% of leasable square feet in our current portfolio will expire in 2016, 2017 and 2018, respectively.

We seek only high acuity licensed medical treatment facilities, which we believe is an underserved niche in the public healthcare REIT universe. We view our business model as a financial services business for medical practitioners, as well as a single tenant-operator, triple-net lease critical mission real estate investor. Our tenant-operators are all market leaders in their respective clinical specialties. Our real estate holdings are all Class A purpose-built and licensed or accredited hospitals and clinics. We have no property management responsibilities or costs, no tax exposure and limited re-leasing or vacancy obligations or exposures.

We were conceived and designed as a “best in class” REIT with investment criteria and lease terms refined over decades of similar experience due to certain members of our management team’s prior experience as former executives of HCP, WRS (HCN), JLL and GE Healthcare Finance, all NYSE leaders in financing healthcare industry companies, major hospitals, physician organizations, and key clinical healthcare facilities.

Several aspects of our business and strategy are unique and in combination position our company differently than other healthcare real estate investors:

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Our Objectives and Growth Strategy

We typically discover and originate our projects without the participation of brokers and without auction processes, thereby controlling the deal negotiations. Customized lease terms benefit operators and allow us to sustain cash on cash returns by incorporating key deal features requested by individual tenant-operators. Some examples include: (a) accordion features on property portfolio financings (tenant-operator can add or substitute healthcare facilities to the portfolio lease); (b) follow-on capitalization clauses that position us to expand healthcare facilities, add square footage, or build out extra space at a later date; and (c) property syndications with tenant-operators (tenant-operators as REIT stockholders subject to certain limitations in the U.S. federal income tax laws applicable to REITs) for tax and other purposes. We believe our customized lease structures allow us to achieve higher risk-adjusted returns.

We hope to grow our equity base and portfolio rapidly each year. Our access to international capital through relationships with our sponsor may allow us to continue to execute on our business plan and growth strategy more efficiently than our peers, which typically raise capital exclusively within the United States. Quality of both real estate and tenant-operators’ credit supersedes raw volume objectives in importance to our business.

The primary objective of our financing strategy is to maintain financial flexibility with a prudent capital structure using retained cash flows, long-term debt and the issuance of common and preferred stock to finance our growth. We seek to manage our balance sheet by maintaining prudent financial ratios and leverage levels. We intend to (i) achieve opportunistic and reasonable debt service with an initial targeted leverage ratio of approximately 60% of the fair market value of our healthcare facilities and a lower targeted leverage ratio as we grow our equity capital base, (ii) establish a secured revolving credit facility to finance acquisitions in concert with other debt instruments, (iii) create staggered debt maturities that are aligned to our expected average lease term, positioning us to re-price parts of our capital structure as our rental rates change with market conditions, (iv) efficiently access the equity capital markets using a shelf registration statement once we are eligible to use Form S-3, which we expect to occur in April 2017, and (v) access international capital to avoid market cycle shortages and enhance acquisition expediency. We are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate.

Our senior management team is highly networked in the medical operator universe, having worked with both hospital corporations and finance companies. On a combined basis, our team has over 100 years of combined experience and executive level network with major operators, constructors, developers, architects, investment bankers and physician groups across the country. Two of the largest NYSE healthcare REITs’ formative years’ growth were spearheaded by members of our company.

Our primary marketing strategy is to leverage our medical services and physician relationships, act on tenant referrals and maintain an ongoing presence at major medical industry events, professional associations, and similar venues. We believe in point of sale relationship development. Our exhibit is used at several well-known trade events each year including the Medical Group Management Association (MGMA) meeting, the American Medical Group (AMGA) annual meeting, the Physician Owned Hospitals (PHA) annual meeting, Becker’s ASC Review, Federation of American Health Systems, and others. Cultivating sale-leaseback and build-to-suit lease deals is more time consuming than acquiring already leased healthcare

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facilities, but it affords us the opportunity to add value and increase our returns. Our approach also enables long-term relationships that lead to follow-on business with tenant-operators.

Our Management Team

We are an “externally managed” REIT, and we have contracted with our advisor to manage our day-to-day affairs and the acquisition, financing and disposition of our assets, subject to our board’s supervision.

Our senior management team is led by David Young, Chief Executive Officer and one of our directors, who has over 25 years of experience in medical and hospital real estate, including leading business development for Healthcare Property Investors (NYSE: HCP) which he helped grow from assets under management of $300 million to over $3.5 billion. Jeffrey Busch, President and Chairman, has over 20 years of real estate and healthcare experience, including president of Safe Blood International Foundation, where he oversaw the establishment of medical facilities in 35 developing nations, funded by the U.S. CDC and USAID among others, and oversight of a HUD portfolio with a yearly budget of $3.2 billion used to develop housing and commercial real estate. Don McClure, Chief Financial Officer, has over 20 years of experience in accounting and extensive experience in operational business practices specific to REIT compliance, having held positions as Accounting Manager of Washington Real Estate Investment Trust (NYSE: WRE) and Chief Financial Officer of Quantum Real Estate Management. Alfonzo Leon, our Chief Investment Officer, has more than 15 years in real estate finance having completed over $3 billion of transactions. His experience as a principal behind pension funds and investment banker representing health care real estate for Cain Brothers and Company provides a technical investment fluency that underpins our aggressive strategic growth. Danica Holley, our Chief Operating Officer, has business development and management experience that spans more than 18 years with an emphasis on managing multinational teams for complex service delivery across disciplines. Conn Flanigan, our Secretary and General Counsel, has 20 years of experience specializing in corporate transactions, governance and compliance. Allen Webb, our Senior Vice President, SEC Reporting and Technical Accounting, has more than 25 years of experience with SEC financial reporting and technical accounting including initial public offerings and secondary equity offerings. His prior experience includes the SEC Division of Corporation Finance and as an Audit Manager at Arthur Andersen.

We believe that we will benefit from strong sponsorship from ZH International Holdings, Ltd. (“ZH International”) and its affiliate, Zensun Real Estate Co., Ltd (“Zensun”), both of which are under common control by Mr. Zhang Jingguo, a well-known Chinese real estate developer and investor. ZH International is the 85% owner of our advisor and the owner of our majority stockholder, ZH USA, LLC, as of the date of this prospectus. A public company traded on the Hong Kong exchange, ZH International is engaged in global real estate development, investment, management and sales and REIT management. Zensun has been involved in the development of more than 36 property development projects in Henan, Shandong and Hainan provinces in China with a total gross floor area of more than 150 million square feet. Zensun has been named one of the top 100 property development companies in China by China Index Academy, China’s most influential property research institute. Our relationship with ZH International and Zensun provides opportunities for international capital raising and their investment in our company strongly aligns our advisor’s interests with those of our stockholders.

Competitive Strengths

We believe our differentiated strategy and our management’s extensive healthcare experience distinguish us from many other real estate companies, both public and private. Specifically, our company’s competitive strengths include, among others:

We believe that the highest quality of patient care depends not only on the acumen of the medical provider but also on the technology and design of the healthcare real estate. Highly specialized medical technology embedded in facilities designed to improve treatment and patient morale is important to clinical outcomes. We focus on these types of state-of-the-art treatment facilities because we believe that patient satisfaction, tenant retention and clinical success are higher as

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compared to older, less specialized assets. Our current portfolio, composed of 12 healthcare facilities, located in eight states, embodies these themes. The weighted average age of our portfolio is 10 years, which is the youngest in the listed healthcare REIT universe. We believe this is important because our more modern, efficient and technologically updated healthcare facilities will be better positioned to serve our healthcare tenant-operators and their patients.

The healthcare facilities in our current portfolio are each leased to a single, well-established market leader with demonstrated excellence in its clinical and business practices. These operators are characterized by cutting edge medical expertise, strong management, a going concern history in the market and stable or increasing market share within their clinical footprints. We target tenant-operators with indicators of sustainable practices going forward, including strong referral networks, mid-career average age of physicians, succession planning and in-network status with all major payors in the geographic market. Our existing tenant-operators’ average rent coverage ratio upon lease inception, EBITDARM/Rent, earnings before interest, taxes, depreciation, amortization, rent and management fees, divided by rent, of 7.3x is representative of the financial strength and cash flow of our tenant-operators. We focus on practice types that we believe will experience increased demand as the amount of insured increases and the population ages, such as cardiovascular treatment, cosmetic plastic surgery, eye surgery, gastroenterology, oncology treatment and orthopedics.

We are disciplined and selective about the investments we make and have a strong track record of identifying attractive markets in which to invest. We target middle market population centers, typically with a population between 200,000 and two million, with high demand for premium healthcare services. These markets are characterized by growth in healthcare spending, growth in healthcare employment and above-average per capita income. Within those markets, we focus on healthcare facilities that cater to the trend of decentralization in healthcare. For that reason, our current portfolio is comprised of smaller, specialized and efficient surgery centers and outpatient facilities that are conveniently located for doctors and patients. By focusing on markets and assets positioned to take advantage of current and future trends in healthcare, we believe our rental income will be sustainable and increasing.

The leases in our current portfolio and lease structures we plan to use on our future acquisitions position us to take advantage of an increasing, long-term stream of rental income. We typically seek to negotiate and enter into new triple-net leases rather than acquiring leased fee returns via acquisition of already rented healthcare facilities. Our ability to customize lease terms gives us a competitive advantage in securing acquisitions by incorporating key deal features requested by individual tenant-operators. We believe that it is not as practical for larger institutions, from a resource and expertise perspective, to create these types of tailored lease solutions that we typically use. Some examples of lease provisions include (i) accordion features on healthcare facility portfolio financings; (ii) follow-on capitalization clauses that provide a capital blueprint to expand healthcare facilities and add square footage; and (iii) substitution clauses that allow tenant-operators to eliminate obsolete facilities and add new location facilities under a portfolio lease. We believe these flexible lease features may in some cases allow us to negotiate more attractive capitalization rates than we would otherwise be able to obtain. Using these types of leases in our current portfolio, we have secured a weighted average lease term of 11 years with contractual annual rent escalators that average 2.5% as of March 31, 2016.

Our senior management team is led by David Young, Chief Executive Officer, who has over 25 years of experience in medical and hospital real estate, including leading business development for Healthcare Property Investors (NYSE: HCP) growing assets from $300 million to over

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$3.5 billion. Jeffrey Busch, President and Chairman, has over 20 years of real estate and healthcare experience, including President of Safe Blood International Foundation, where he oversaw the establishment of medical facilities in 35 developing nations, funded by the U.S. CDC and USAID among others, and oversight of a HUD portfolio with a yearly budget of $3.2 billion. Our management team has the significant healthcare experience necessary to identify trends in the healthcare industry and apply those to the acquisition of purpose-built real estate that best serves the medical provider in delivering the highest quality care. Upon completion of this offering, our officers, directors and our primary sponsor, ZH International, will beneficially own in the aggregate approximately 18.3% of our outstanding common stock on a fully diluted basis, assuming conversion of all LTIP units outstanding upon completion of this offering into shares of our common stock on a one-for-one basis, aligning their interests with those of our stockholders.

Healthcare Facilities

The table below sets forth certain information regarding the healthcare facilities in our current portfolio as of March 31, 2016:

Facility		Metro Area				Facility Type				Year Built/ Renovated				% Owned				Leasable sq.ft.				Occupancy				Annualized Base Rent(2)				Annualized Base Rent per Leased sq.ft.				Tenant/ Guarantor
Omaha Facility			Omaha, NE				Acute-care hospital				2008				100	%			41,113				100	%		$	1,599,480			$	38.90				Select Specialty Hospital-Omaha, Inc./Select Medical Holdings Corporation
Gastro One Facilities (6 facilities)			Memphis, TN				Licensed patient treatment facilities				2001, 2003, 1984, 2011, 2009, 2006				100	%			52,266				100	%		$	1,300,000			$	24.87				Gastroenterology Center of the MidSouth, P.C.
Plano Facility			Dallas, Ft. Worth, TX				Acute-care hospital				2013				100	%			24,000				100	%		$	1,278,000			$	53.25				Star Medical Center, LLC/Lumin Health, LLC
Melbourne Facility			Melbourne, FL				Orthopedic rehabilitation facility				1994/ 2005				100	%			75,899				100	%		$	1,104,675			$	14.55				Marina Towers, LLC/First Choice Healthcare Solutions, Inc.
West Mifflin Facility			West Mifflin, PA				Ophthalmology surgery center				2007				100	%			27,193				100	%		$	783,653			$	28.82				Associates in Ophthalmology, Ltd. and Associates Surgery Centers, LLC
Michigan Facility			Westland, MI				Surgery center and medical office building				1974/ 2002/ 2009				100	%			15,018				100	%		$	380,000			$	25.30				Surgical Institute of Michigan, LLC/Surgical Management Professionals
Asheville Facility			Asheville, NC				Orthopedic surgery center				1981/ 2002				100	%			8,840				100	%		$	217,457			$	24.60				Orthopedic Surgery Center of Asheville LP/McKesson Corp
Total/Weighted Average											2006	(1)			100	%			244,329				100	%		$	6,663,265			$	27.27

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Omaha Facility.  On June 5, 2014, we acquired a 52-bed, long-term, acute-care hospital located in Omaha, Nebraska and operated by Select Specialty Hospital — Omaha, Inc. (“SSH Omaha”) for $21.7 million (the “Omaha Facility”). SSH Omaha maintains a Certificate of Need as a long-term, acute-care hospital. This hospital has 24 hour in-house physician, nursing and respiratory therapy coverage. We entered into an Assignment of Sublease in which we lease the facility to SSH Omaha as the hospital tenant-operator. SSH Omaha’s obligations under the lease are guaranteed by its parent company, Select Medical Holdings Corporation (NYSE: SEM). The guarantor, Select Medical Holdings Corporation, is one of the largest specialty hospital and outpatient rehabilitation center operators in the United States. According to its annual report on Form 10-K for the year ended December 31, 2015, Select Medical Holdings Corporation reported net operating revenues of $3,742.7 million. Of this total, 63% of net operating revenues was derived from its specialty hospital segment and approximately 22% from its outpatient rehabilitation segment, operating 127 facilities throughout 27 states, of which 109 are Long Term Acute Care Hospitals, including the Omaha Facility. Additional information about Select Medical Holdings Corporation, including its audited historical financial statements, can be obtained from its Annual Report on Form 10-K and other reports and filings available on its website at http://www.selectmedical.com/or on the SEC website at www.sec.gov.

This hospital is subject to a ground lease with a Nebraska non-profit organization, Alegent Health, Bergan Mercy Health System, an affiliate of Catholic Health Initiatives (“Catholic Health”). Constructed in 2008, the hospital is strategically located on, and directly connected to, the Bergan Mercy Medical Center, a 400 bed general hospital that is operated by Catholic Health and Alegent Creighton Health, and is affiliated with Creighton University Medical Center. Catholic Health is among the largest health systems in the country and maintains an investment grade credit rating.

Asheville Facility.  On September 17, 2014 we acquired our second asset, an orthopedic surgery center located in Asheville, North Carolina, for $2.42 million. The facility is a 8,840 square foot building operated by Orthopedic Surgery Center of Asheville with annual rent increases tied to the consumer price index and over six years remaining on the lease, which automatically renewed in October 2015. The lease is guaranteed by the parent company of the tenant, McKesson Corp. (f/k/a Symbion, Inc.), a leading operator of short-term surgical facilities. McKesson provides services to 57 facilities in 24 states. The facility has three operating rooms and specializes in providing orthopedic, podiatric, hand and spine surgical services. McKesson has more than 3,000 employees and 1,100 physician partners. Asheville is the headquarters of the Mission Health System, which has over 1,000 physicians and 1,032 beds. The Mission Hospital, the flagship facility, contains 795 beds and is located within walking distance of the orthopedic surgery center. According to US News, Mission Hospital is ranked in the top five hospitals in North Carolina.

West Mifflin Facility.  On September 25, 2015 we acquired our third asset, an ophthalmology surgery center (with three operating rooms) and medical office building located in West Mifflin, Pennsylvania, for $11.35 million (the “West Mifflin Facility”). The facility is a 27,193 square foot building operated by Associates in Ophthalmology (AIO) occupying 63% of building and Associates Surgery Center (ASC) occupying 37% of building. The Class A building was completed in 2006 and is located nine miles south of downtown Pittsburgh. AIO and ASC lease the building on a new fifteen year triple-net lease with annual rent increases of 2.0% starting in the 37^th month of the lease, with two five year renewal options. The lease is guaranteed by the AIO, a leading provider of surgical eye operations, with seven locations and 11 physicians in the Pittsburgh metropolitan area. The market-leading practice is well established, having served Western Pennsylvania for over 100 years, providing ophthalmological surgical service with state-of-the-art equipment. West Mifflin is a major civic and industrial center of Allegheny County, with a significant presence of specialized, highly-technical manufacturing. West Mifflin is home to the fourth largest shopping mall in the region, Century III, which has big box retail including Home Depot, Best Buy and Walmart. AIO West Mifflin is located adjacent to Century III and benefits from its anchor retail traffic.

Gastro One Facilities.  On December 31, 2015, we acquired a six building, 52,266 square-foot medical clinic portfolio for a purchase price of $20.0 million. This clinic portfolio includes six facilities, five of which are located in Tennessee and one of which is located in Mississippi. We originated a new lease to the Gastroenterology Center of the MidSouth, P.C. via an absolute triple-net lease agreement that expires in 2027. The tenant-operator has two successive options to renew the lease for five year periods at then prevailing market rental rates on September 30, 2015, on the same terms as the initial lease. The tenant is an

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independent practice of thirty-four (34) doctors, not owned or tied to any hospital system, though its doctors have privileges at most local hospitals, including the dominant health systems in Memphis. The independence of its practice allows for the highest level of flexibility for patients in terms of facilities, insurance and choice in convenient off-campus locations near affluent communities. Gastro One has an average rent coverage ratio upon lease inception, EBITDARM/Rent, earnings before interest, taxes, depreciation, amortization, rent and management fees, divided by rent, of 10.5x.

Plano Facility.  On September 30, 2015, we entered into a Purchase Agreement with Star Medreal, LLC, a Texas limited liability company to acquire an approximately 24,000 square foot, eight bed acute hospital facility located in Plano, Texas, along with all real property and improvements (the “Plano Facility”) thereto for approximately $17.5 million. We completed such acquisition in January 2016. Under the terms of the agreement, the Company is obligated to pay a development fee of $500,000 to Lumin, LLC. This healthcare facility will be leased back via an absolute triple-net lease agreement that expires in 2036. The tenant-operator will be Star Medical Center, LLC and Lumin Health, LLC will serve as guarantor. Lumin Health, LLC is an affiliate and management company for Star Medical Center, LLC. The tenant-operator has two successive options to renew the lease for ten year periods at then prevailing market rental rates on the same terms as the initial lease. The terms of the lease also provide for a tenant-operator allowance up to $2.75 million for a 6,400 square foot expansion to be paid by the Company.

The Plano Facility is managed by a joint venture between physicians and Lumin Health, which has nine locations throughout the Dallas/Fort Worth area. The Plano Facility consists of four operating rooms, one procedure room and 14 Pre-Op/PACU beds. There are eight private 24-hour patient rooms along with support and dietary spaces. The remainder of the Plano Facility houses administrative staff, general exam rooms, and imaging. The medical services provided include foot and ankle surgery, gastroenterology, general surgery, gynecology, spine surgery, orthopedic surgery, otolaryngology, pain management, and urology.

Melbourne Facility.  On March 31, 2016, we acquired a 78,000 square-foot orthopedic rehabilitation center located in Melbourne, Florida (the “Melbourne Facility”). The building was constructed in 1994, renovated in 2004, and offers patients riverfront water views in a Class A facility. Under the purchase agreement, we acquired the site and building, an easement on the adjacent property to the north for surface parking, and above and below ground parking garages for an aggregate purchase price of $15.45 million. We will lease the facility back to Marina Towers, LLC under a new triple-net master lease agreement that expires in 2026, subject to two successive five-year renewal options for the tenant at then-prevailing market rental rates on the same terms as the initial lease. First Choice Healthcare Solutions, Inc. will be the guarantor. The purchase agreement contains customary covenants, representations and warranties. Our due diligence period has expired and our $20,000 earnest money deposit is non-refundable except in certain circumstances.

Michigan Facility.  On March 31, 2016, we acquired a two-story ambulatory surgery center and medical office building located in Westland, Michigan (the “Michigan Facility”). The property contains 15,018 leasable square feet and is located on a 1.3 acre site. Under the purchase agreement, we acquired the site and building, including parking for an aggregate purchase price of $4.75 million. We will lease the facility back to the Surgical Institute of Michigan, LLC under a new triple-net master lease agreement that expires in 2026, subject to two successive ten-year renewal options for the tenant at then-prevailing market rental rates on the same terms as the initial lease. Surgical Management Professionals will be the guarantor. The purchase agreement contains customary covenants, representations and warranties.

Properties Under Contract

Reading, Pennsylvania

On April 19, 2016, we entered into a purchase and sale contract to acquire a 6,500 square-foot eye surgery center and 17,000 square-foot medical office building located in Wyomissing, Pennsylvania, in the Reading, Pennsylvania metro area. Under the contract, we have the right to acquire both properties (including land, buildings, and above-ground parking) for an aggregate purchase price of $9,200,600. The surgery center, built in 2001, will be leased to Ridgewood Surgery Associates LLC and the medical office building, built in 1992 and renovated in 2008, will be leased back to Berks Eye Physicians & Surgeons, Ltd. each under a triple-net master lease agreement that will expire in 2026, subject to two successive five-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. We

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have the right to purchase this facility by July 20, 2016. Our $50,000 earnest money deposit is non-refundable except in certain circumstances. The closing of this acquisition is subject to the completion of our due diligence to our satisfaction, prior to the expiration of the due diligence period under the purchase and sale contract on May 30, 2016.

Properties Under Letter of Intent

Shelton, Connecticut

On March 27, 2016, we entered into a non-binding letter of intent to acquire a 40,000 square-foot medical clinic and licensed ambulatory surgery center located in Shelton, Connecticut with three operating rooms, an imaging center and procedural suites. Built in 2013, the property includes 13.62 acres, all necessary titled parking, and is licensed by the state of Connecticut. Under the letter of intent, we would acquire the property for a purchase price of $12,000,000. The medical clinic and surgery center would be leased back to Griffin Health Services Corporation under a triple-net master lease agreement that would expire in 2031, subject to two successive ten-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. The terms of the purchase contract are being negotiated and we have only completed preliminary due diligence on the facility and the operator. There is no assurance that we will enter into a definitive purchase contract for this facility or that we will close this acquisition.

Oakdale, Marksville and Winnfield, Louisiana

On June 9, 2016, we entered into a non-binding letter of intent to acquire three fully operational and licensed acute care hospital facilities located in Oakdale, Marksville, and Winnfield, Louisiana, each with fully functional operating rooms, laboratories, physical therapy center, physician offices and administration offices and aggregate square footage of 186,120. Built in 1972 and updated in 2007, 1979 and updated in 2004 and 1945 and updated in 1972, respectively, the acute care hospital facilities include approximately 43 acres, all necessary titled parking, and are licensed by the state of Louisiana. Under the letter of intent, we would acquire the acute care hospital facilities for a purchase price of $20,000,000. The acute care hospital facilities would be leased back to PCH Hospital LLC under a triple-net master lease agreement that would expire in 2031, subject to two successive five-year renewal options for the tenant at then-prevailing market rental rates but otherwise on the same terms as the initial lease. The lease would be guaranteed by A People’s Choice Hospital, LLC. The terms of the purchase contract are being negotiated and we have only completed preliminary due diligence on the facility and the operator. There is no assurance that we will enter into a definitive purchase contract for this facility or that we will close this acquisition.

Our Investment Pipeline

We currently have 52 facilities in our investment pipeline, with approximately $486 million in aggregate value and approximately 1.7 million square feet of leasable space. We identified these acquisition opportunities through our management team’s industry contacts and our strategic marketing.

Consistent with our investment strategy, all of the properties in our investment pipeline are purpose-built, licensed facilities that would be leased under triple net leases to regionally dominant medical providers. We do not have any existing commercial relationship with the owners or operators of the facilities in our investment pipeline. We are in varying stages of negotiation and have completed only preliminary due diligence with respect to the properties in our investment pipeline. We cannot provide any assurance that we will be successful in completing the acquisition of any of these properties.

We include a property in our investment pipeline if the property satisfies the following criteria: (i) the owner has advised us that the property is available for sale, (ii) we have had active discussions with the owner regarding a potential purchase of the property and such discussions have not been terminated by either party, (iii) we have performed preliminary due diligence on the property and on the tenant-operator in order to ascertain whether the property and tenant-operator appear to satisfy our investment criteria, and (iv) we have either delivered a written proposal to the owner or are considering the preparation of a written proposal for delivery to the owner regarding a potential purchase of the property.

Scheduled Lease Expirations

The following table shows information for lease expirations as of March 31, 2015 for the healthcare facilities in our current portfolio for the periods indicated.

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Tenant		Location		Initial Lease Expiration		Renewal Terms
Select Speciality		Omaha, NE		06/23/2023		Tenant-operator options for 12 five-year periods
Orthopedic Surgery Center of Asheville LP		Asheville, NC		03/07/2017		Tenant-operator option for one five-year period
Associates in Ophthalmology, Ltd.		West Mifflin, PA		09/24/2030		Tenant-operator options for two five-year-periods
Gastroenterology Center of the MidSouth, P.C.		Memphis, TN		12/31/2027		Tenant-operator has two successive options to renew the lease for five year periods.
Star Medical Center, LLC		Plano, Texas		01/28/2036		Tenant-operator has two 10 year renewal options
Marina Towers, LLC		Melbourne, FL		03/31/2026		Tenant-operator has two successive five-year renewal options
Surgical Institute of Michigan, LLC		Westland, MI		03/31/2026		Tenant-operator has two successive ten-year renewal options