1. Organization Summit Healthcare REIT, Inc. (Summit) is a real estate investment trust that owns 100% of three properties, 95.3% of four properties, a 10% equity interest in an unconsolidated equity-method investment that holds 17 properties, a 35% equity interest in an unconsolidated equity-method investment that holds two properties, a 20% equity interest in an unconsolidated equity-method investment that holds two properties, a 10% equity interest in an unconsolidated equity-method investment that holds nine properties, a 10% equity interest in an unconsolidated equity-method investment that holds six properties and a 15% equity interest in an unconsolidated equity-method investment that holds 14 properties. Summit is a Maryland corporation, formed in 2004 under the General Corporation Law of Maryland for the purpose of investing in and owning real estate. As used in these notes, the Company, we, us and our refer to Summit and its consolidated subsidiaries, except where the context otherwise requires. We conduct substantially all of our operations through Summit Healthcare Operating Partnership, L.P. (the Operating Partnership), which is a Delaware limited partnership. We own a 99.88% general partner interest in the Operating Partnership, and Cornerstone Realty Advisors, LLC (CRA), a former affiliate, owns a 0.12% limited partnership interest. Our financial statements and the financial statements of the Operating Partnership are consolidated in the accompanying condensed consolidated financial statements. Cornerstone Healthcare Partners LLC  Consolidated Joint Venture We own 95% of Cornerstone Healthcare Partners LLC (CHP LLC), which was formed in 2012, and the remaining 5% noncontrolling interest is owned by Cornerstone Healthcare Real Estate Fund, Inc. (CHREF), an affiliate of CRA. CHP LLC is consolidated with our financial statements and owns four properties (the JV Properties) with another partially owned subsidiary. As of September 30, 2020, we own a 95.3% interest in the four JV Properties, and CHREF owns a 4.7% interest. See Note 13 for the disposition of real estate properties in 2019 which includes one of the JV Properties. Summit Union Life Holdings, LLC  Equity-Method Investment In April 2015, through our Operating Partnership, we entered into a limited liability company agreement with Best Years, LLC (Best Years), an unrelated entity and a U.S.-based affiliate of Union Life Insurance Co, Ltd. (a Chinese corporation), and formed Summit Union Life Holdings, LLC (the SUL JV). The SUL JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 10% interest in the SUL JV which owns 17 properties. Summit Fantasia Holdings, LLC  Equity-Method Investment In September 2016, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia Investment III LLC (Fantasia), an unrelated entity and a U.S.-based affiliate of Fantasia Holdings Group Co., Limited (a Chinese corporation listed on the Stock Exchange of Hong Kong (HKEX)), and formed Summit Fantasia Holdings, LLC (the Fantasia JV). The Fantasia JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 35% interest in the Fantasia JV which owns two properties. Summit Fantasia Holdings II, LLC  Equity-Method Investment In December 2016, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia, and formed Summit Fantasia Holdings II, LLC (the Fantasia II JV). The Fantasia II JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 20% interest in the Fantasia II JV which owns two properties. Summit Fantasia Holdings III, LLC Equity-Method Investment In July 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia and formed Summit Fantasia Holdings III, LLC (the Fantasia III JV). The Fantasia III JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 10% interest in the Fantasia III JV which owns nine properties. Summit Fantasy Pearl Holdings, LLC Equity-Method Investment In October 2017, through our Operating Partnership, we entered into a limited liability company agreement with Fantasia, Atlantis Senior Living 9, LLC, a Delaware limited liability company (Atlantis), and Fantasy Pearl LLC, a Delaware limited liability company (Fantasy), and formed Summit Fantasy Pearl Holdings, LLC (the FPH JV). The FPH JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 10% interest in the FPH JV which owns six properties. Indiana JV Equity-Method Investment In February 2019, through our wholly-owned subsidiary, Summit Indiana, LLC, we formed a new joint venture, a Delaware limited liability company (the "Indiana JV"). On March 13, 2019, we entered into a Limited Liability Company Agreement (the Indiana JV Agreement) with two unrelated parties: a real estate holding company and a global institutional asset management firm, both Delaware limited liability companies. The Indiana JV is not consolidated in our condensed consolidated financial statements and is accounted for under the equity-method. As of September 30, 2020 and December 31, 2019, we have a 15% interest in the Indiana JV which owns 14 properties. Summit Healthcare Asset Management, LLC (TRS) Summit Healthcare Asset Management, LLC (SAM TRS) is our wholly-owned taxable REIT subsidiary (TRS). We serve as the manager of the SUL JV, Fantasia JV, Fantasia II JV, Fantasia III JV, and FPH JV, and as the operating member of the Indiana JV (collectively, our Equity-Method Investments), and provide management services in exchange for fees and reimbursements. All acquisition fees and asset management fees earned by us are paid to SAM TRS and expenses incurred by us, as the manager, are reimbursed from SAM TRS. See Notes 5 and 7 for further information.