Investment in Affiliate

March 19, 2019,

the Company entered into subscription agreements with HC Realty, pursuant to which it purchased (i)

200,000

shares of HC Realty's

10.00%

Series B Cumulative Convertible Preferred Stock (the “Series B Stock”) for an aggregate purchase price of

$2,000,000

and (ii)

300,000

shares of HC Realty's common stock for an aggregate purchase price of

$3,000,000.

Certain investors affiliated with HPCM purchased an additional

850,000

shares of Series B Stock for an aggregate purchase price of

$8,500,000.

April 3,

April 9,

and

June 29, 2020,

the Company entered into subscription agreements with HC Realty, pursuant to which we purchased

100,000,

250,000,

and

475,000

shares of Series B Stock, respectively, for an aggregate purchase price of

$8,250,000.

While some of these investors have other investments with HPCM, each of these investors made a separate and direct investment in HC Realty and HPCM does

not

receive management fees, performance fees, or any other economic benefits with respect to these investors' investment in HC Realty's Series B Stock.

The Series B Stock is

not

deemed to be in-substance common stock and is accounted for using the measurement alternative for equity investments with

readily determinable fair value. The Series B Stock will be reported at cost, adjusted for impairments or any observable price changes in ordinary transactions with identical or similar investments issued by HC Realty.

The following table summarizes the Company's investment in HC Realty as of the

two

years ended

December 31, 2020 (

in thousands):

	Ownership %						Investment in Affiliate Balance				Loss recorded in the Consolidated Statements of Operations (b)
	December 31, 2020			December 31, 2019			December 31, 2020		December 31, 2019		2020			2019

HC Realty Series B Stock (a)		28.7	%		7.9	%	$	10,250	$	2,000	$	-		$	-
HC Realty common stock		7.7	%		8.5	%		1,822		2,405		(418	)		(430	)
Total		36.4	%		16.4	%	$	12,072	$	4,405	$	(418	)	$	(430	)

(a)

Represents investments in shares of HC Realty preferred stock with a basis of

$10.25

million. Each share of preferred stock can be converted into

one

share of HC Realty common stock at a conversion price equal to the lesser of

$9.10

per share or the fair market value per share of HC Realty common stock, subject to adjustment upon the occurrence of certain events.

(b)

Loss from these investments is included in “Loss from affiliate” in the statements of operations. Since HC Realty is a Real Estate Investment Trust and

not

a taxable entity, the loss is

not

reported net of taxes.

The Company's investment in HC Realty common stock is accounted for under the equity method of accounting. For portions of the year ended

December 31, 2020,

the Company owned less than

20%

of the fully diluted shares outstanding. The Company determined that accounting for the investment in HC Realty common stock under the equity method was appropriate for the portion of time the Company owned less than

20%

because the Company holds significant influence of HC Realty.