What changed in this filing

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Item 9A. Controls and Procedures

2024-02-08 compared with 2023-02-09 · 488 added, 269 removed, 1203 unchanged (39% of the section changed)

2 unchanged sentences

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and regulations and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

In designing and evaluating the disclosure

controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of December 31, 2023, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures.

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Other Information

Not applicable.

Insider Trading Arrangements

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

4 unchanged sentences

We have adopted a code of business conduct and ethics that applies to all employees, including employees of our subsidiaries, as well as each member of our Board of Directors.

The code of business conduct and ethics is available at our website at www.caretrustreit.com under the Investors-Corporate Governance section.

The code of business conduct and ethics is available at our website at www.caretrustreit.com under the Investors-Governance section.

We intend to satisfy any disclosure requirement under applicable rules of the Securities and Exchange Commission or the New York Stock Exchange regarding an amendment to, or waiver from, a provision of this code of business conduct and ethics by posting such information on our website, at the address specified above.

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Second Amended and Restated Credit and Guaranty Agreement, dated as of December 16, 2022 by and among CTR Partnership, L.P., as borrower, CareTrust REIT, Inc., as guarantor, CareTrust GP, LLC and the other guarantors named therein and KeyBank National Association, as administrative agent, an issuing lender and swingline lender and the other parties thereto (incorporated by reference to Exhibit 10.1 to CareTrust REIT, Inc.’s Current Report on Form 8-K filed on December 19, 2022).

First Amendment to Second Amended and Restated Credit and Guarantee Agreement, dated as of October 10, 2023, by and among CTR Partnership, L.P., CareTrust REIT, Inc.

and KeyBank National Association (incorporated by reference to Exhibit 10.1 to CareTrust REIT, Inc.’s Quarterly Report on Form 10-Q, filed on November 9, 2023)

Amended and Restated Partnership Agreement of CTR Partnership, L.P.

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Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.15 to CareTrust REIT, Inc.’s Annual Report on Form 10-K, filed on February 11, 2015).

Form of TSR Award Agreement

Form of Performance-Based Restricted Stock Award Grant Notice

Form of TSR Award Agreement (incorporated by reference to Exhibit 10.10 to CareTrust REIT, Inc.’s Annual Report on Form 10-K, filed on February 9, 2023)

Form of Performance-Based Restricted Stock Award Grant Notice (incorporated by reference to Exhibit 10.11 to CareTrust REIT, Inc.’s Annual Report on Form 10-K, filed on February 9, 2023)

Form of Change in Control and Severance Agreement (incorporated by reference to Exhibit 10.1 to CareTrust REIT, Inc’s Current Report on Form 8-K filed on February 11, 2019).

Form of Amendment to Change in Control and Severance Agreement (incorporated by reference to Exhibit 10.1 to CareTrust REIT, inc.'s Quarterly Report on Form 10-Q, filed on May 10, 2023)

List of Subsidiaries of CareTrust REIT, Inc.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Policy Regarding the Recoupment of Certain Compensation Payments

*101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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Upon designation as held for sale, the Company writes down the excess of the carrying value over the estimated fair value less costs to sell, resulting in an impairment of the real estate investments, if necessary.

If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a real estate investment previously classified as held for sale or otherwise no longer meets the held for sale criteria, the respective assets are reclassified as real estate investments held for use.

A real estate investment that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the real estate investment was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the real estate investment been continuously classified as held for use, or (b) the fair value at the date of the decision not to sell or change in circumstances that led to the real estate investment no longer meeting the criteria of held for sale.

The fair value of the assets held for sale is based on a market approach using estimated sales prices (comparable sales model), which relies on certain assumptions by management, including:

(i) comparable market transactions, (ii) estimated prices per unit, and (iii) binding agreements for sales and non-binding offers to purchase from unrelated third-parties.

The fair value of assets reclassified as real estate investments held for use is based on an income approach using current market conditions and considers matters such as the forecasted operating cash flows, lease coverage ratios, capitalization rates, and, where applicable, terms of recent lease agreements or the results of negotiations with prospective tenants.

There are inherent uncertainties in making these assumptions.

We identified the impairment of real estate investments as a critical audit matter because of the significant estimates and assumptions management makes to determine the fair value of real estate investments held for sale and real estate investments reclassified from held for sale to held for use.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s determination of fair value.

As of December 31, 2022, the Company had real estate investments held for sale of $12.3 million, after taking an impairment loss of $14.4 million.

During the year ended December 31, 2022, the Company reclassified real estate investments from held for sale to held for use of $57.4 million, after taking an impairment loss of $18.0 million.

We identified the impairment of real estate investments held for sale as a critical audit matter because of the significant estimates and assumptions management makes to determine the fair value of real estate investments held for sale.

This required

a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimate of fair value.

As of December 31, 2023, the Company had real estate investments held for sale of $15.0 million, net of impairment loss of $26.8 million.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the significant inputs to the fair value of real estate investments held for sale and real estate investments reclassified from held for sale to held for use included the following, among others:

• We tested the effectiveness of controls over management’s evaluation of balance sheet classification and determination of fair value for real estate investments held for sale and real estate investments reclassified to real estate investments held for use.

• We evaluated the reasonableness of the (1) valuation methodology;

and (2) the concluded real estate investment fair value by independently obtaining sales comparison data, capitalization rates, and market rents and developing a range of independent fair value estimates and comparing our estimates to those used by management.

Our audit procedures related to the significant inputs to the fair value of real estate investments held for sale included the following, among others:

• We tested the effectiveness of controls over management’s evaluation of balance sheet classification and determination of fair value for real estate investments held for sale.

• We assessed the reasonableness of the valuation methodology used and the concluded real estate investment fair value by obtaining sales comparison data, while also engaging in discussions with management to understand portfolio-specific factors impacting the Company’s fair value determination.

• We used the assistance of our fair value specialists in obtaining relevant market data, where necessary.

• We considered the properties disposed in the period and subsequent period to evaluate if the retrospective review provides any indication of error or bias in the fair value estimates.

• Read and considered terms of executed arrangements and evidence regarding terms for arrangements in the process of negotiation at or near the valuation date.

• We held discussions with management to understand individual real estate investment specific factors that impacted the Company’s fair value determination.

/s/ Deloitte & Touche LLP

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Real estate investments, net $ 1,567,119 $ 1,421,410

Other real estate related investments, at fair value (including accrued interest of $ 1,320 as of December 31, 2022 and $ 155 as of December 31, 2021)

Other real estate related investments (including accrued interest of $ 1,727 and $ 1,320 as of December 31, 2023 and 2022, respectively)

180,368 156,368

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Cumulative distributions in excess of earnings ( 467,628 ) ( 396,954 )

Total stockholders' equity 1,416,819 849,373

Noncontrolling interests 1,898 —

Total equity 1,418,717 849,373

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Rental income $ 198,599 $ 187,506 $ 190,195

Independent living facilities — — 2,077

Interest and other income 19,171 8,626 2,156

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Property taxes 6,170 4,333 3,574

Independent living facilities — — 1,869

Impairment of real estate investments 36,301 79,062 —

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Loss on extinguishment of debt — — ( 10,827 )

Loss on sale of real estate, net ( 3,769 ) ( 77 ) ( 37 )

Unrealized loss on other real estate related investments ( 7,102 ) — —

Gain (loss) on sale of real estate, net 2,218 ( 3,769 ) ( 77 )

Unrealized loss on other real estate related investments, net ( 6,485 ) ( 7,102 ) —

Total other loss ( 4,267 ) ( 10,871 ) ( 10,904 )

Net (loss) income $ ( 7,506 ) $ 71,982 $ 80,867

(Loss) earnings per common share:

Net income (loss) 53,722 ( 7,506 ) 71,982

Net loss attributable to noncontrolling interests ( 13 ) — —

Net income (loss) attributable to CareTrust REIT, Inc.

$ 53,735 $ ( 7,506 ) $ 71,982

Earnings (loss) per common share attributable to CareTrust REIT, Inc:

Basic $ 0.50 $ ( 0.08 ) $ 0.74

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Distributions

of Earnings Total

of Earnings Total Stockholders’ Equity Noncontrolling Interests Total

Shares Amount

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— — — ( 107,403 ) ( 107,403 ) — ( 107,403 )

Net income — — — 71,982 71,982

Net loss — — — ( 7,506 ) ( 7,506 ) — ( 7,506 )

Balance as of December 31, 2022 99,010,112 990 1,245,337 ( 396,954 ) 849,373 — 849,373

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— — — ( 124,409 ) ( 124,409 ) — ( 124,409 )

Net loss — — — ( 7,506 ) ( 7,506 )

Distributions to noncontrolling interests — — — — — ( 41 ) ( 41 )

Contributions from noncontrolling interests — — — — — 1,952 1,952

Net income (loss) — — — 53,735 53,735 ( 13 ) 53,722

Balance as of December 31, 2023 129,992,796 $ 1,300 $ 1,883,147 $ ( 467,628 ) $ 1,416,819 $ 1,898 $ 1,418,717

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Cash flows from operating activities:

Net (loss) income $ ( 7,506 ) $ 71,982 $ 80,867

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Net income (loss) $ 53,722 $ ( 7,506 ) $ 71,982

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization (including below-market ground leases) 51,257 50,378 55,394

1 unchanged sentence

Loss on extinguishment of debt — — 10,827

Unrealized loss on other real estate related investments 7,102 — —

Unrealized losses on other real estate related investments, net 6,485 7,102 —

Amortization of stock-based compensation 5,153 5,758 10,832

Straight-line rental income 29 ( 17 ) ( 32 )

Amortization of below market rent ( 384 ) — —

Adjustment for collectibility of rental income — 1,417 —

Noncash interest income ( 407 ) ( 1,165 ) ( 155 )

Loss on sale of real estate, net 3,769 77 37

Interest income distribution from other real estate investment — — 1,346

(Gain) loss on sale of real estate, net ( 2,218 ) 3,769 77

Impairment of real estate investments 36,301 79,062 —

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Purchases of equipment, furniture and fixtures and improvements to real estate ( 10,976 ) ( 7,292 ) ( 6,013 )

Preferred equity investments ( 1,782 ) — —

Investment in real estate related investments and other loans receivable ( 60,319 ) ( 149,650 ) ( 1,253 )

Principal payments received on other loans receivable 6,308 393 80,928

Repayment of other real estate investment — — 2,327

Principal payments received on real estate related investments and other loans receivable 26,525 6,308 393

Escrow deposits for potential acquisitions of real estate ( 3,800 ) — —

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Cash flows from financing activities:

Proceeds from (costs paid for) the issuance of common stock, net 47,236 22,946 ( 404 )

Proceeds from the issuance of common stock, net 634,446 47,236 22,946

Proceeds from the issuance of senior unsecured notes payable — — 400,000

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Dividends paid on common stock ( 115,492 ) ( 106,138 ) ( 100,782 )

Net cash (used in) provided by financing activities ( 23,732 ) 36,738 ( 105,561 )

Net (decrease) increase in cash and cash equivalents ( 6,717 ) 976 ( 1,408 )

Contributions from noncontrolling interests 1,952 — —

Distributions to noncontrolling interests ( 41 ) — —

Net cash provided by (used in) financing activities 394,318 ( 23,732 ) 36,738

Net increase (decrease) in cash and cash equivalents 281,270 ( 6,717 ) 976

Cash and cash equivalents as of the beginning of period 13,178 19,895 18,919

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Description of Business— CareTrust REIT, Inc.’s (“CareTrust REIT” or the “Company”) primary business consists of acquiring, financing, developing and owning real property to be leased to third-party tenants in the healthcare sector.

As of December 31, 2022, the Company owned and leased to independent operators, 216 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 22,831 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California, Texas, Louisiana, Idaho and Arizona.

As of December 31, 2022, the Company also had other real estate related investments consisting of three real estate secured loans receivable and two mezzanine loans receivable with a carrying value of $ 156.4 million.

COVID-19— The COVID-19 pandemic has had and may continue to have an adverse impact on the economy generally and the Company’s business, results of operations and financial condition.

The duration and extent of the COVID-19 pandemic’s effect on the Company’s operational and financial performance, and the operational and financial performance of the Company’s tenants, will depend on future developments, which are highly uncertain and cannot be predicted at this time, including resurgences of COVID-19 or outbreaks of other highly infectious diseases.

The adverse impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition could be material.

As of December 31, 2023, the Company owned directly or through a joint venture and leased to independent operators, 226 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,928 operational beds and units located in 28 states with the highest concentration of properties by rental income located in California and Texas.

As of December 31, 2023, the Company also had other real estate related investments consisting of one preferred equity investment, eight real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $ 180.4 million.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation —The accompanying consolidated financial statements of the Company reflect, for all periods presented, the historical financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

All intercompany transactions and account balances within the Company have been eliminated.

Basis of Presentation —The accompanying consolidated financial statements of the Company reflect, for all periods presented, the historical financial position, results of operations and cash flows of the Company prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Consolidation —The accompanying consolidated financial statements include the accounts of CareTrust REIT, its wholly-owned subsidiaries, and variable interest entities (“VIEs”) over which the Company exercises control.

All intercompany transactions and account balances within the Company have been eliminated, and net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.

Variable Interest Entities —The Company is required to continually evaluate its VIE relationships and consolidate these entities when it is determined to be the primary beneficiary of their operations.

A VIE is broadly defined as an entity where either:

(i) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support, (ii) substantially all of an entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights, or (iii) the equity investors as a group lack any of the following:

(a) the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of an entity, or (c) the right to receive the expected residual returns of an entity.

Criterion (iii) above is generally applied to limited partnerships and similarly structured entities by assessing whether a simple majority of the limited partners hold substantive rights to participate in the significant decisions of the entity or have the ability to remove the decision maker or liquidate the entity without cause.

If neither of those criteria are met, the entity is a VIE.

The designation of an entity as a VIE is reassessed upon certain events, including, but not limited to:

(i) a change to the contractual arrangements of the entity or in the ability of a party to exercise its participation or kick-out rights, (ii) a change to the capitalization structure of the entity, or (iii) acquisitions or sales of interests that constitute a change in control.

A variable interest holder is considered to be the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE.

The Company qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE.

The Company’s consideration of various factors include, but is not limited to, which activities most significantly impact the entity’s economic performance and the ability to direct those activities, its form of ownership interest, its representation on the VIE’s governing body, the size and seniority of its investment, its ability and the rights of other investors to participate in policy making decisions, its ability to manage its ownership interest relative to the other interest holders, and its ability to replace the VIE manager and/or liquidate the entity.

For any investment in a joint venture that is not considered to be VIE, the Company would evaluate the type of ownership rights held by limited partner(s) that may preclude consolidation by the majority interest holder.

The assessment of limited partners’ rights and their impact on the control of a joint venture should be made at inception of the joint venture and continually reassessed.

See Note 11, Variable Interest Entities , for additional information.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Noncontrolling Interests —The Company presents the portion of any equity that the Company does not own in entities that the Company controls (and thus consolidates) as noncontrolling interests and classifies those interests as a component of consolidated equity, separate from stockholders' equity, on the Company’s consolidated balance sheets.

For consolidated joint ventures, the Company allocates net income or loss utilizing the hypothetical liquidation at book value method, in which the Company allocates income or loss based on the change in each unitholders’ claim on the net assets of the joint venture partners at period end after adjusting for any distributions or contributions made during such period.

The Company includes net income (loss) attributable to the noncontrolling interests in net income (loss) in the consolidated statements of operations.

Lessor Accounting —The Company recognizes lease revenue in accordance with Accounting Standards Codification (“ASC”) 842, Leases .

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Such write-offs and recoveries are recorded as decreases or increases through rental income on the Company’s consolidated statements of operations.

For the years ended December 31, 2023 and 2021, the Company did no t record any recovery adjustments or write-off adjustments to rental income.

For the year ended December 31, 2022, the Company did no t record any recovery adjustments and wrote-off $ 1.4 million of rental income.

For the year ended December 31, 2021, the Company did no t record any recovery adjustments or write-off adjustments to rental income.

For the year ended December 31, 2020, the Company recorded recovery adjustments of $ 1.0 million and did no t recognize any write-off adjustments to rental income.

See Note 3, Real Estate Investments, Net for further detail.

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Actual results, however, could differ from those estimates and assumptions.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Real Estate Acquisition Valuation — In accordance with ASC 805, Business Combinations , the Company’s acquisitions of real estate investments generally do not meet the definition of a business, and are treated as asset acquisitions.

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The fair value of tangible assets of an acquired property is based on the value of the property as if it is vacant.

The Company recognizes acquired “above or below market” leases at their fair value (for asset acquisitions) using discount rates which reflect the risks associated with the leases acquired.

The fair value is based on the present value of the difference between (i) the contractual amounts due pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, generally measured over a period equal to the remaining term of the lease for above market leases and the initial term plus the extended term for any leases with renewal options that are reasonably certain to be exercised.

Other intangible assets acquired include amounts for in-place lease values that are based on an evaluation of the

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

specific characteristics of each property and the acquired tenant lease(s).

Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions, and costs to execute similar leases.

In estimating carrying costs, the Company includes estimates of lost rents at market rates during the hypothetical expected lease-up periods, which are dependent on local market conditions and expected trends.

In estimating costs to execute similar leases, the Company considers leasing commissions, legal, and other related costs.

As of December 31, 2023, the Company had gross below market lease liabilities of $ 7.3 million, accumulated amortization of $ 0.4 million and a weighted average remaining amortization period of 3 years.

Impairment of Long-Lived Assets —At each reporting period, the Company evaluates its real estate investments held for use for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

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While the Company believes its assumptions are reasonable, changes in these assumptions may have a material impact on financial results.

For the year ended December 31, 2022, the Company recorded an impairment charge of $ 79.1 million.

For the years ended December 31, 2023 and 2022, the Company recorded an impairment charge of $ 36.3 million and $ 79.1 million, respectively.

See Note 4, Impairment of Real Estate Investments, Asset Held For Sale, Net and Asset Sales , for additional information.

Other Real Estate Related Investments —Included in other real estate related investments on the Company’s consolidated balance sheets at December 31, 2022, are three real estate secured loans receivable and two mezzanine loans receivable.

Included in other real estate related investments on the Company’s consolidated balance sheets at December 31, 2021, is one mezzanine loan receivable.

The Company elected the fair value option for all other real estate related investments.

Other Real Estate Related Investments —Included in other real estate related investments on the Company’s consolidated balance sheets at December 31, 2023, are one preferred equity investment, eight real estate secured loans receivable and one mezzanine loan receivable.

The Company elected the fair value option for all secured and mezzanine loans receivable.

Instruments for which the fair value option has been elected are measured at fair value on a recurring basis with changes in fair value recognized in other income (loss) on the consolidated statements of operations.

Fair value was estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market

Fair value was estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market interest rates and other credit enhancements.

Interest income is recognized as earned within interest and other income in the consolidated statements of operations.

The preferred equity investment is accounted for at unpaid principal balance, plus accrued return, net of reserves.

The Company recognizes return income on a monthly basis based on the

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

interest rates and other credit enhancements.

Interest income is recognized as earned within interest and other income in the consolidated statements of operations.

outstanding investment including any accrued and unpaid return, to the extent there is outside contributed equity or cumulative earnings from operations.

As the preferred member of the joint venture, the Company is not entitled to share in the joint venture’s earnings or losses.

Rather, the Company is entitled to receive a preferred return, which is deferred if the cash flow of the joint venture is insufficient to pay all of the accrued preferred return.

The unpaid accrued preferred return is added to the balance of the preferred equity investment up to the estimated economic outcome assuming a hypothetical liquidation of the book value of the joint venture.

Any unpaid accrued preferred return, whether recorded or unrecorded by the Company, will be repaid upon redemption or as available cash flow is distributed from the joint venture.

Prepaid expenses and other assets —Prepaid expenses and other assets consist of prepaid expenses, deposits, pre-acquisition costs and other loans receivable.

During the year ended December 31, 2022, the Company determined that the remaining contractual obligations under two other loans receivable were not collectible and recorded a $ 4.6 million expected credit loss, net of a loan loss recovery of $ 0.8 million related to a loan previously written-off.

The Company did not record an expected credit loss or recovery during the year ended December 31, 2023.

Expected credit losses and recoveries are recorded in provision for loan losses, net in the consolidated statements of operations.

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To date, the Company has experienced no loss or lack of access to cash in its operating accounts.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Financing Costs —External costs incurred from placement of the Company’s debt are capitalized and amortized on a straight-line basis over the terms of the related borrowings, which approximates the effective interest method.

1 unchanged sentence

For the unsecured revolving credit facility, deferred financing costs are included in assets on the Company’s consolidated balance sheets.

Amortization of deferred financing costs is

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

classified as interest expense in the consolidated statements of operations.

Amortization of deferred financing costs is classified as interest expense in the consolidated statements of operations.

Accumulated amortization of deferred financing costs was $ 4.8 million and $ 2.5 million at December 31, 2023 and 2022, respectively.

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ASC 718 requires all entities to apply a fair value-based measurement method in accounting for share-based payment transactions with directors, officers and employees.

The Company measures and recognizes compensation expense for all share-based payment awards made to directors, officers and employees based on the grant date fair value, amortized over the requisite service period of the awar d.

Compensation expense for awards with performance-based vesting conditions is recognized based upon the probability that the performance target will be met.

1 unchanged sentence

Forfeitures of stock-based awards are recognized as they occur.

Net (loss) income reflects stock-based compensation expense of $ 5.8 million, $ 10.8 million and $ 3.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Net income (loss) reflects stock-based compensation expense of $ 5.2 million, $ 5.8 million and $ 10.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Concentration of Credit Risk —The Company is subject to concentrations of credit risk consisting primarily of operating leases on its owned properties.

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Beds, Units, Occupancy and Other Measures —Beds, units, occupancy and other non-financial measures used to describe real estate investments included in these Notes to the consolidated financial statements are presented on an unaudited basis and are not subject to audit by the independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board.

Recent Accounting Pronouncements — In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional relief to applying reference rate reform to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”).

Dollar LIBOR, the overnight, one-month, three-month, six-month and one-year LIBOR rates will be discontinued in June 2023, while other U.S.

Dollar LIBOR rates were discontinued at the end of 2021.

The amendments in this update were effective immediately and could have been applied through December 31, 2022.

On December 21, 2022, the FASB issued ASU 2022-06 to defer the sunset date of ASC 848 to December 31, 2024.

During the year ended December 31, 2022, the Company adopted ASU 2020-04.

Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements —On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is still evaluating its adoption timeline and the impact on its disclosures.

CARETRUST REIT, INC.

1 unchanged sentence

REAL ESTATE INVESTMENTS, NET

The following table summarizes the Company’s investment in owned properties held for use at December 31, 2022 and 2021 (dollars in thousands):

The following table summarizes the Company’s investment in owned properties, and properties held in consolidated joint ventures, held for use at December 31, 2023 and 2022 (dollars in thousands):

December 31, 2023 December 31, 2022

7 unchanged sentences

As of December 31, 2023, 94 of the Company’s 226 facilities were leased to subsidiaries of The Ensign Group, Inc.

(“Ensign”) on a triple-net basis under multiple long-term leases (each, an “Ensign Master Lease” and, collectively, the “Ensign Master Leases”) which commenced on June 1, 2014 and were subsequently modified on October 1, 2019, June 1, 2021, August 1, 2021, March 1, 2022 and April 1, 2022.

The obligations under the Ensign Master Leases are guaranteed by Ensign.

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The obligations under the lease agreements for the four additional facilities are guaranteed by Ensign but do not contain cross-default provisions with the Ensign Master Leases.

See below under “Lease Amendments” for further detail on Ensign lease amendments.

See below under “Lease Amendments and Terminations” for further detail on Ensign lease amendments.

Ensign provides a guaranty for properties leased to The Pennant Group, Inc.

(“Pennant”) under the Pennant Master Lease (defined below), which represent $ 7.3 million of total annualized contractual rental income as of December 31, 2023.

As of December 31, 2023, 15 of the Company’s facilities were leased to subsidiaries of Priority Management Group (“PMG”) on a triple-net basis under one long-term lease (the “PMG Master Lease”).

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All of these leases contain annual escalators based on the percentage change in the CPI (but not less than zero), some of which are subject to a cap, or fixed rent escalators.

During the second and third quarters of 2022, the Company entered into triple-net lease agreements for two of the Company’s 216 facilities which are being repurposed to behavioral health facilities with rent commencing 12 to 18 months following lease commencement.

Two of the Company’s 216 facilities are non-operational and are leased under a short term lease with an expected remaining term of less than one year as of December 31, 2022.

As of December 31, 2022, five facilities were held for sale.

During the second and third quarters of 2022, the Company entered into triple-net lease agreements for two of the Company’s 226 facilities which are being repurposed to behavioral health facilities.

Two of the Company’s 226 facilities are non-operational and are leased under a long term lease with rent commencing 12 months following lease commencement.

In addition, as of December 31, 2023, the master lease for one of the Company’s 226 facilities was terminated and the facility is non-operational while undergoing renovations.

See below under “Lease Amendments and Terminations” for further detail.

As of December 31, 2023, 14 facilities were held for sale.

See Note 4, Impairment of Real Estate Investments, Assets Held for Sale, Net and Asset Sales for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, the Company’s total future contractual minimum rental income for all of its tenants, excluding operating expense reimbursements, was as follows (dollars in thousands):

As of December 31, 2023, the Company’s total future contractual minimum rental income for all of its tenants, excluding operating expense reimbursements, assets held for sale and assets being repurposed, was as follows (dollars in thousands):

2024 $ 200,650

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A summary of these purchase options is presented below (dollars in thousands):

Asset Type Properties Lease Expiration Next Option Open Date (1)

Asset Type (1)

Properties Lease Expiration Option Period Open Date (2)

Option Type (3)

Current Cash Rent (4)

SNF 11 November 2030 1/1/2023 (4)

SNF 1 March 2029 4/1/2022 (5)

SNF / Campus 2 October 2032 1/1/2023 (4)

SNF / Campus 1 (8)

October 2032 1/1/2024 (6)

SNF 4 November 2034 12/1/2024 (5)

(1) Excludes a purchase option on an 11 building SNF portfolio classified as held for sale as of December 31, 2023 and representing $ 5.1 million of current cash rent.

Tenant is currently not eligible to elect the option.

(2) The Company has not received notice of exercise for the option periods that are currently open.

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B - Fixed capitalization rate on lease revenue.

(3) Based on annualized cash revenue for contracts in place at December 31, 2022.

(4) Option window is open for six months.

(4) Based on annualized cash revenue for contracts in place as of December 31, 2023.

(5) Option window is open until the expiration of the lease term.

(6) Option window is open for six months from the option period open date.

(7) Purchase option reflects two option types.

(8) Excludes one property classified as held for sale as of December 31, 2023 and subsequently sold in the first quarter of 2024.

Rental Income

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Straight-line rent ( 29 ) 17 32

Amortization of below-market lease intangible 384 — —

Adjustment for collectibility (2)

— ( 1,417 ) —

Recoveries (3)

Lease termination revenue (3)

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For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received.

Tenant operating expense reimbursements for the years ended December 31, 2023, 2022 and 2021 were $ 5.5 million, $ 2.8 million, and $ 3.6 million, respectively.

(2) During the year ended December 31, 2022, and in accordance with ASC 842, the Company evaluated the collectibility of lease payments through maturity and determined that it was not probable that the Company would collect substantially all of the contractual obligations from five existing and former operators.

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If lease payments are subsequently deemed probable of collection, the Company will reestablish the receivable which will result in an increase in rental income for such recoveries.

(3) During the year ended December 31, 2020, the Company recovered $ 1.0 million in rental income related to affiliates of Metron Integrated Health Systems (“Metron”) that was previously written off.

(3) In connection with the agreement to terminate its lease agreements with Metron Integrated Health Systems (“Metron”) and to sell the facilities to a third-party, the Company received certain lease termination payments from Metron.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) In connection with the agreement to terminate its lease agreements with Metron and to sell the facilities to a third-party, the Company received certain lease termination payments from Metron.

During the years ended December 31, 2021 and 2020, the Company recognized approximately $ 0.1 million and $ 1.2 million in lease termination revenue, respectively.

Recent Real Estate Acquisitions

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Type of Property Purchase Price (1)

Initial Annual Cash Rent Number of Properties Number of Beds/Units (2)

Initial Annual Cash Rent (2)

Number of Properties Number of Beds/Units (3)

December 31, 2023

Skilled nursing (4) (5)

$ 169,181 $ 13,764 10 1,256

Multi-service campuses (5)

25,276 1,916 1 168

Assisted living 39,318 3,495 4 241

Total $ 233,775 $ 19,175 15 1,665

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Multi-service campuses 13,003 1,235 1 130

Assisted living 12,395 — (5) 2 98

Total $ 21,921 $ 2,050 2 265

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(1) Purchase price includes capitalized acquisition costs.

(2) Initial annual cash rent represents initial cash rent for the first twelve months excluding the impact of straight-line rent or rent abatement in the first one to three months, if applicable.

(3) The number of beds/units includes operating beds at acquisition date.

(3) Initial annual cash rent represents initial cash rent for the first twelve months excluding any impact of straight-line rent.

(4) Includes three SNFs held through joint ventures.

See Note 11, Variable Interest Entities , for additional information.

One SNF is currently leased under a short-term lease and a new long-term lease has been entered into with one of the Company’s existing operators and it is expected that this lease will become effective once regulatory approval is obtained.

Initial annual cash rent does not consider a rent deferral of $ 420,000 in the first year upon commencement of the long-term lease to be repaid in 15 installments beginning in year 2.

The two other SNFs held through a joint venture are under separate leases with an initial annual rent of $ 2.0 million.

The leases provide for a rent reset in which the joint venture may propose rent, capped at 10 % of gross revenues, effective January 1, 2027.

If the proposed rent reset is not accepted, the joint venture has the option to replace the current tenant.

(5) One acquisition including three SNFs and one multi-service campus provides for annual fixed increases from $ 6.8 million in year one to $ 7.6 million in year two and $ 8.9 million in year three.

(6) Initial annual cash rent represents the first twelve months of rent upon commencement of the Company’s long-term net leases, which occurred during the three months ended June 30, 2021, upon the tenant’s receipt of licensing approval and increases to $ 9.4 million in the second year with CPI-based annual escalators thereafter.

(7) Initial annual cash rent is zero until transfer of operations upon receipt of licensing approval.

Lease Amendments

Lease Amendments and Terminations

New Embassy Lease and Hillstone Lease Amendment and Termination.

Effective January 1, 2024, the Company entered into a new triple-net master lease with Embassy Healthcare Holdings, Inc.

(“Embassy”) with respect to one multi-service campus, formerly leased to an affiliate of Hillstone Healthcare, Inc.

(“Hillstone”).

The Embassy lease had an initial term at the date of the lease of approximately 10 years with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the lease is approximately $ 0.6 million and the master lease provides Embassy with a partial rent abatement until required authorizations with respect to the ALF portion of the facility are obtained and occupancy levels reach a certain percentage.

On March 24, 2023, the Company amended its master lease with affiliates of Hillstone.

In connection with the lease amendment, the Company agreed to defer rent of approximately $ 0.7 million for 12 months from December 2022 through November 2023 to be repaid as a percentage of adjusted gross revenues of one underlying facility, as defined in the amended lease, beginning January 1, 2025, until deferred rent has been paid in full.

On December 31, 2023, the Company terminated its master lease with Hillstone.

Annual cash rent under the Hillstone master lease prior to lease termination was approximately $ 1.3 million.

Hillstone paid a lease termination fee of approximately $ 0.8 million to cover unpaid contractual rent.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Noble NJ Lease Termination and New Ridgeline NJ Lease.

On October 24, 2023, the Company entered into a new master lease (the “Ridgeline NJ Lease”) with affiliates of Ridgeline Properties, LLC (“Ridgeline”) to lease two ALFs in New Jersey which were non-operational and under a short-term lease (the “Noble NJ Lease”) which was terminated in connection with the Ridgeline NJ Lease.

The Ridgeline NJ Lease had an initial term at the date of the lease of approximately 10 years from the facility opening date, which is expected to occur in the second quarter of 2024 upon final regulatory approval and final licensing of both facilities, with two five-year renewal options and CPI-based escalators.

Annual cash rent under the Ridgeline NJ Lease is approximately $ 1.0 million beginning on the first day of the second lease year.

Premier Termination and Amended Ridgeline Lease.

Effective September 1, 2023, six ALFs in Michigan and North Carolina were removed from the master lease with affiliates of Premier Senior Living, LLC (“Premier”) and the Company terminated the Premier master lease.

Annual cash rent under the Premier master lease prior to lease termination was approximately $ 2.7 million.

In connection with the lease termination, the Company amended its existing triple-net master lease with affiliates of Ridgeline with respect to the six ALFs.

The Ridgeline lease had a remaining term at the date of the lease amendment of approximately 15 years with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the amended lease increased by approximately $ 2.7 million.

The amended lease provides for $ 0.2 million in rent abatement and a $ 0.2 million rent deferral to be repaid beginning in December 2024.

Amended Pennant Lease.

On July 6, 2023, the Company amended its master lease with affiliates of Pennant (the “Pennant Master Lease”).

In connection with the lease amendment, the Company extended the initial lease term.

The Pennant Master Lease, as amended, had a remaining term at the date of amendment of approximately 15 years, with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the amended Pennant Master Lease remained unchanged.

Amended Momentum Lease .

On April 1, 2023, the Company acquired one SNF.

In connection with the acquisition, the Company amended its existing triple-net master lease with affiliates of Momentum Skilled Services (“Momentum”) to include the one SNF and extended the initial lease term.

The Momentum master lease, as amended, had a remaining term at the date of amendment of approximately 15 years, with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the amended lease increased by approximately $ 1.0 million.

Noble VA Lease Termination and New Pennant Lease.

Effective March 16, 2023, two ALFs in Wisconsin were removed from a master lease with affiliates of Noble VA Holdings (“Noble VA”) and the Company terminated the applicable Noble VA master lease.

Annual cash rent under the applicable Noble VA master lease prior to lease termination was approximately $ 2.3 million.

In connection with the lease termination, the Company entered into a new lease (the “New Pennant Lease”) with Pennant with respect to the two ALFs.

The New Pennant Lease had an initial term at the date of the lease of approximately 15 years with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the new lease was approximately $ 0.8 million and the master lease provides Pennant with three months deferred rent to be repaid before the expiration or termination of the lease.

Noble Partial Lease Termination and New Landmark Leases.

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Pennant Partial Lease Termination and Amended Ensign Master Leases.

On April 1, 2022, operations at two ALFs in California and Washington operated by affiliates of The Pennant Group, Inc.

(“Pennant”) were transferred to affiliates of The Ensign Group, Inc.

On April 1, 2022, operations at two ALFs in California and Washington operated by Pennant were transferred to Ensign.

In connection with the transfers, the Company amended the Pennant Master Lease to reflect the removal of the two ALFs and amended two existing Ensign Master Leases to include the two ALFs.

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The Company closed on the acquisition of the two facilities in December 2021 and the deferred rent, as well as all contractual rent for the fourth quarter of 2021, was paid in full.

The two facilities are currently leased back to Noble under a short-term lease agreement while the Company pursues other tenants for the long-term.

The two facilities were leased back to Noble under a short-term lease agreement while the Company pursued other tenants for the long-term.

Amended Ensign Master Lease .

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Premier Partial Lease Termination and Amended Noble VA Master Lease .

On March 10, 2021 and July 1, 2021, two assisted living facilities in Wisconsin operated by affiliates of Premier Senior Living, LLC (“Premier”) were transferred to affiliates of Noble VA Holdings, LLC (“Noble VA”).

On March 10, 2021 and July 1, 2021, two assisted living facilities in Wisconsin operated by affiliates of Premier were transferred to affiliates of Noble VA.

In connection with the transfer, the Company partially terminated the Premier master lease and amended the existing triple-net master lease with Noble VA to include the two assisted living facilities.

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Initial annual cash rent under the amended Noble VA master lease increased by approximately $ 1.3 million on March 10, 2021 and approximately $ 1.0 million on July 1, 2021 and annual cash rent under the partially terminated Premier master lease decreased by approximately the same amount.

See above under “Amended Noble Master Leases and New Noble NJ Master Lease” for additional information regarding the Company’s leases with Noble.

Twenty/20 Lease Termination and New Noble VA Master Lease .

On December 1, 2020, five assisted living facilities in Virginia operated by Twenty/20 Management, Inc.

(“Twenty/20”) were transferred to affiliates of Noble VA.

In connection with the transfer, the Company entered into a new triple-net master lease with Noble VA.

The lease had an initial term of approximately 14 years as of December 1, 2020, with two five-year renewal options and CPI-based rent escalators.

Initial annual cash rent under the new lease is approximately $ 3.2 million .

See above under “Amended Noble Master Leases and New Noble NJ Master Lease” for additional information regarding the Company’s leases with Noble.

See above under “Noble VA Lease Termination and New Pennant Lease” and “Amended Noble Master Leases and New Noble NJ Master Lease” for additional information regarding the Company’s leases with Noble.

IMPAIRMENT OF REAL ESTATE INVESTMENTS, ASSETS HELD FOR SALE, NET AND ASSET SALES

In connection with the Company’s ongoing review and monitoring of its investment portfolio and the performance of its tenants, during the first quarter of 2022, the Company determined to pursue the sale of 27 properties and the repurposing of three properties representing an aggregate of approximately 10 % of contractual cash rent as of March 31, 2022.

As of March 31, 2022, the Company determined that these 27 properties met the criteria to be classified as assets held for sale.

During the year ended December 31, 2022, the Company recognized an aggregate impairment charge of $ 79.1 million, of which $ 45.0 million related to 12 facilities that have been sold, $ 18.0 million related to 10 facilities that were classified as held for sale in the first quarter of 2022 and reclassified to held for use in the third and fourth quarters of 2022, $ 14.4 million related to five facilities that were held for sale as of December 31, 2022, and $ 1.7 million related to one facility that was held for use during the year.

For properties classified as held for sale, the impairment charges were recognized to write down the properties to the lower of their carrying value or their aggregate fair value, less estimated costs to sell.

For properties classified as held for use, the impairment charges were recognized to write down the properties to their fair value.

Following the asset sales and held for sale reclassifications discussed below, five properties continued to meet the criteria to be classified as held for sale as of December 31, 2022.

As of December 31, 2022, the real estate comprising the remaining five properties classified as held for sale had an aggregate carrying value of $ 12.3 million.

The fair value of the assets held for sale was based on estimated sales prices, which are considered to be Level 3 measurements within the fair value hierarchy.

Impairment of Real Estate Investments Held for Sale

During the year ended December 31, 2023, the Company recognized aggregate impairment charges of $ 36.3 million, of which $ 26.8 million related to properties held for sale, $ 8.0 million related to properties held for investment, and $ 1.5 million related to properties that were sold.

During the year ended December 31, 2022, the Company recognized aggregate impairment charges of $ 79.1 million, of which $ 14.4 million related to properties held for sale, $ 19.7 million related to properties held for investment, and $ 45.0 million related to properties that were sold.

These charges are reported in impairment of real estate investments in the consolidated statements of operations.

During the year ended December 31, 2021, the Company did not recognize any impairment charges.

As of December 31, 2023, there were 14 facilities classified as held for sale, all of which have been marked down to fair value less estimated costs to sell.

The fair values of the assets held for sale were based on estimated sales prices, which are considered to be Level 3 measurements within the fair value hierarchy.

Estimated sales prices were determined using a market approach (comparable sales model), which relies on certain assumptions by management, including:

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There are inherent uncertainties in making these assumptions.

For the Company’s impairment calculations, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 20,000 to $ 85,000 , with a weighted average price per unit of $ 55,000 .

Asset Sales and Held for Sale Reclassifications

During the first quarter of 2022, the Company determined that one ALF that was classified as held for sale at December 31, 2021 no longer met the held for sale criteria.

The Company reclassified this ALF’s carrying value of $ 4.8 million out of assets held for sale and recorded catch-up depreciation of approximately $ 0.1 million during the year ended December 31, 2022.

During the first quarter of 2022, the Company closed on the sale of one SNF, operated by affiliates of Cascadia Healthcare, LLC (“Cascadia”), consisting of 83 beds located in Washington with a carrying value of $ 0.8 million, for net sales proceeds of $ 1.0 million.

During the year ended December 31, 2022, the Company recorded a gain of $ 0.2 million in connection with the sale.

There was no rent reduction under the Cascadia master lease in connection with the sale.

For the Company’s impairment calculations on assets held for sale during the twelve months ended December 31, 2023, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 8,000 to $ 85,000 , with a weighted average price per unit of $ 20,000 .

For the Company’s impairment calculations on assets held for sale during the twelve months ended December 31, 2022, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 20,000 to $ 85,000 , with a weighted average price per unit of $ 55,000 .

Impairment of Real Estate Investments Held for Investment

During the year ended December 31, 2023, the Company recognized an impairment charge of $ 8.0 million related to one SNF.

The Company wrote down its carrying value of $ 8.7 million to its estimated fair value of $ 0.7 million, which is included in real estate investments, net on the Company’s consolidated balance sheets.

The fair value of the asset was based on comparable market transactions and considered Level 3 measurements within the fair value hierarchy.

For the Company’s impairment calculation, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit of $ 7,000 .

During the year ended December 31, 2022, the Company recognized an impairment charge of $ 1.7 million related to one SNF.

The Company wrote down its carrying value of $ 2.8 million to its estimated fair value of $ 1.1 million, which is included in real estate investments, net on the Company’s condensed consolidated balance sheets.

The fair value of the asset was based on comparable market transactions and considered Level 3 measurements within the fair value hierarchy.

For the Company’s impairment calculation, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit of $ 20,000 .

During the third quarter of 2022, the Company determined that one ALF, with a carrying value of $ 4.9 million, that was classified as held for sale at June 30, 2022 no longer met the held for sale criteria.

The Company reclassified this ALF out of assets held for sale at its fair value at the date of the decision not to sell of approximately $ 4.9 million, or a weighted average

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company reclassified this ALF out of assets held for sale at its fair value at the date of the decision not to sell of approximately $ 4.9 million, or a weighted average price per unit of $ 125,000 .

During the third quarter of 2022, the Company closed on the sale of six SNFs and one multi-service campus, operated by affiliates of Trio Healthcare Holdings, LLC (“Trio”), consisting of 708 beds located in Ohio for net proceeds of $ 32.8 million.

In connection with the sale, the Company provided affiliates of the purchaser of the properties with a $ 7.0 million term loan that bears interest at 8.5 % and has a maturity date of September 30, 2025.

The Company also provided a $ 5.0 million bridge loan to four individuals that bore interest at 8.5 % and was subsequently repaid during the fourth quarter of 2022.

Prior to their sale, the seven properties were classified as held for sale, with a carrying value of $ 46.9 million.

During the year ended December 31, 2022, the Company recorded a loss of $ 2.1 million in connection with the sale.

During the fourth quarter of 2022, the Company closed on the sale of five ALFs, operated by affiliates of Noble VA Holdings, LLC (“Noble”), consisting of 301 beds located in Virginia for net proceeds of $ 11.0 million.

Prior to their sale, the five properties had been classified as held for sale at September 30, 2022, with a carrying value of $ 12.7 million.

During the year ended December 31, 2022, the Company recorded a loss of $ 1.7 million in connection with the sale.

price per unit of $ 125,000 .

During the year ended December 31, 2022, the Company recognized approximately $ 1.4 million in impairment charges related to this one ALF.

During the fourth quarter of 2022, the Company determined that nine ALFs, with a carrying value of $ 50.8 million, that were classified as held for sale at September 30, 2022, no longer met the held for sale criteria.

The Company reclassified the nine ALFs out of assets held for sale at their fair value at the date of the decision not to sell of approximately $ 47.8 million.

During the year ended December 31, 2022, the Company recognized approximately $ 16.6 million in impairment charges related to these nine ALFs.

The fair value of assets reclassified as real estate investments held for use was based on an income approach using current market conditions and considers matters such as the forecasted operating cash flows, lease coverage ratios, capitalization rates, and, where applicable, terms of recent lease agreements or the results of negotiations with prospective tenants, which are considered to be Level 3 measurements within the fair value hierarchy.

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When utilizing an income approach, assumptions include, but are not limited to, terminal capitalization rates ranging from 7.5 % to 8.75 % and discount rates ranging from 8.5 % to 9.75 %.

Impairment of Assets Held For Use

During the second quarter of 2022, the Company recognized an impairment charge of $ 1.7 million related to one SNF.

The Company wrote down its carrying value of $ 2.8 million to its estimated fair value of $ 1.1 million, which is included in real estate investments, net on the Company’s consolidated balance sheets.

The fair value of the asset was based on comparable market transactions.

For the Company’s impairment calculation, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit of $ 20,000 .

Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):

Twelve Months Ended December 31,

2023 2022 (1)

Number of facilities 5 13 1

Net sales proceeds (2)

$ 18,313 $ 57,149 $ 7,178

Net carrying value 16,095 60,918 7,255

Net gain (loss) on sale $ 2,218 $ ( 3,769 ) $ ( 77 )

(1) Net sales proceeds, net carrying value and net gain (loss) on sale also reflect a land parcel that was sold in each of the years ended December 31, 2022 and 2021, which is not included in the number of facilities.

(2) Net sales proceeds includes $ 2 million of seller financing in connection with the sale of one ALF in June 2023.

Net sales proceeds includes $ 12 million of seller financing in connection with the sale of six SNFs and one multi-service campus in September 2022.

The following table summarizes the Company’s assets held for sale activity for the year ended December 31, 2023 (dollars in thousands):

Net Carrying Value Number of Facilities

December 31, 2022 $ 12,291 5

Additions to assets held for sale 47,114 14

Assets sold ( 16,095 ) ( 5 )

Impairment of real estate held for sale ( 28,299 ) —

December 31, 2023 $ 15,011 14

CARETRUST REIT, INC.

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Investment Facility Count and Type Principal Balance as of December 31, 2023

Book Value as of December 31, 2022

Book Value as of December 31, 2021

Fair Value as of December 31, 2023

Fair Value as of December 31, 2022

Weighted Average Contractual Interest Rate Maturity Date

Senior mortgage secured loan receivable 18 SNF/Campus

$ 75,000 $ 72,543 $ — 8.4 % (1) 6/30/2027

Mortgage secured loan receivable 5 SNF

22,250 21,345 — 10.2 % (2) 8/1/2025

Mortgage secured loan receivable 4 SNF

24,900 23,796 — 9.0 % (2) 9/8/2025

Mezzanine loan receivable 9 SNF

Mortgage secured loans receivable 30 SNF, 3 ALF, 2 Campus & ILF

$ 165,197 $ 156,769 $ 117,684 8.9 % (1), (2) 5/31/2024 - 6/29/2033

Mezzanine loan receivable 18 SNF/Campus

Mezzanine loans receivable 18 SNF/Campus

25,000 21,799 38,684 11.0 % 6/30/2032

Total $ 190,197 $ 178,568 $ 156,368

(1) Rate is net of subservicing fee.

(2) Term secured overnight financing rate (“SOFR”) used as of December 31, 2022 was 4.33 %.

(1) Rates are net of subservicing fee, if applicable.

(2) Two mortgage secured loans receivable use term secured overnight financing rate (“SOFR”).

Term SOFR used as of December 31, 2023 was 5.35 %.

Rates are net of subservicing fees.

The following table summarizes the Company’s other real estate related investments activity for the year ended December 31, 2022 and 2021 (dollars in thousands):

The following table summarizes the Company’s other real estate related investments activity for the years ended December 31, 2023, 2022, and 2021 (dollars in thousands):

For the Year Ended December 31,

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Accrued interest, net 388 1,165 155

Unrealized loss on other real estate related investments ( 7,102 ) —

Unrealized loss on other real estate related investments, net ( 6,485 ) ( 7,102 ) —

Prepayments of other real estate related investments ( 25,537 ) — —

Net increase in other real estate related investments, at fair value $ 22,200 $ 141,213 $ 155

2023 Other Real Estate Related Investment Transactions

On December 15, 2023, a partial payment of $ 10.5 million was made on one $ 22.3 million mortgage loan receivable.

See below under “2022 Other Real Estate Related Investment Transactions” for further detail.

On March 30, 2023, one $ 15.0 million mezzanine loan was prepaid in full.

The $ 15.0 million mezzanine loan was originated in 2020 for nine skilled nursing facilities secured by membership interests in the borrower, with an annual interest rate of 12 %.

On November 29, 2023, the Company extended a $ 6.3 million mortgage loan to an assisted living real estate owner.

The mortgage loan is secured by one ALF and bears interest at a rate of 9.9 %.

The mortgage loan is set to mature on June 1, 2026, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee of 2 % of the loan plus unpaid interest payments;

provided, however, that no exit fee is payable in connection with the loan being refinanced pursuant to a loan (or loans) provided by Fannie Mae, Freddie Mac, Federal Housing Administration, or a similar governmental authority.

The Company elected the fair value option for the mortgage loan.

On September 29, 2023, the Company extended a $ 3.6 million mortgage loan as part of a larger, multi-tranche real estate secured term loan facility to a skilled nursing real estate owner.

The secured term loan was structured with an “A” and a “B” tranche (with the payments on the “B” tranche being subordinate to the “A” tranche pursuant to the terms of a written agreement between the lenders).

The Company’s $ 3.6 million secured mortgage loan constituted the entirety of the “B” tranche with its payments subordinated accordingly and bears interest at a rate of 12.0 %.

The mortgage loan is secured by three SNFs.

The mortgage loan is set to mature on September 29, 2026, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 0% to 2 % of any proposed financing in connection with the loan being refinanced by the U.S.

Department of Housing and Urban Development (“HUD”).

The Company elected the fair value option for the mortgage loan.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On July 17, 2023, the Company extended a $ 15.7 million mortgage loan to a skilled nursing real estate owner.

The mortgage loan is secured by two SNFs and bears interest at a rate of 9.0 %.

The mortgage loan is set to mature on August 1, 2028, with one five-year extension option and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 2 % to 3 % of the loan plus unpaid interest payments;

The Company elected the fair value option for the mortgage loan.

On June 29, 2023, the Company extended a $ 26.0 million mortgage loan to a skilled nursing real estate owner.

The mortgage loan is secured by one SNF campus and one ILF and bears interest at a rate of 9.0 %.

The mortgage loan is set to mature on June 29, 2033 and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 0% to 3 % of the loan plus unpaid interest payments.

The Company elected the fair value option for the mortgage loan.

On June 1, 2023, the Company closed on the sale of one ALF.

In connection with the sale, the Company provided affiliates of the purchaser of the properties with a $ 2.0 million mortgage loan which bears interest at a rate of 9.0 %.

The mortgage loan is secured by the ALF and is set to mature on May 31, 2024.

The mortgage loan has a one-year extension option and may be prepaid in whole before the maturity date.

The Company elected the fair value option for the mortgage loan.

2022 Other Real Estate Related Investment Transactions

In September 2022, the Company extended a $ 24.9 million term loan as part of a larger, multi-tranche real estate secured term loan facility to a skilled nursing real estate owner.

1 unchanged sentence

The Company’s $ 24.9 million secured term loan constituted the entirety of the “B” tranche with its payments subordinated accordingly.

The secured term loan is primarily secured by four skilled nursing faciliti es operated by an operator in the Southeast.

The “B” tranche secured term loan is set to mature on September 8, 2025, with two one-year extension options and ma y (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 1 % to 3 % of the loan plus unpaid interest payments;

The secured term loan is primarily secured by four skilled nursing facilities operated by an operator in the Southeast.

The “B” tranche secured term loan is set to mature on September 8, 2025, with two one-year extension options and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 1 % to 3 % of the loan plus unpaid interest payments;

provided, however, that no exit fee is payable in connection with portions of the loan being refinanced pursuant to a loan (or loans) provided by or insured by the United States Department of Housing and Urban Development, Federal Housing Administration, or a similar governmental authority.

8 unchanged sentences

The Company’s $ 22.3 million secured term loan constituted the entirety of the “B” tranche with its payments subordinated accordingly.

The secured term loan is primarily secured by five skilled nursing facilities, four of which are operated by an existing o perator and one of which is operate d by a large, regional skilled nursing operator.

The “B” tranche secured term loan is set to mature on August 1, 2025, with two one-year extension options and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an ex it fee ranging from 2 % to 3 % of the loan plus unpaid interest payments;

The secured term loan is primarily secured by five skilled nursing facilities, four of which are operated by an existing operator and one of which is operated by a large, regional skilled nursing operator.

The “B” tranche secured term loan is set to mature on August 1, 2025, with two one-year extension options and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 2 % to 3 % of the loan plus unpaid interest payments;

provided, however, that no exit fee is payable in connection with portions of the loan being refinanced pursuant to a loan (or loans) provided by or insured by HUD, Federal Housing Administration, or a similar governmental authority.

The "B" tranche secured term loan bears interest at a rate based on term secured overnight financing rate, calculated as a fraction, with the numerator being the difference between (i) the monthly payment of interest of term SOFR plus a 4.25 % spread and (ii) the amount of such monthly payment of interest of term SOFR plus a 2.75 % spread, and with the denominator being the average daily balance of the outstanding principal amount during the applicable month, with such fraction expressed as a percentage and annualized, with a term SOFR floor of 1.0 % and less a subservicing fee of 50 % over 8.25 %.

1 unchanged sentence

The Company elected the fair value option for the “B” tranche secured term loan.

In December 2023, in accordance with the terms and conditions set forth in the loan agreement, the borrower elected to cause one of the skilled nursing facilities to be released from the loan, and in connection with the same, the borrower partially prepaid the loan in the amount of $ 10.5 million.

In June 2022, the Company extended a $ 75.0 million term loan to a skilled nursing real estate owner as part of a larger, multi-tranche, senior secured term loan facility.

5 unchanged sentences

The “C” tranche senior secured term loan is set to mature on June 30, 2027 and may (subject to certain restrictions) be prepaid in whole or in part before the maturity date for an exit fee ranging from 1 % to 3 % of the loan plus unpaid interest payments through the end of the month of prepayment;

The mezzanine loan bears interest at 11 % and is secured by a pledge of membership interests in an up-tier affiliate of the borrower group.

4 unchanged sentences

The Company’s primary purpose in electing the fair value option for these instruments was to align with management’s view of the underlying economics of the loans and the manner in which they are managed.

Preferred Equity Investment

In December 2023, the Company completed a $ 1.8 million preferred equity investment in E3 Acquisition, LLC, which owns the borrowers under the $ 3.6 million mortgage loan noted above under “ 2023 Other Real Estate Related Investment Transactions.” The preferred equity investment yields a return of 15 % calculated on the outstanding carrying value of the investment.

The preferred equity investment is expected to be repaid with proceeds from the refinancing of the Company’s $ 3.6 million mortgage loan with HUD, provided, however, that if the repayment occurs sooner than 15 months from the investment date, the Company will receive the amount had the preferred equity investment remained outstanding for the full 15 months.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Loans Receivables

As of December 31, 2023 and 2022, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s consolidated balance sheets, consisted of the following (dollars in thousands):

7 unchanged sentences

Total $ 17,094 $ 15,062 $ 7,506

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s other loans receivable activity for the year ended December 31, 2022 and 2021 (dollars in thousands):

The following table summarizes the Company’s other loans receivable activity for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):

For the Year Ended December 31,

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Expected credit losses and recoveries are recorded in provision for loan losses, net in the consolidated statements of operations.

During the year ended December 31, 2022, the Company recorded a $ 4.6 million expected credit loss related to two other loans receivable that were placed on non-accrual status, net of a loan loss recovery of $ 0.8 million related to a loan previously written-off.

During the year ended December 31, 2022, the Company recorded a $ 4.6 million expected credit loss related to two other loans receivable that have been placed on non-accrual status, including an unfunded loan commitment of $ 0.4 million, net of a loan loss recovery of $ 0.8 million related to a loan previously written-off.

During the year ended December 31, 2022, the Company fully reserved and wrote-off $ 2.5 million, related to one other loan receivable, in connection with the sale of six SNFs and one multi-service campus.

As of December 31, 2021, the Company had no expected credit loss and did not consider any loan receivable investments to be impaired.

During the years ended December 31, 2023 and 2021, the Company had no additional expected credit loss and did not consider any loan receivable investments to be impaired.

The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the years ended December 31, 2023, 2022 and 2021 ( dollar amounts in thousands):

For Year Ended December 31,

For the Year Ended December 31,

Investment 2023 2022 2021

2 unchanged sentences

Preferred equity investments 18 — —

Other loans receivable 847 284 331

Other 1,294 — —

Total $ 19,171 $ 8,626 $ 2,156

(1) As of December 31, 2022 and 2021, the Company had no preferred equity investments .

FAIR VALUE MEASUREMENTS

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GAAP guidance defines three levels of inputs that may be used to measure fair value:

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

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The Company does not expect that changes in classifications between levels will be frequent.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021, aggregated by the level in the fair value hierarchy within which those instruments fall (dollars in thousands):

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of December 31, 2023 and 2022, aggregated by the level in the fair value hierarchy within which those instruments fall (dollars in thousands):

Level 1 Level 2 Level 3 Balance as of December 31, 2023

Mortgage secured loans receivable $ — $ — $ 156,769 $ 156,769

Mezzanine loans receivable — — 38,684 38,684

Mezzanine loan receivable — — 21,799 21,799

Total $ — $ — $ 178,568 $ 178,568

Level 1 Level 2 Level 3 Balance as of December 31, 2022

Mezzanine loan receivable $ — $ — $ 15,155 $ 15,155

Mortgage secured loans receivable $ — $ — $ 117,684 $ 117,684

Mezzanine loans receivable — — 38,684 38,684

Total $ — $ — $ 156,368 $ 156,368

The following table details the Company’s assets measured at fair value on a recurring basis using Level 3 inputs (dollars in thousands):

1 unchanged sentence

Balance at December 31, 2022

$ 117,684 $ 38,684

Loan originations 53,834 —

Accrued interest, net 543 ( 155 )

Unrealized loss on other real estate related investments ( 5,394 ) ( 1,708 )

Unrealized losses on other real estate related investments, net ( 4,755 ) ( 1,730 )

Repayments ( 10,537 ) ( 15,000 )

Balance as of December 31, 2023

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As such, the Company classifies each instrument as Level 3 due to the significant unobservable inputs used in determining market interest rates for investments with similar terms.

During the year ended December 31, 2023, the Company recorded an unrealized loss of $ 8.1 million on the Company’s secured and mezzanine loans receivable due to rising interest rates and a $ 0.3 million loss due to a loan origination fee paid, partially offset by unrealized gains of $ 0.7 million due to a decrease in projected forward interest rates and a reversal

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of a previously recognized unrealized loss of $ 1.2 million related to the repayment of one mezzanine loan receivable and partial repayment of one mortgage loan receivable.

During the year ended December 31, 2022, the Company recorded an unrealized loss of $ 7.1 million on the Company’s secured and mezzanine loans receivable due to rising interest rates.

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Mortgage secured loans receivable $ 156,769 Discounted cash flow Discount Rate 10 % - 15 %

Mezzanine loans receivable 38,684 Discounted cash flow Discount Rate 12 % - 14 %

Mezzanine loan receivable 21,799 Discounted cash flow Discount Rate 12 % - 15 %

For the year ended December 31, 2023, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

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Specifically, the fair value of the real estate investment is based on current market conditions and considers matters such as the forecasted operating cash flows, lease coverage ratios, capitalization rates, comparable sales data, and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers.

For the year ended December 31, 2022, the

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company recorded an impairment charge of $ 79.1 million.

For the years ended December 31, 2021 and 2020, there were no real estate assets deemed to be impaired.

For the years ended December 31, 2023 and 2022, the Company recorded impairment charges of $ 36.3 million and $ 79.1 million, respectively.

For the year ended December 31, 2021, there were no real estate assets deemed to be impaired.

See Note 4, Impairments of Real Estate Investments, Assets Held for Sale, Net and Asset Sales, for additional information.

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The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.

A summary of the face values, carrying amount and fair value of the Notes (as defined in Note 7, Debt , below) as of December 31, 2022 and 2021 using Level 2 inputs (dollars in thousands):

A summary of the face value, carrying amount and fair value of the Notes (as defined in Note 7, Debt , below) as of December 31, 2023 and 2022 using Level 2 inputs is as follows (dollars in thousands):

December 31, 2023 December 31, 2022

1 unchanged sentence

Value Carrying

Financial assets:

Preferred equity investment 3 $ 1,782 $ 1,801 $ 1,801 $ — $ — $ —

Financial liabilities:

2 unchanged sentences

The carrying values for these instruments approximate their fair values due to the short-term nature of these instruments.

Preferred equity investments:

The fair value of the preferred equity investment was estimated using an internal valuation model that considered the expected future cash flows of the investment, the underlying collateral value, market interest rates and other credit enhancements.

The Company utilized discount rates ranging from 14 % to 16 % with a weighted average of 15 % in its fair value calculation.

As such, the Company classifies these instruments as Level 3.

Senior unsecured notes payable :

The fair value of the Notes was determined using third-party quotes derived from orderly trades.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unsecured revolving credit facility and senior unsecured term loan:

The fair values approximate their carrying values as the interest rates are variable and approximate prevailing market interest rates for similar debt arrangements.

The following table summarizes the balance of the Company’s indebtedness as of December 31, 2022 and 2021 (in thousands):

The fair values approximate their carrying values as the interest rates are variable and approximate prevailing market interest rates and spreads for similar debt arrangements.

The following table summarizes the balance of the Company’s indebtedness as of December 31, 2023 and 2022 (dollars in thousands):

December 31, 2023 December 31, 2022

5 unchanged sentences

— — — 125,000 — 125,000

$ 600,000 $ ( 4,402 ) $ 595,598 $ 725,000 $ ( 5,502 ) $ 719,498

(1) Deferred financing fees are included in deferred financing costs, net on the balance sheet, and not reflected as a reduction to the unsecured revolving credit facility.

Senior Unsecured Notes Payable

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At any time on or after March 30, 2028, the Issuers may redeem some or all of the Notes at a redemption price equal to 100 % of the principal amount of the Notes redeemed plus accrued interest on the Notes, if any, to, but not including, the redemption date.

In addition, at any time on or prior to June 30, 2024, up to 40 % of the

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

aggregate principal amount of the Notes may be redeemed with the net proceeds of certain equity offerings at a redemption price of 103.875 % of the aggregate principal amount of Notes to be redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date.

In addition, at any time on or prior to June 30, 2024, up to 40 % of the aggregate principal amount of the Notes may be redeemed with the net proceeds of certain equity offerings at a redemption price of 103.875 % of the aggregate principal amount of Notes to be redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date.

If certain changes of control of the Company occur, the Issuers will be required to make an offer to holders of the Notes to repurchase their Notes at a price of 101 % of their principal amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

12 unchanged sentences

The indenture governing the Notes also contains customary events of default.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

7 unchanged sentences

Unsecured Revolving Credit Facility and Term Loan

On December 16, 2022, the Operating Partnership, as the borrower, the Company, as guarantor, CareTrust GP, LLC, and certain of the Operating Partnership’s wholly owned subsidiaries, entered into a second amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender (the “Second Amended Credit Agreement”).

The Second Amended Credit Agreement, which amends and restates the Company’s amended and restated credit and guaranty agreement, dated as of February 8, 2019 (as amended, the “Prior Credit Agreement”) provides for:

1 unchanged sentence

Future borrowings under the Second Amended Credit Facility will be used for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes.

On October 10, 2023, the Operating Partnership, the Company, CareTrust GP, LLC, certain of the Operating Partnership’s wholly owned subsidiaries and KeyBank National Association entered into the First Amendment to the Second Amended Credit Agreement (the “First Amendment”).

The First Amendment restates the definition of Consolidated Total Asset Value to include net proceeds from at-the-market forward commitments executed but not yet closed as of the relevant date as if such proceeds had actually been received.

The interest rates applicable to loans under the Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.10 % to 0.55 % per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Second Amended Credit Agreement) plus a margin ranging from 1.10 % to 1.55 % per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt).

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt).

The interest rates applicable to loans under the Term Loan are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.50 % to 1.20 % per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR plus a margin ranging from 1.50 % to 2.20 % per annum based on the debt to asset value ratio of the Company and its consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt).

In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Revolving Facility ranging from 0.15 % to 0.35 % per annum, based on the debt to asset value ratio of the Company and its consolidated subsidiaries (unless the Company obtains certain specified investment grade ratings on its senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125 % to 0.30 % per annum based on the credit ratings of the Company’s senior long-term unsecured debt).

As of December 31, 2022, the Operating Partnership had $ 200.0 million of borrowings outstanding under the Term Loan and $ 125.0 million outstanding under the Revolving Facility.

As of December 31, 2023, the Operating Partnership had $ 200.0 million of borrowings outstanding under the Term Loan and no borrowings outstanding under the Revolving Facility.

The Revolving Facility has a maturity date of February 9, 2027, and includes, at the sole discretion of the Operating Partnership, two six-month extension options.

The Term Loan has a maturity date of February 8, 2026.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Second Amended Credit Facility is guaranteed, jointly and severally, by the Company and its wholly owned subsidiaries that are party to the Second Amended Credit Agreement (other than the Operating Partnership).

5 unchanged sentences

As of December 31, 2023, the Company’s debt maturities were (dollars in thousands):

Thereafter 400,000

At-The-Market Offering —On March 10, 2020, the Company entered into a new equity distribution agreement to issue and sell, from time to time, up to $ 500.0 million in aggregate offering price of its common stock through an “at-the-market” equity offering program (the “ATM Program”), which expires in March 2023.

At-The-Market Offering —On February 24, 2023, the Company entered into an equity distribution agreement to issue and sell, from time to time, up to $ 500.0 million in aggregate offering price of its common stock through an “at-the-market” equity offering program (the “Previous ATM Program”).

On September 15, 2023, the Company terminated the Previous ATM Program and entered into a new equity distribution agreement to issue and sell, from time to time, up to $ 500.0 million in aggregate offering price of its common stock through an “at-the-market” equity offering program (the “New ATM Program” and together with the Previous ATM Program, the “ATM Program”).

In addition to the issuance and sale of shares of its common stock, the Company may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of the Company’s shares of common stock under the ATM Program.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the year ended December 31, 2020.

The following table summarizes ATM Program activity for the years ended December 31, 2022 and 2021 (in thousands, except per share amounts):

The Company expects to fully physically settle forward equity sales by delivery of shares of common stock to the forward purchaser and receive cash proceeds upon one or more settlement dates, which are typically a one-year term, at the Company’s discretion, prior to the final settlement date, at which time the Company expects to receive aggregate net cash proceeds at settlement equal to the number of shares sold on a forward basis multiplied by the relevant forward price per share.

The weighted average forward sale price that the Company expects to receive upon physical settlement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends through the settlement.

There were no outstanding ATM forward contracts that had not settled as of December 31, 2023.

The following tables summarize ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the years ended December 31, 2023, 2022 and 2021 (in thousands, except per share amounts):

For the Year Ended December 31,

2023 2022 2021

Number of shares 30,869 2,405 990

2 unchanged sentences

$ 643,802 $ 48,100 $ 23,505

(1) Total gross proceeds is before $ 0.6 million and $ 0.3 million of commissions paid to the sales agents during the year ended December 31, 2022 and 2021, respectively, under the ATM Program.

(1) Total gross proceeds is before $ 8.3 million, $ 0.6 million, and $ 0.3 million of commissions paid to the sales agents and forward adjustments during the years ended December 31, 2023, 2022 and 2021, respectively, under the ATM Program.

In addition, total gross proceeds is before other costs related to the ATM Program.

As of December 31, 2023, the Company had $ 274.1 million available for future issuances under the ATM Program.

Share Repurchase Program — On March 20, 2020, the Company’s Board of Directors authorized a share repurchase program up to $ 150.0 million of outstanding shares of the Company’s common stock (the “Repurchase Program”).

Repurchases under the Repurchase Program, which expires on March 31, 2023, may be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated share repurchase transactions, or other methods of acquiring shares, in each case subject to market conditions and at such times as shall be permitted by applicable securities laws and determined by management.

Repurchases under the Repurchase Program may also be made pursuant to a plan adopted under Rule 10b5-1 promulgated under the Exchange Act.

The Company expects to finance any share repurchases under the Repurchase Program using available cash and may also use short-term borrowings under the Revolving Facility.

The Company did no t repurchase any shares of common stock under the Repurchase Program during the years ended December 31, 2022, 2021 and 2020.

The Repurchase Program may be modified, discontinued or suspended at any time.

Dividends on Common Stock — The following table summarizes the cash dividends per share of common stock declared by the Company’s board of directors for 2023, 2022 and 2021 (dollars in thousands, except per share amounts):

16 unchanged sentences

Dividends record date March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021

(1) Dividends payable includes dividends on performance stock awards that will be paid if and when the shares subject to such awards vest.

(1) Dividends payable includes dividends on performance stock awards that will be paid if and when the shares subject to such awards vest if deemed probable of meeting their performance condition.

CARETRUST REIT, INC.

6 unchanged sentences

Under the Plan, 5,000,000 shares have been authorized for awards.

Under the Plan, restricted stock awards (“RSAs”) vest in equal annual installments beginning on the first anniversary of the grant date over a three year period for the RSAs granted in 2022 and 2021 and a four year period for the RSAs granted in 2020.

Under the Plan, restricted stock awards (“RSAs”) vest in equal annual installments over a three year period for the RSAs granted after 2020 and a four year period for the RSAs granted in 2020.

RSAs granted to non-employee members of the board of directors (“Board Awards”) vest in full on the earlier to occur of the Company’s next Annual Meeting of Stockholders or one year .

Performance stock awards (“PSA”) granted are subject to both time and performance based conditions and vest over a one -to three year period for PSAs granted in 2021 and over a one -to- four year period for PSAs granted in 2020.

Performance stock awards (“PSAs”) granted are subject to both time and performance based conditions and vest over a one -to three year period for PSAs granted in 2021 and over a one -to- four year period for PSAs granted in 2020.

The amount of such PSAs that will ultimately vest is dependent on the Company’s Normalized Funds from Operations (“NFFO”) per share, as defined by the Compensation Committee, meeting or exceeding a specified per share amount for the applicable vesting period.

Relative total shareholder return units (“TSR Units”) granted in 2022 and 2021 are subject to both time and market based conditions and cliff vest after a three-year period.

Relative total shareholder return units (“TSR Units”) granted since 2021 are subject to both time and market based conditions and cliff vest after a three-year period.

The amount of such market awards that will ultimately vest is dependent on the Company’s total shareholder return (“TSR”) performance relative to a custom TSR peer group consisting of other publicly traded healthcare REITs and will range from 0 % to 200 % of the TSR Units initially granted.

10 unchanged sentences

As of December 31, 2023, the weighted-average remaining vesting period of such awards was 1.7 years .

The following table summarizes the Company’s RSA, PSA and Board Award grants during the year ended December 31, 2022 (dollars in thousands, except per share amounts):

The following table summarizes the Company’s RSAs and Board Awards grants during the year ended December 31, 2023 (dollars in thousands, except per share amounts):

Grants Vested

11 unchanged sentences

RSAs 159,663 $ 19.56 $ 3,123

PSAs 108,414 22.48 2,437

Board Awards 25,992 16.93 440

3 unchanged sentences

Board Awards 20,266 24.18 490

(1) The Compensation Committee granted annual awards for 2023 in December 2022.

(2) In 2021, the Compensation Committee changed the structure of the grants that resulted in two long-term equity incentive awards being granted to the Company’s named executive officers in 2021.

4 unchanged sentences

Expected volatility is based on historical volatility for the most recent weighted average period ending on the grant date for the Company and the selected TSR peer group, and is calculated on a daily basis.

The following table reflects the weighted-average key assumptions used in this valuation for awards granted during the year ended December 31, 2022 and 2021 :

For the Year Ended December 31, 2022

The following table reflects the weighted-average key assumptions used in this valuation for awards granted during the years ended December 31, 2023, 2022 and 2021 :

For the Year Ended December 31, 2023

For the Year Ended December 31, 2022 For the Year Ended December 31, 2021

Risk-free interest rate 4.08 % 3.91 % 0.60 %

Expected stock price volatility 26.44 % 52.90 % 52.42 %

Expected service period 3.04 years 2.93 years

Expected service period 3.04 years 3.04 years 2.93 years

Expected dividend yield (assuming full reinvestment) — % — % — %

Fair value per share at date of grant $ 27.41 $ 26.53 $ 29.10

The total fair value of the TSR Units granted during the year ended December 31, 2022 and 2021 was $ 2.5 million and $ 5.3 million, respectively.

The total fair value of the TSR Units granted during the years ended December 31, 2023, 2022 and 2021 was $ 2.9 million, $ 2.5 million and $ 5.3 million, respectively.

The following table summarizes the stock-based compensation expense recognized (dollars in thousands):

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(LOSS) EARNINGS PER COMMON SHARE

The following table presents the calculation of basic and diluted (loss) earnings per common share (“EPS”) for the Company’s common stock for the years ended December 31, 2022, 2021 and 2020, and reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands, except per share amounts):

EARNINGS (LOSS) PER COMMON SHARE

The following table presents the calculation of basic and diluted earnings (loss) per common share attributable to CareTrust REIT, Inc.

(“EPS”) for the Company’s common stock for the years ended December 31, 2023, 2022 and 2021, and reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the years ended December 31, 2023, 2022 and 2021 (amounts in thousands, except per share amounts):

Year Ended December 31,

2023 2022 2021

Net (loss) income $ ( 7,506 ) $ 71,982 $ 80,867

Net income (loss) attributable to CareTrust REIT, Inc.

$ 53,735 $ ( 7,506 ) $ 71,982

Net income allocated to participating securities ( 400 ) ( 440 ) ( 507 )

1 unchanged sentence

Weighted-average basic common shares outstanding 105,956 96,703 96,017

Dilutive performance stock awards — 75 7

Dilutive potential common shares - performance stock awards 164 — 75

Dilutive potential common shares - forward equity agreements 32 — —

Weighted-average diluted common shares outstanding 106,152 96,703 96,092

(Loss) earnings per common share, basic $ ( 0.08 ) $ 0.74 $ 0.85

(Loss) earnings per common share, diluted $ ( 0.08 ) $ 0.74 $ 0.85

Antidilutive unvested restricted stock awards, total shareholder units and performance awards excluded from the computation 744 591 296

Earnings (loss) per common share attributable to CareTrust REIT, Inc., basic $ 0.50 $ ( 0.08 ) $ 0.74

Earnings (loss) per common share attributable to CareTrust REIT, Inc., diluted $ 0.50 $ ( 0.08 ) $ 0.74

Antidilutive unvested restricted stock awards, total shareholder units, performance awards, and forward equity shares excluded from the computation 475 744 591

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

VARIABLE INTEREST ENTITIES

Noncontrolling Interests —The Company has entered into ventures with unrelated third parties to own real estate and has concluded that such ventures are VIEs.

As the Company exercises power over and receives economic benefits from the VIEs, the Company is considered the primary beneficiary and consolidates the VIEs.

In August 2023, the Company entered into a joint venture (“JV”), pursuant to which the Company contributed $ 2.4 million into the JV, that was used to satisfy a deposit on a potential real estate acquisition.

In September 2023, the Company entered into a JV, pursuant to which the Company contributed $ 25.5 million into the JV that purchased one SNF located in California for $ 26.1 million.

The JV partner contributed the remaining $ 0.6 million of equity.

In October 2023, the Company entered into a JV, pursuant to which the Company contributed $ 34.3 million into the JV that purchased two SNFs located in California for $ 35.1 million.

The JV partner contributed the remaining $ 0.8 million of equity.

Pursuant to the Company’s JVs, the Company typically contributes 97.5 % of the JVs total investment amount and the Company receives 100 % of the preferred equity interest in the JV in exchange for 95 % of that total investment and a 50 % common equity interest in the JV in exchange for the remaining 2.5 % of that investment.

The JV partner contributes the remaining 2.5 % of the JVs total investment amount in exchange for a 50 % common ownership interest in the JV.

Total assets and total liabilities on the Company’s consolidated balance sheets include VIE assets and liabilities as follows (in thousands):

December 31, 2023

Real estate investments, net $ 68,106

Prepaid and other assets 2,800

Total assets 70,906

Accounts payable, accrued liabilities and deferred rent liabilities 7,239

Total liabilities $ 7,239

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Claims and lawsuits may include matters involving general or professional liability asserted against the Company’s tenants, which are the responsibility of the Company’s tenants and for which the Company is entitled to be indemnified by its tenants under the insurance and indemnification provisions in the applicable leases.

Capital expenditures for each property leased under the Company’s triple-net leases are generally the responsibility of the tenant, except that, for the facilities leased to subsidiaries of Ensign, under the Ensign Master Leases, and Pennant, the tenant will have an option to require the Company to finance certain capital expenditures up to an aggregate of 20 % of its initial investment in such property, subject to a corresponding rent increase at the time of funding.

In the normal course of business, the Company enters into various commitments, typically consisting of funding of capital expenditures and short-term working capital loans to existing tenants while they await licensure and certification or are conducting turnaround work in one or more of the Company’s properties.

Capital expenditures for each property leased under the Company’s triple-net leases are generally the responsibility of the tenant, except for the facilities leased under certain master lease agreements, with certain subsidiaries of Ensign and Pennant, under which the tenant will have an option to require the Company to finance certain capital expenditures up to an aggregate of 20 % of the Company’s initial investment in such property, subject to a corresponding rent increase at the time of funding.

For the Company’s other triple-net master leases, the tenants also have the option to request capital expenditure funding that would generally be subject to a corresponding rent increase at the time of funding, which are subject to tenant compliance with the conditions to the Company’s approval and funding of their requests.

As of December 31, 2022, the Company had committed to fund expansions, construction and capital improvements at certain triple-net leased facilities totaling $ 15.7 million, of which $ 2.7 million is subject to rent increase at the time of funding.

The Company has also provided select tenants with strategic capital for facility upkeep and modernization.

The Company’s Tenant Code of Conduct and Corporate Responsibility policy (the “Tenant ESG Program”) provides eligible triple-net tenants of the Company with monetary inducements to make sustainable improvements to the Company’s properties.

Incentive options include a wide variety of opportunities for tenants to upgrade everything from energy and environmental systems to water-saving landscaping and more.

The Company’s board of directors has authorized annual allocations of up to $ 500,000 to fund the Tenant ESG Program.

The table below summarizes the Company’s existing, known commitments and contingencies as of December 31, 2023 (in thousands):

Remaining Commitment

Capital expenditures (1)

Mortgage loans (2)

(1) As of December 31, 2023, the Company had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities totaling $ 9.2 million, of which $ 2.4 million is subject to rent increase at the time of funding.

(2) One mortgage loan includes an earnout advance upon satisfaction of certain conditions.

CONCENTRATION OF RISK

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Major operator concentration – The Company has operators from which it derived 10% or more of its rental revenue for the years ended December 31, 2022, 2021 and 2020.

Major operator concentration – The Company has operators from which it derived 10% or more of its revenue for the years ended December 31, 2023, 2022 and 2021.

The following table sets forth information regarding the Company’s major operators as of December 31, 2023, 2022 and 2021:

10 unchanged sentences

PMG 13 2 — 1,742 402 — 15 %

(1) The Company’s rental income, exclusive of operating expense reimburseme nts.

(1) See Note 3, Real Estate Investments, Net , for further information regarding Ensign and PMG.

2 unchanged sentences

The Company has not verified this information through an independent investigation or otherwise.

Major geographic concentration – The following table provides information regarding the Company’s concentrations with respect to certain states, from which the Company derived 10% or more of its rental revenue for the year ended December 31, 2022 and 2021:

(2) The Company’s rental income and interest income on other real estate related investments, exclusive of operating expense reimbursements and adjustments for collectibility.

(3) The Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

Major geographic concentration – The following table provides information regarding the Company’s concentrations with respect to certain states, from which the Company derived 10% or more of its revenue for the year ended December 31, 2023, 2022 and 2021:

Number of Facilities Number of Beds/Units Percentage of Total Revenue

6 unchanged sentences

TX 38 3 3 4,849 536 242 22 %

(1) The Company’s rental income, exclusive of operating expense reimburseme nts and adjustments for collectibility.

December 31, 2021 (2)

CA 27 8 5 3,048 1,359 449 25 %

TX 37 3 3 4,694 536 242 20 %

(1) Based on the Company’s rental income and interest income on other real estate related investments, exclusive of operating expense reimbursements and adjustments for collectibility.

(2) Based on the Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

SUBSEQUENT EVENTS

1 unchanged sentence

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Recent Asset Sale

On January 13, 2023, the Company closed on the sale of one ALF consisting of 105 beds located in Florida with a carrying value of $ 3.3 million, which approximated the net sales proceeds received.

The facility was classified as held for sale as of December 31, 2022.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Acquisitions and Investments

On January 3, 2024, the Company contributed $ 10.7 million into a JV that purchased one ALF located in California for $ 11.0 million.

In exchange, the Company holds 100 % of the preferred equity interests in the JV and 50 % of the common equity interest in the JV.

The JV partner contributed the remaining $ 0.3 million of the total investment in exchange for 50 % of the common equity interest in the JV.

The new lease has an initial term of approximately 10 years, with four five-year renewal options and 2 % fixed rent escalators beginning in year 3.

Annual cash rent under the lease is approximately $ 1.0 million.

On January 25, 2024, the Company extended a $ 9.8 million mezzanine loan to a skilled nursing real estate owner in connection with a portfolio of ten SNFs located in Missouri.

The mezzanine loan is secured by a pledge of membership interests in an affiliate of the borrower.

The loan bears interest at term SOFR plus 8.75 %, with a term SOFR floor of 6 %, payable monthly and net of a 0.75 % subservicing fee.

Commencing on February 1, 2026, monthly principal payments shall be due.

The mezzanine loan is set to mature on July 25, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1 % to 2 % of the loan plus unpaid interest payments equal to 24 months (less the amount of monthly interest payments made by the borrower through the date of prepayment).

On February 1, 2024, the Company extended a $ 7.4 million mezzanine loan to a skilled nursing real estate owner for one SNF located in California.

The mezzanine loan is secured by a pledge of membership interests in an affiliate of the borrower.

The loan bears interest at 11.5 %, payable monthly.

The mezzanine loan is set to mature on January 31, 2029 and may (subject to certain limited exceptions) not be prepaid prior to the date that is 18 months following the loan closing.

On February 2, 2024, the Company extended a $ 35.0 million mezzanine loan to a skilled nursing real estate owner in connection with 15 SNFs located in Virginia.

The mezzanine loan is secured by a pledge of membership interests in an affiliate of the borrower.

The loan bears interest at term SOFR plus 8.75 %, with a term SOFR floor of 6 %, payable monthly and net of a 0.75 % subservicing fee.

Commencing on February 2, 2026, monthly principal payments shall be due.

The mezzanine loan is set to mature on August 1, 2027, with two six-month extension options and may (subject to certain restrictions) be prepaid in whole before the maturity date for an exit fee ranging from 1 % to 2 % of the loan plus unpaid interest payments equal to 18 months (less the amount of monthly interest payments made by the borrower through the date of prepayment).

New Lease Agreement

Effective January 1, 2024, in connection with the December 31, 2023 Hillstone lease termination, one multi-service campus was removed from the Hillstone master lease.

In connection with the lease termination, the Company entered into a new lease with Embassy Healthcare Holdings, Inc.

(“Embassy”) with respect to the one multi-service campus.

The Embassy lease had an initial term at the date of the lease of approximately 10 years with two five-year renewal options and CPI-based rent escalators.

Subsequent to December 31, 2023, the Company closed on the sale of one SNF and one ALF with an aggregate carrying value of $ 1.0 million, which approximated the net sales proceeds received.

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

38 unchanged sentences

Jefferson Ralston Holdings LLC Arvada Arvada, CO — 280 1,230 834 280 2,064 2,344 ( 1,159 ) 2012 2009

Lafayette Health Holdings LLC Julia Temple Englewood, CO — 1,607 4,222 6,195 1,607 10,417 12,024 ( 6,529 ) 2012 2009

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

1 unchanged sentence

(dollars in thousands)

Lafayette Health Holdings LLC Julia Temple Englewood, CO — 1,607 4,222 6,195 1,607 10,417 12,024 ( 6,030 ) 2012 2009

Hillendahl Health Holdings LLC Golden Acres Dallas, TX — 2,133 11,977 1,421 2,133 13,398 15,531 ( 7,046 ) 1984 2009

36 unchanged sentences

Guadalupe Health Holdings LLC The Courtyard (Victoria East) Victoria, TX — 80 2,391 15 80 2,406 2,486 ( 587 ) 2013 2013

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(dollars in thousands)

49th Street Health Holdings LLC Omaha Omaha, NE — 129 2,418 24 129 2,442 2,571 ( 875 ) 1960 2013

1 unchanged sentence

Tulalip Bay Health Holdings LLC Mountain View Marysville, WA — 1,722 2,642 ( 980 ) 742 2,642 3,384 ( 925 ) 1966 2013

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2023

(dollars in thousands)

Sky Holdings AZ LLC Bella Vita Health and Rehabilitation Center Glendale, AZ — 228 1,124 1,380 228 2,504 2,732 ( 2,021 ) 2004 2002

7 unchanged sentences

CTR Partnership, L.P.

Shamrock Nursing and Rehabilitation Center Dublin, GA — 251 7,855 — 251 7,855 8,106 ( 1,473 ) 2010 2015

CTR Partnership, L.P.

Premier Estates of Cincinnati-Riverview Cincinnati, OH — 833 18,086 792 833 18,878 19,711 ( 3,936 ) 1992 2015

2 unchanged sentences

CTR Partnership, L.P.

Casa de Paz Sioux City, IA — 119 7,727 — 119 7,727 7,846 ( 1,336 ) 1974 2016

CTR Partnership, L.P.

Denison Care Center Denison, IA — 96 2,784 — 96 2,784 2,880 ( 481 ) 2015 2016

CTR Partnership, L.P.

Garden View Care Center Shenandoah, IA — 105 3,179 — 105 3,179 3,284 ( 550 ) 2013 2016

CTR Partnership, L.P.

Grandview Health Care Center Dayton, IA — 39 1,167 — 39 1,167 1,206 ( 202 ) 2014 2016

CTR Partnership, L.P.

Grundy Care Center Grundy Center, IA — 65 1,935 — 65 1,935 2,000 ( 335 ) 2011 2016

CTR Partnership, L.P.

Iowa City Rehab and Health Care Center Iowa City, IA — 522 5,690 — 522 5,690 6,212 ( 984 ) 2014 2016

CTR Partnership, L.P.

Lenox Care Center Lenox, IA — 31 1,915 — 31 1,915 1,946 ( 331 ) 2012 2016

CTR Partnership, L.P.

Osage Osage, IA — 126 2,255 — 126 2,255 2,381 ( 390 ) 2014 2016

CTR Partnership, L.P.

Pleasant Acres Care Center Hull, IA — 189 2,544 — 189 2,544 2,733 ( 440 ) 2014 2016

CTR Partnership, L.P.

Cedar Falls Health Care Center Cedar Falls, IA — 324 4,366 — 324 4,366 4,690 ( 737 ) 2015 2016

CTR Partnership, L.P.

Premier Estates of Highlands Norwood, OH — 364 2,199 623 143 943 1,086 ( 22 ) 2012 2016

CTR Partnership, L.P.

Shaw Mountain at Cascadia Boise, ID — 1,801 6,572 395 1,801 6,967 8,768 ( 1,520 ) 1989 2016

CTR Partnership, L.P.

The Oaks Petaluma, CA — 3,646 2,873 110 3,646 2,983 6,629 ( 519 ) 2015 2016

CTR Partnership, L.P.

Arbor Nursing Center Lodi, CA — 768 10,712 — 768 10,712 11,480 ( 1,986 ) 1982 2016

13 unchanged sentences

DuQuoin Nursing & Rehabilitation Center DuQuoin, IL — 511 3,662 — 511 3,662 4,173 ( 626 ) 2014 2017

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(dollars in thousands)

CTR Partnership, L.P.

30 unchanged sentences

Grapevine Medical Lodge Grapevine, TX — 1,602 4,536 891 1,602 5,427 7,029 ( 1,004 ) 2006 2017

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2023

(dollars in thousands)

CTR Partnership, L.P.

28 unchanged sentences

Gulf Coast Buyer 1 LLC The Bradford Skilled Nursing and Rehabilitation Shreveport, LA — 3,758 21,325 17 3,758 21,342 25,100 ( 2,694 ) 1980 2019

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(dollars in thousands)

Gulf Coast Buyer 1 LLC Colonial Oaks Skilled Nursing and Rehabilitation Bossier City, LA — 1,635 21,180 — 1,635 21,180 22,815 ( 2,591 ) 2013 2019

16 unchanged sentences

Cooney Healthcare and Rehabilitation Helena, MT — 867 7,431 20 867 7,451 8,318 ( 656 ) 1984 2020

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2023

(dollars in thousands)

CTR Partnership, L.P.

15 unchanged sentences

Ennis Care Center Ennis,TX — 568 8,055 — 568 8,055 8,623 ( 421 ) 1982 2022

CTR Partnership, L.P.

Park Bend Rehabilitation and Healthcare Center Burleson, TX — 1,877 6,616 717 1,877 7,333 9,210 ( 148 ) 1988 2023

CTR Partnership, L.P.

Prairie Ridge Health and Rehabiliation Overland Park , KS — 1,301 5,025 — 1,301 5,025 6,326 ( 104 ) 1987 2023

CTR Partnership, L.P.

Spalding Post Acute Griffin , GA — 680 11,044 — 680 11,044 11,724 ( 209 ) 2022 2023

CTR Partnership, L.P.

Casa Azul Skilled Nursing and Rehabilitation Katy , TX — 3,413 10,451 — 3,413 10,451 13,864 ( 165 ) 2005 2023

8665 La Mesa Boulevard, LLC Community Convalescent Hospital of La Mesa La Mesa , CA — 5,346 21,528 — 5,346 21,528 26,874 ( 321 ) 1968 2023

7039 Alonda Boulevard, LLC Paramount Meadows Nursing Center Paramount , CA — 3,640 15,380 — 3,640 15,380 19,020 ( 230 ) 1969 2023

10625 Leffingwell Road, LLC Norwalk Meadows Nursing Center Norwalk , CA — 4,932 14,229 — 4,932 14,229 19,161 ( 216 ) 1964 2023

Bobier Drive, LLC La Fuente Post Acute Vista , CA — 4,882 20,793 — 4,882 20,793 25,675 ( 187 ) 1990 2023

Capitola 1935 Realty LLC Pacific Coast Manor Capitola , CA — 5,231 16,321 — 5,231 16,321 21,552 ( 70 ) 1964 2023

Morgan Hills Realty LLC Pacific Hills Manor Morgan Hill , CA — 3,239 14,418 — 3,239 14,418 17,657 ( 64 ) 2014 2023

— 187,074 1,044,381 99,030 185,374 1,135,033 1,320,407 ( 267,859 )

5 unchanged sentences

4th Street Holdings LLC West Bend Care Center West Bend, IA — 180 3,352 — 180 3,352 3,532 ( 1,304 ) 2006 2011

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(dollars in thousands)

Big Sioux River Health Holdings LLC Hillcrest Health Hawarden, IA — 110 3,522 75 110 3,597 3,707 ( 1,317 ) 1974 2011

5 unchanged sentences

Premier Estates of Middletown/Premier Retirement Estates of Middletown Middletown, OH — 990 7,484 380 990 7,864 8,854 ( 1,676 ) 1985 2015

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2023

(dollars in thousands)

CTR Partnership, L.P.

23 unchanged sentences

Imboden Creek Living Center Decatur, IL — 131 12,499 91 131 12,590 12,721 ( 644 ) 2003 2022

4075 54th Street, LLC Jacob Healthcare Center San Diego , CA — 4,949 20,227 — 4,949 20,227 25,176 ( 308 ) 1994 2023

— 60,619 301,613 10,884 60,619 312,497 373,116 ( 48,798 )

9 unchanged sentences

Boardwalk Health Holdings LLC Park Place Reno, NV — 367 1,633 52 367 1,685 2,052 ( 679 ) 1993 2012

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2022

(dollars in thousands)

Willows Health Holdings LLC Cascade Plaza Redmond, WA — 2,835 3,784 395 2,835 4,179 7,014 ( 1,648 ) 2013 2013

7 unchanged sentences

Prelude Cottages of Woodbury Woodbury, MN — 430 6,714 289 430 7,003 7,433 ( 1,539 ) 2011 2014

CTR Partnership, L.P.

Lamplight Inn of West Allis West Allis, WI — 97 6,102 106 77 4,181 4,258 — 2013 2016

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2023

(dollars in thousands)

CTR Partnership, L.P.

28 unchanged sentences

Rio Grande Essentia Neighborhood Rio Grande, NJ — 224 5,652 — 224 5,652 5,876 ( 325 ) 2021 2021

CTR Partnership, L.P.

Chapters Living of Northwest Chicago Bartlett , IL — 1,964 5,650 — 1,964 5,650 7,614 ( 106 ) 2017 2023

CTR Partnership, L.P.

Chapters Living of Elmhurst Elmhurst , IL — 2,852 7,348 — 2,852 7,348 10,200 ( 135 ) 2017 2023

CTR Partnership, L.P.

The Ridge at Lansing Lansing , MI — 888 9,871 — 888 9,871 10,759 ( 163 ) 2018 2023

CTR Partnership, L.P.

The Ridge at Beavercreek Beavercreek , OH — 1,165 8,616 — 1,165 8,616 9,781 ( 140 ) 2018 2023

— 33,996 181,060 16,374 33,283 172,484 205,767 ( 34,075 )

32 unchanged sentences

24,900 22,962 N/A

Mezzanine Loans:

West Virginia ( 18 SNF facilities)

Florida ( 2 SNF facilities)

9.0 % 2028 (3)

— 15,727 15,399 N/A

Virginia ( 9 SNF facilities)

California ( 3 SNF facilities)

12.0 % 2026 (3)

3,564 3,439 N/A

Indiana ( 1 ALF facility)

9.0 % 2024 (3)

— 2,000 2,016 N/A

California ( 2 SNF Campus & ILF facility)

9.0 % 2033 (3)

— 25,993 26,194 N/A

California ( 1 ALF facility)

9.9 % 2026 (3)

— 6,300 6,345 N/A

Mezzanine Loans:

West Virginia ( 18 SNF facilities)

11.0 % 2032 (3)

25,000 21,799 N/A

$ 1,170,106 $ 190,197 $ 178,568

(1) The aggregate cost for federal income tax purposes was $ 190.2 million as of December 31, 2023.

10 unchanged sentences

Accordingly, the amounts of the prior liens at December 31, 2023 are estimated.

MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 2023

(dollars in thousands)

Changes in mortgage secured and mezzanine loans are summarized as follows (in thousands):

7 unchanged sentences

Paydowns/Repayments ( 25,537 ) — —

Unrealized loss ( 7,102 )

Unrealized losses, net ( 6,485 ) ( 7,102 ) —

Balance at end of period $ 178,568 $ 156,368 $ 15,155

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures