What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-09 · 281 added, 349 removed, 377 unchanged (63% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Real estate investments, net $ 1,619,438 $ 1,567,119

Other real estate related investments, at fair value (including accrued interest of $ 1,449 as of September 30, 2023 and $ 1,320 as of December 31, 2022)

Other real estate related investments (including accrued interest of $ 2,152 as of March 31, 2024 and $ 1,727 as of December 31, 2023)

233,346 180,368

Assets held for sale, net 21,341 12,291

Assets held for sale 12,483 15,011

Cash and cash equivalents 451,173 294,448

6 unchanged sentences

Senior unsecured term loan, net 199,612 199,559

Unsecured revolving credit facility — 125,000

Accounts payable, accrued liabilities and deferred rent liabilities 35,275 33,992

3 unchanged sentences

Preferred stock, $ 0.01 par value;

100,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022

100,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, $ 0.01 par value;

500,000,000 shares authorized, 115,409,356 and 99,010,112 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

500,000,000 shares authorized, 141,712,165 and 129,992,796 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,152,454 1,883,147

6 unchanged sentences

CARETRUST REIT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2023 2022 2023 2022

For the Three Months Ended March 31,

Rental income $ 53,502 $ 46,163

5 unchanged sentences

Impairment of real estate investments 2,744 1,886

Provision for loan losses, net — — — 3,844

Property operating expenses 660 963

1 unchanged sentence

Total expenses 33,719 30,855

Other (loss) income:

(Loss) gain on sale of real estate, net — ( 2,287 ) 1,958 ( 2,101 )

Unrealized losses on other real estate related investments, net ( 5,251 ) ( 4,706 ) ( 7,856 ) ( 4,706 )

Gain (loss) on sale of real estate, net 11 ( 70 )

Unrealized loss on other real estate related investments, net ( 612 ) ( 454 )

Total other loss ( 601 ) ( 524 )

Net income (loss) 8,685 709 27,428 ( 21,886 )

Net loss attributable to noncontrolling interests ( 11 ) — ( 11 ) —

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

Net income 28,750 19,227

Net income attributable to noncontrolling interests 4 —

Net income attributable to CareTrust REIT, Inc.

$ 28,746 $ 19,227

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

Earnings per common share attributable to CareTrust REIT, Inc:

Basic $ 0.22 $ 0.19

11 unchanged sentences

Shares Amount

Balance at January 1, 2023 99,010,112 $ 990 $ 1,245,337 $ ( 396,954 ) $ 849,373 $ — $ 849,373

Vesting of restricted common stock, net of shares withheld for employee taxes 87,978 1 ( 1,480 ) — ( 1,479 ) — ( 1,479 )

Amortization of stock-based compensation — — 936 — 936 — 936

Common dividends ($ 0.28 per share)

— — — ( 27,738 ) ( 27,738 ) — ( 27,738 )

Net income — — — 19,227 19,227 — 19,227

Balance at March 31, 2023 99,098,090 991 1,244,793 ( 405,465 ) 840,319 — 840,319

Vesting of restricted common stock 25,992 — — — — — —

Amortization of stock-based compensation — — 924 — 924 — 924

Common dividends ($ 0.28 per share)

— — — ( 27,737 ) ( 27,737 ) — ( 27,737 )

Net loss — — — ( 484 ) ( 484 ) — ( 484 )

Balance at June 30, 2023 99,124,082 991 1,245,717 ( 433,686 ) 813,022 — 813,022

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

Issuance of common stock, net 11,600,000 116 269,671 — 269,787 — 269,787

Vesting of stock-based compensation awards, net of shares withheld for employee taxes 119,369 1 ( 2,484 ) — ( 2,483 ) — ( 2,483 )

Amortization of stock-based compensation — — 2,120 — 2,120 — 2,120

1 unchanged sentence

— — — ( 41,192 ) ( 41,192 ) — ( 41,192 )

Contribution from noncontrolling interests — — — — — 1,073 1,073

Distributions to noncontrolling interests — — — — — ( 47 ) ( 47 )

Contributions from noncontrolling interests — — — — — 444 444

Net income — — — 28,746 28,746 4 28,750

Balance at September 30, 2023 115,409,356 $ 1,154 $ 1,566,161 $ ( 457,393 ) $ 1,109,922 $ 1,062 $ 1,110,984

Balance at March 31, 2024 141,712,165 $ 1,417 $ 2,152,454 $ ( 480,074 ) $ 1,673,797 $ 2,299 $ 1,676,096

See accompanying notes to condensed consolidated financial statements.

6 unchanged sentences

Shares Amount

Balance at January 1, 2022 96,296,673 $ 963 $ 1,196,839 $ ( 282,045 ) $ 915,757 $ — $ 915,757

Vesting of restricted common stock, net of shares withheld for employee taxes 190,393 2 ( 2,774 ) — ( 2,772 ) — ( 2,772 )

Amortization of stock-based compensation — — 1,521 — 1,521 — 1,521

Common dividends ($ 0.275 per share)

— — — ( 26,659 ) ( 26,659 ) — ( 26,659 )

Net loss — — — ( 43,264 ) ( 43,264 ) — ( 43,264 )

Balance at March 31, 2022 96,487,066 965 1,195,586 ( 351,968 ) 844,583 — 844,583

Vesting of restricted common stock, net of shares withheld for employee taxes 118,046 1 ( 1,698 ) — ( 1,697 ) — ( 1,697 )

Amortization of stock-based compensation — — 1,394 — 1,394 — 1,394

Common dividends ($ 0.275 per share)

— — — ( 26,681 ) ( 26,681 ) — ( 26,681 )

Net income — — — 20,669 20,669 — 20,669

Balance at June 30, 2022 96,605,112 966 1,195,282 ( 357,980 ) 838,268 — 838,268

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

Vesting of stock-based compensation awards, net of shares withheld for employee taxes 87,978 1 ( 1,480 ) — ( 1,479 ) — ( 1,479 )

Amortization of stock-based compensation — — 936 — 936 — 936

2 unchanged sentences

Net income — — — 19,227 19,227 — 19,227

Balance at September 30, 2022 96,605,112 $ 966 $ 1,196,662 $ ( 383,951 ) $ 813,677 $ — $ 813,677

Balance at March 31, 2023 99,098,090 $ 991 $ 1,244,793 $ ( 405,465 ) $ 840,319 $ — $ 840,319

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss) $ 27,428 $ ( 21,886 )

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

Net income $ 28,750 $ 19,227

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization (including below-market ground leases) 13,462 12,252

3 unchanged sentences

Straight-line rental income 7 7

Adjustment for collectibility of rental income — 977

Amortization of below market rent ( 575 ) —

Noncash interest income ( 425 ) 150

1 unchanged sentence

Impairment of real estate investments 2,744 1,886

Provision for loan losses, net — 3,844

Change in operating assets and liabilities:

14 unchanged sentences

Borrowings under unsecured revolving credit facility — 10,000

Payments on unsecured revolving credit facility ( 310,000 ) ( 45,000 )

Payments of deferred financing costs ( 24 ) ( 21 )

2 unchanged sentences

Contributions from noncontrolling interests 444 —

Net cash provided by financing activities 110,516 16,053

Net decrease in cash and cash equivalents ( 9,693 ) ( 15,034 )

Distributions to noncontrolling interests ( 47 ) —

Net cash provided by (used in) financing activities 231,146 ( 19,410 )

Net increase in cash and cash equivalents 156,725 14,892

Cash and cash equivalents as of the beginning of period 294,448 13,178

6 unchanged sentences

Transfer of pre-acquisition costs to acquired assets $ 5 $ —

Sale of real estate settled with notes receivable $ 2,000 $ 12,000

Sale of real estate settled with note receivable $ 1,000 $ —

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

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 September 30, 2023, the Company owned directly or through a joint venture and leased to independent ope rator s, 225 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 23,916 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 September 30, 2023, the Company also had other real estate related investments consisting of seven real estate secured loans receivable and one mezzanine loan receivable with a carrying value of $ 181.2 million.

As of March 31, 2024, the Company owned directly or through a joint venture and leased to independent operators, 228 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 24,189 operational beds and units located in 29 states with the highest concentration of properties by rental income located in California and Texas.

As of March 31, 2024, the Company also had other real estate related investments consisting of one preferred equity investment, nine real estate secured loans receivable and four mezzanine loans receivable with a carrying value of $ 233.3 million.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

REAL ESTATE INVESTMENTS, NET

The following table summarizes the Company’s investment in owned properties held for use at September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

The following table summarizes the Company’s investment in owned properties, and properties held in consolidated joint ventures, held for use as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Land $ 287,607 $ 279,276

5 unchanged sentences

Real estate investments, net $ 1,619,438 $ 1,567,119

As of September 30, 2023, 221 of the Company’s 225 facilities were leased to various operators under triple-net leases.

As of March 31, 2024, 223 of the Company’s 228 facilities were leased to various operators under triple-net leases.

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

During the year ended December 31, 2022, the Company entered into triple-net lease agreements for two of the Company’s 225 facilities which are being repurposed to behavioral health facilities with rent commencing 12 to 18 months following lease commencement.

Two of the Company’s 225 facilities are non-operational and are leased under a short term lease with an expected remaining term of less than one year as of September 30, 2023.

As of September 30, 2023, 15 facilities were held for sale.

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

During the second and third quarters of 2022, the Company entered into triple-net lease agreements for two of the Company’s 228 facilities which are being repurposed to behavioral health facilities.

Two of the Company’s 228 facilities are non-operational and are leased under a long term lease with rent commencing 12 months following lease commencement.

In addition, as of March 31, 2024, one facility is non-operational and held for sale.

As of March 31, 2024, 13 facilities were held for sale.

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

As of September 30, 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):

2023 (three months) $ 49,490

As of March 31, 2024, 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 (nine months) $ 156,186

Thereafter 885,009

8 unchanged sentences

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

SNF / Campus 2 (8)

October 2032 1/1/2024 (6)

SNF / Campus 1 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 September 30, 2023 and representing $ 5.1 million of current cash rent.

Tenant is currently not eligible to elect the option.

SNF / Campus 2 October 2032 11/1/2026 (6)

(1) Excludes a purchase option on an 11 building SNF portfolio classified as held for sale as of March 31, 2024 and representing $ 5.1 million of current cash rent.

The 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.

2 unchanged sentences

B - Fixed capitalization rate on lease revenue.

(4) Based on annualized cash revenue for contracts in place as of September 30, 2023.

(4) Based on annualized cash revenue for contracts in place as of March 31, 2024.

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

1 unchanged sentence

(7) Purchase option reflects two option types.

(8) Includes one property classified as held for sale as of September 30, 2023.

(8) Purchase option provides for purchase of two of three facilities.

The current cash rent shown is an average of the range of $ 3.2 million to $ 3.4 million.

Rental Income

The following table summarizes components of the Company’s rental income (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Rental Income 2024 2023

2 unchanged sentences

Straight-line rent ( 7 ) ( 7 )

Adjustment for collectibility (2)

— — — ( 977 )

Amortization of below-market lease intangible 575 —

Total $ 53,502 $ 46,163

1 unchanged sentence

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 three months ended September 30, 2023 and 2022 were $ 2.0 million and $ 0.7 million, respectively.

Tenant operating expense reimbursements for the nine months ended September 30, 2023 and 2022 were $ 3.9 million and $ 2.0 million, respectively.

(2) During the nine months ended September 30, 2022, and in accordance with Accounting Standards Codification 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 four existing and former operators.

As such, the Company reversed $ 0.7 million of operating expense reimbursements, $ 0.2 million of contractual rent and $ 0.1 million of straight-line rent during the nine months ended September 30, 2022.

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.

Tenant operating expense reimbursements for the three months ended March 31, 2024 and 2023 were $ 1.5 million and $ 0.7 million, respectively.

CARETRUST REIT, INC.

1 unchanged sentence

Recent Real Estate Acquisitions

The following table summarizes the Company’s acquisitions for the nine months ended September 30, 2023 (dollars in thousands):

The following table summarizes the Company’s acquisitions for the three months ended March 31, 2024 (dollars in thousands):

Type of Property Purchase Price (1)

2 unchanged sentences

Skilled nursing $ 38,311 $ 3,450 2 140

$ 133,970 $ 11,722 8 1,058

Multi-service campuses 17,277 1,553 1 94

Assisted living (4)

11,036 1,022 1 86

Total $ 66,624 $ 6,025 4 320

(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 rent abatement in the first one to three months, if applicable.

(2) Initial annual cash rent represents initial cash rent for the first twelve months.

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

(4) Includes one SNF held through a joint venture.

(4) Includes one ALF held through a joint venture.

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

The 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.

Lease Amendments and Terminations

New Embassy Lease and Hillstone Lease Termination.

On December 31, 2023, the Company terminated its master lease with affiliates of Hillstone Healthcare, Inc.

(“Hillstone”).

Effective January 1, 2024, in connection with the December 31, 2023 lease termination, one SNF was removed from the Hillstone master lease and was subsequently classified as held for sale as of March 31, 2024.

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

In connection with the lease termination, the Company entered into a new triple-net master lease with a subsidiary of Embassy Healthcare Holdings, Inc.

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

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

Initial 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.

Amended Eduro Lease and Amended Ensign Lease.

On March 1, 2024, operations of two SNFs in Colorado operated by affiliates of Eduro Healthcare, LLC (“Eduro”) were transferred to subsidiaries of The Ensign Group, Inc.

In connection with the transfer, the Company partially terminated the Eduro master lease and amended one existing triple-net master lease with Ensign to include the two SNFs and extended the initial lease term by 15 years.

The applicable Ensign master lease, as amended, had a remaining term at the date of amendment of approximately 20 years with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the applicable Ensign master lease, as amended, increased by approximately $ 2.1 million and annual cash rent under the Eduro master lease, as amended, decreased by the same amount.

Noble VA Lease Termination and New Pennant Lease.

5 unchanged sentences

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.

Amended Hillstone Lease.

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

(“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.

The amended Hillstone lease had a remaining term at the date of amendment of approximately 7 years with two five-year renewal options and 2 % fixed rent escalators.

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.

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.

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 Properties, LLC (“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.

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

Impairment of Real Estate Investments Held for Sale

During the three months ended March 31, 2024, the Company recognized aggregate impairment charges of $ 2.7 million related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated income statements.

During the three months ended March 31, 2023, the Company recognized aggregate impairment charges of $ 1.9 million related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated income statements.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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

Impairment of Real Estate Investments Held for Sale

During the three months ended March 31, 2023, the Company recognized an impairment charge of $ 1.9 million on four facilities held for sale, which is reported in impairment of real estate investments in the condensed consolidated statements of operations.

During the three months ended June 30, 2023, the Company recognized an impairment charge of $ 21.4 million on 12 facilities held for sale.

During the three months ended September 30, 2023, the Company recognized an impairment charge of $ 0.2 million on one facility held for sale.

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

During the three and nine months ended September 30, 2022, the Company recognized an impairment charge on sixteen and 27 facilities of $ 12.3 million and $ 72.0 million, respectively, all of which were held for sale.

As of September 30, 2023, there were 15 facilities classified as held for sale, all of which have been marked down to fair value less estimated costs to sell.

As of March 31, 2024, there were 13 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.

2 unchanged sentences

There are inherent uncertainties in making these assumptions.

For the Company’s impairment calculations during the nine months ended September 30, 2023, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 18,000 to $ 35,000 , with a weighted average price per unit of $ 23,000 .

For the Company’s impairment calculations during the nine months ended September 30, 2022, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 35,000 to $ 145,000 , with a weighted average price per unit of $ 80,000 .

Impairment of Real Estate Investments Held for Investment

During the three months ended September 30, 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 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 $ 7,000 .

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 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 .

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

For the Company’s impairment calculations during the three months ended March 31, 2024, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 12,000 to $ 36,000 , with a weighted average price per unit of $ 16,000 .

One property, with no bed rights, was reclassified to held for sale during the three months ended March 31, 2024.

The Company plans to dispose of this facility and does not expect to receive a material amount upon disposition.

For the Company’s impairment calculations during the three months ended March 31, 2023, 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 $ 32,000 .

Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 (1)

The following table summarizes the Company’s dispositions for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three Months Ended March 31,

Number of facilities 2 1

2 unchanged sentences

Net carrying value 1,035 3,300

Net (loss) gain on sale $ — $ ( 2,287 ) $ 1,958 $ ( 2,101 )

(1) Net sales proceeds, net carrying value and net (loss) gain on sale also reflect a land parcel that was sold during the three and nine months ended September 30, 2022, 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.

Net gain (loss) on sale $ 11 $ ( 70 )

(1) Net sales proceeds includes $ 1.0 million of seller financing in connection with the sale of one ALF in January 2024.

The following table summarizes the Company’s assets held for sale activity for the periods presented (dollars in thousands):

4 unchanged sentences

Impairment of real estate held for sale ( 2,744 ) —

September 30, 2023 $ 21,341 15

March 31, 2024 $ 12,483 13

December 31, 2022 $ 12,291 5

Additions to assets held for sale 10,374 2

Assets sold ( 3,300 ) ( 1 )

Impairment of real estate held for sale ( 1,886 ) —

March 31, 2023 $ 17,479 6

CARETRUST REIT, INC.

1 unchanged sentence

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

As of September 30, 2023 and December 31, 2022, the Company’s other real estate related investments, at fair value, consisted of the following (dollar amounts in thousands):

As of September 30, 2023

Investment Facility Count and Type Principal Balance as of September 30, 2023

Fair Value as of September 30, 2023

As of March 31, 2024 and December 31, 2023, the Company’s other real estate related investments consisted of the following (dollar amounts in thousands):

Facility Count and Type As of March 31, 2024

Loans Receivable, at Fair Value:

SNF Campus ALF ILF Principal Balance as of March 31, 2024

Fair Value as of March 31, 2024

Fair Value as of December 31, 2023

Weighted Average Contractual Interest Rate Maturity Date

Senior mortgage secured loan receivable 18 SNF/Campus

$ 75,000 $ 68,472 $ 72,543 8.4 % (1)

Mortgage secured loan receivable 5 SNF

22,250 21,210 21,345 10.7 % (2)

Mortgage secured loan receivable 4 SNF

24,900 22,716 23,796 9.0 % (2)

Mortgage secured loan receivable (3)

2,000 2,000 — 9.0 % 5/31/2024

Mortgage secured loan receivable (4)

2 SNF Campus / ILF

25,993 26,186 — 9.0 % 6/29/2033

Mortgage secured loan receivable (5)

15,727 15,397 — 9.0 % 8/1/2028

Mortgage secured loan receivable (6)

3,564 3,390 — 12.0 % 9/29/2026

Mezzanine loan receivable (7)

Mortgage secured loans receivable 31 1 4 1 $ 166,197 $ 157,265 $ 156,769 8.9 % (1), (2)

5/31/2024 - 6/29/2033

Mezzanine loan receivable 18 SNF/Campus

Mezzanine loans receivable 40 3 2 — 77,165 74,276 21,799 12.8 % (1), (2)

7/25/2027 - 6/30/2032

$ 243,362 $ 231,541 $ 178,568

(1) Rate is net of subservicing fee.

(2) Term secured overnight financing rate (“SOFR”) used as of September 30, 2023 was 5.32 %.

Rates are net of subservicing fees.

(3) In June 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.

The mortgage loan is secured by the ALF.

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

(4) In June 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.

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.

(5) In July 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.

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;

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.

(6) In September 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.

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.

(7) Mezzanine loan was prepaid during the nine months ended September 30, 2023.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

The following table summarizes the Company’s other real estate related investments activity for the nine months ended September 30, 2023 and 2022 (dollars in thousands):

Nine Months Ended September 30,

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

(2) Two mortgage secured loans receivable and two mezzanine loans receivable use term secured overnight financing rate (“SOFR”), which are subject to a floor for certain of the loans.

Term SOFR used as of March 31, 2024 was 5.33 %.

Facility Count and Type As of March 31, 2024

Other Investments:

SNF Campus ALF ILF Principal Balance as of March 31, 2024

Book Value as of March 31, 2024

Book Value as of December 31, 2023

Weighted Average Contractual Interest Rate Maturity Date

Preferred Equity 3 — — — 1,782 1,805 1,801 15.0 % N/A

Total $ 1,782 $ 1,805 $ 1,801

The following table summarizes the Company’s other real estate related investments activity for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three Months Ended March 31,

Origination of other real estate related investments $ 53,165 $ —

2 unchanged sentences

Prepayments of other real estate related investments — ( 15,000 )

Net change in other real estate related investments, at fair value $ 24,807 $ 143,507

As of September 30, 2023 and December 31, 2022, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets, consisted of the following (dollars in thousands):

As of September 30, 2023

Investment Principal Balance as of September 30, 2023

Book Value as of September 30, 2023

Net change in other real estate related investments $ 52,978 $ ( 15,604 )

2024 Other Real Estate Related Investment Transactions

On January 1, 2024, the Company closed on the sale of one ALF.

In connection with the sale, the Company provided affiliates of the purchaser of the property with a $ 1.0 million mortgage loan which bears interest at a rate of 9.0 %.

The mortgage loan is s ecured by the ALF and is set to mature on January 1, 2027.

The mortgage loan may be prepaid in whole before the maturity date.

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

On January 25, 2024, the Company extended a $ 9.8 million mezzanine loan for a portfolio of ten SNFs located in Missouri secured by a pledge of membership interests in an up-tier holding company of the borrower group.

The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender.

Pursuant to such agreement, the Company provided $ 9.8 million in mezzanine loan proceeds and the co-lender provided the remaining $ 10.2 million of loan proceeds.

As a participant in the loan, and subject to limited exceptions, the Company is entitled to receive its proportionate share of loan payments made by the borrower with each co-lender’s proportionate share being given equal weight.

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).

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

On February 1, 2024, the Company extended a $ 7.4 million mezzanine loan for one SNF located in California secured by a pledge of membership interests in an up-tier holding company of the borrower group.

The loan bears interest at 11.5 %, payable monthly.

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

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

On February 2, 2024, the Company extended a $ 35.0 million mezzanine loan for a portfilio of 15 SNFs located in Virginia secured by a pledge of membership interests in an up-tier holding company of the borrower group.

The Company participated in the loan alongside a co-lender pursuant to a participation agreement entered into between the Company and the co-lender.

Pursuant to such agreement, the Company provided $ 35.0 million in mezzanine loan proceeds and the co-lender provided the remaining $ 50.0 million of loan proceeds.

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).

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

Other Loans Receivables

As of March 31, 2024 and December 31, 2023, the Company’s other loans receivable, included in prepaid expenses and other assets, net on the Company’s condensed consolidated balance sheets, consisted of the following (dollars in thousands):

As of March 31, 2024

Investment Principal Balance as of March 31, 2024

Book Value as of March 31, 2024

Book Value as of December 31, 2023

3 unchanged sentences

Total $ 17,094 $ 15,062 $ 15,062

(1) One other loan receivable with a balance of approximately $ 26,000 had a maturity date of September 1, 2023.

This loan was paid off subsequent to September 30, 2023.

The following table summarizes the Company’s other loans receivable activity for the nine months ended September 30, 2023 and 2022 (dollars in thousands):

Nine Months Ended September 30,

Origination of loans receivable $ 5,160 $ 14,500

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

The following table summarizes the Company’s other loans receivable activity for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three Months Ended March 31,

Principal payments $ — $ ( 143 )

Accrued interest, net — ( 1 )

Provision for loan losses, net — ( 4,594 )

Net change in other loans receivable $ — $ ( 144 )

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

During the nine months ended September 30, 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 nine months ended September 30, 2023 , the Company had no additional expected credit loss and did not consider any loan receivable investments to be impaired.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

The following table summarizes the interest and other income recognized from the Company’s loans receivable and other investments during the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

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

During both the three months ended March 31, 2024 and 2023, 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 three months ended March 31, 2024 and 2023 (dollars in thousands):

For the Three Months Ended March 31,

Investment 2024 2023

1 unchanged sentence

Mezzanine loans receivable 1,895 1,583

Other 216 14 723 50

Preferred equity investment 68 —

Other loans receivable 331 156

Total $ 9,568 $ 4,443

(1) Other income is comprised of interest income on money market funds.

FAIR VALUE MEASUREMENTS

9 unchanged sentences

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of September 30, 2023 and December 31, 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 September 30, 2023

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, 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 March 31, 2024

Mortgage secured loans receivable $ — $ — $ 157,265 $ 157,265

5 unchanged sentences

Total $ — $ — $ 178,568 $ 178,568

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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

5 unchanged sentences

Unrealized losses on other real estate related investments, net ( 311 ) ( 301 )

Repayments — ( 15,000 )

Balance as of September 30, 2023

Balance as of March 31, 2024

$ 157,265 $ 74,276

2 unchanged sentences

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 three months ended September 30, 2023, the Company recorded an unrealized loss of $ 5.3 million related to four mortgage loans and one mezzanine loan receivable due to rising interest rates.

During the nine months ended September 30, 2023, the Company recorded an unrealized loss of $ 8.1 million related to five mortgage loans and one mezzanine loan receivable due to rising interest rates and a $ 0.3 million loss due to a loan origination fee paid, partially offset by a reversal of a previously recognized unrealized loss of $ 0.5 million related to the repayment of one mezzanine loan receivable.

During the three months ended March 31, 2024, the C ompany recorded an unrealized loss of $ 0.8 million on the Company’s secured and mezzanine loans receivable due to rising interest rates, partially offset by unrealized gains of $ 0.2 million due to increases in expected cash flows on floating rate loans.

During the three months ended March 31, 2023, the Company recorded an unrealized loss of $ 1.0 million related to one mezzanine loan receivable due to rising interest rates, partially offset by a reversal of a previously recognized unrealized loss of $ 0.5 million related to the repayment of one mezzanine loan receivable.

Future changes in market interest rates or collateral value could materially impact the estimated discounted cash flows that are used to determine the fair value of the secured and mezzanine loans receivable.

As of September 30, 2023 and December 31, 2022, the Company did no t have any loans that were 90 days or more past due.

The following table shows the quantitative information about unobservable inputs related to the Level 3 fair value measurements comprising the investments in secured and mezzanine loans receivables as of September 30, 2023:

Type Book Value as of September 30, 2023

As of March 31, 2024 and December 31, 2023, the Company did no t have any loans that were 90 days or more past due.

Type Book Value as of March 31, 2024

Valuation Technique Unobservable Inputs Range

1 unchanged sentence

Mezzanine loan receivable 74,276 Discounted cash flow Discount Rate 12 % - 15 %

For the nine months ended September 30, 2023, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

For the three months ended March 31, 2024, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Items Disclosed at Fair Value

1 unchanged sentence

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 value, carrying amount and fair value of the Notes (as defined in Note 7, Debt, below) as of September 30, 2023 and December 31, 2022 using Level 2 inputs is as follows (dollars in thousands):

September 30, 2023 December 31, 2022

A summary of the face value, carrying amount and fair value of the preferred equity investment and the Notes (as defined in Note 7, Debt, below) as of March 31, 2024 and December 31, 2023 is as follows (dollars in thousands):

March 31, 2024 December 31, 2023

Value Carrying

Financial assets:

Preferred equity investment 3 $ 1,782 $ 1,805 $ 1,805 $ 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 investment:

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 a discount rate 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 CONDENSED 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 September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

Principal Amount Deferred Loan Fees Carrying Value Principal Amount Deferred Loan Fees Carrying Value

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 March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Principal Amount Deferred Loan Fees Carrying Amount Principal Amount Deferred Loan Fees Carrying Amount

Senior unsecured notes payable $ 400,000 $ ( 3,739 ) $ 396,261 $ 400,000 $ ( 3,961 ) $ 396,039

2 unchanged sentences

$ 600,000 $ ( 4,127 ) $ 595,873 $ 600,000 $ ( 4,402 ) $ 595,598

$ 600,000 $ ( 4,677 ) $ 595,323 $ 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.

8 unchanged sentences

The Notes accrue interest at a rate of 3.875 % per annum payable semiannually in arrears on June 30 and December 30 of each year, commencing on December 30, 2021.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

The Issuers may redeem some or all of the Notes at any time prior to March 30, 2028 at a price equal to 100 % of the principal amount of the Notes redeemed plus accrued and unpaid interest on the Notes, if any, to, but not including, the redemption date, plus a “make-whole” premium.

15 unchanged sentences

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

As of September 30, 2023, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

As of March 31, 2024, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

Unsecured Revolving Credit Facility and Term Loan

6 unchanged sentences

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).

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).

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 September 30, 2023, the Operating Partnership had $ 200.0 million of borrowings outstanding under the Term Loan and no borrowings outstanding under the Revolving Facility.

As of March 31, 2024, 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.

4 unchanged sentences

The Second Amended Credit Agreement also contains certain customary events of default, including the failure to make timely payments under the Second Amended Credit Facility or other material indebtedness, the failure to satisfy certain covenants (including the financial maintenance covenants), the occurrence of change of control and specified events of bankruptcy and insolvency.

As of March 31, 2024, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

At-The-Market Offering —On September 15, 2023, 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 “New ATM Program”) and terminated its previous $ 500.0 million “at-the-market” equity offering program (the “Previous ATM Program” and together with the New ATM Program, the “ATM Program”).

In addition to the issuance and sale of shares of its common stock, the ATM Program also provides for the ability to 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

As of September 30, 2023, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

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.

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.

During the three and nine months ended September 30, 2023, the Company entered into ATM forward contracts under the ATM Program with a financial institution acting as a forward purchaser to sell 9,058,140 and 15,794,229 shares of common stock, respectively, at a weighted average initial sales price of $ 19.99 and $ 19.87 per share, respectively, before commissions and offering expenses.

During the three months ended September 30, 2023, the Company settled 10,893,229 shares outstanding under the ATM forward contracts at a weighted average sales price of $ 19.57 for net proceeds of $ 213.1 million.

For the remaining shares subject to the ATM forward contracts, the Company will not receive any proceeds from sales of those shares of common stock by the forward sellers until the forward contracts are settled.

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three and nine months ended September 30, 2022.

The following table summarizes the ATM Program activity under the ATM forward contracts and direct issuances for the three and nine months ended September 30, 2023 (in thousands, expect per share amounts).

For the Three Months Ended For the Nine Months Ended

September 30, 2023 September 30, 2023

In the event the Company enters into an ATM forward contract to sell shares of common stock pursuant to the ATM Program, the Company would expect 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 would expect 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 would expect to receive upon physical settlement would 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 March 31, 2024.

There was no ATM Program activity (or activity under any predecessor at-the-market equity offering programs) for the three months ended March 31, 2023.

The following table summarizes the ATM Program activity for the three months ended March 31, 2024 (in thousands, except per share amounts):

For the Three Months Ended

March 31, 2024

Number of shares 11,600

1 unchanged sentence

Gross proceeds (1)

$ 323,886 $ 323,886

(1) Total gross proceeds is before $ 4.0 million of commissions paid to the sales agents and forward adjustments during both the three and nine months ended September 30, 2023, respectively, under the ATM Program.

As of September 30, 2023, 4,901,000 shares of common stock at the weighted average initial sales price of $ 20.00 per share, before commissions and offering expenses, remain outstanding under the ATM forward contracts.

As of September 30, 2023, the Company had $ 496.0 million available for future issuances under the New ATM Program.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 the first nine months of 2023 (dollars in thousands, except per share amounts):

(1) Total gross proceeds is before $ 3.4 million of commissions paid to the sales agents during the three months ended March 31, 2024, under the ATM Program.

As of March 31, 2024, the Company had $ 0.9 million available for future issuances under the New ATM Program.

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 the first three months of 2024 (dollars in thousands, except per share amounts):

For the Three Months Ended

March 31, 2023 June 30, 2023 September 30, 2023

March 31, 2024

Dividends declared per share $ 0.29

Dividends payment date April 14, 2023 July 14, 2023 October 13, 2023

Dividends payment date April 15, 2024

Dividends payable as of record date $ 41,192

$ 27,846 $ 27,853 $ 32,403

Dividends record date March 31, 2023 June 30, 2023 September 29, 2023

(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.

Dividends record date March 28, 2024

STOCK-BASED COMPENSATION

4 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 over a three year period for the RSAs granted in 2022 and 2021 and a four year period for the RSAs granted in 2020.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 (“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 since 2021 are subject to both time and market based conditions and cliff vest after a three-year period.

Performance stock awards (“PSAs”) granted were subject to both time and performance based conditions and vested 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 ultimately vested was 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 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.

The RSAs, PSAs, and Board Awards are valued on the date of grant based on the closing price of the Company’s common stock, while the TSR Units are valued on the date of grant using a Monte Carlo valuation model.

The RSAs and Board Awards are valued on the date of grant based on the closing price of the Company’s common stock, while the TSR Units are valued on the date of grant using a Monte Carlo valuation model.

The vesting of certain awards may accelerate, as defined in the grant agreement, upon retirement, a change in control or other events.

The following table summarizes the status of the restricted stock award and performance award activity for the nine months ended September 30, 2023:

The following table summarizes the status of the restricted stock award and performance award activity for the three months ended March 31, 2024:

Shares Weighted Average Share Price

Unvested balance at December 31, 2023 510,596 $ 21.01

RSAs 1,272 19.43

Board Awards 24,768 19.38

Vested ( 145,043 ) 20.89

Forfeited ( 35,161 ) 20.48

Unvested balance at September 30, 2023 352,202 $ 20.28

As of September 30, 2023, the weighted-average remaining vesting period of such awards w as 1.5 years.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Unvested balance at March 31, 2024 330,392 $ 21.12

As of March 31, 2024, the weighted-average remaining vesting period of such awards w as 1.9 years.

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2023 2022 2023 2022

For the Three Months Ended March 31,

Stock-based compensation expense $ 2,120 $ 936

For the nine months ended September 30, 2023, approximately $ 0.6 million of previously recognized stock-based compensation expense related to the PSAs was reversed as the awards are not expected to meet the performance conditions.

For the nine months ended September 30, 2023, approximately $ 0.9 million of previously recognized stock-based compensation expense was reversed due to forfeitures of stock awards.

As of September 30, 2023, there was $ 5.7 million of unamortized stock-based compensation expense related to the unvested RSAs and TSR Awards.

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 three and nine months ended September 30, 2023 and 2022, 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 (amounts in thousands, except per share amounts):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2023 2022 2023 2022

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

For the three months ended March 31, 2023, approximately $ 0.9 million of previously recognized stock-based compensation expense was reversed due to forfeitures of stock awards.

As of March 31, 2024, there was $ 7.9 million of unamortized stock-based compensation expense related to the unvested RSAs and TSR Units.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

EARNINGS PER COMMON SHARE

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

(“EPS”) for the Company’s common stock for the three months ended March 31, 2024 and 2023, 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 (amounts in thousands, except per share amounts):

For the Three Months Ended March 31,

Net income attributable to CareTrust REIT, Inc.

$ 28,746 $ 19,227

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Weighted-average basic common shares outstanding 132,836 99,063

Dilutive potential common shares - performance stock awards 201 20 128 —

Dilutive potential common shares - forward equity agreements 99 — 42 —

Dilutive potential common shares - TSR Units 366 24

Weighted-average diluted common shares outstanding 133,202 99,087

Earnings (loss) per common share attributable to CareTrust REIT, Inc., basic $ 0.08 $ 0.01 $ 0.27 $ ( 0.23 )

Earnings (loss) per common share attributable to CareTrust REIT, Inc., diluted $ 0.08 $ 0.01 $ 0.27 $ ( 0.23 )

Antidilutive unvested restricted stock awards, total shareholder return units, performance awards, and forward equity shares excluded from the computation 317 341 317 478

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Earnings per common share attributable to CareTrust REIT, Inc., basic $ 0.22 $ 0.19

Earnings per common share attributable to CareTrust REIT, Inc., diluted $ 0.22 $ 0.19

Antidilutive unvested RSAs, TSR Units and PSAs excluded from the computation (1)

(1) For the three months ended March 31, 2024, RSAs are antidilutive.

For the three months ended March 31, 2023, certain TSR Units and RSAs are antidilutive.

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.

Noncontrolling Interests —The Company has entered into multiple 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.

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.

During the three months ended September 30, 2023, the Company entered into a joint venture (“JV”), whereunder 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.

The Company contributed to the JV an amount equal to 95 % of the JV’s total investment amount in the one newly-acquired SNF and holds 100 % of the preferred equity ownership interests in the JV.

In addition, the Company contributed an amount equal to 2.5 % of the JV’s total investment amount in the one SNF for a 50 % common ownership interest in the JV.

During the three months ended September 30, 2023, the Company entered into a JV, whereunder the Company contributed $ 2.4 million into the JV, which made a deposit on a potential real estate acquisition.

Upon the closing date of the real estate acquisition, the Company will hold an amount equal to 95 % of the JV’s total investment amount and will hold 100 % of the preferred equity ownership interest and an amount equal to 2.5 % of the JV’s total investment amount for a 50 % common ownership interest in the JV.

Total assets and total liabilities include VIE assets and liabilities as follows (in thousands):

September 30, 2023 December 31, 2022

Pursuant to the Company’s joint ventures (“JVs”), the Company typically contributes 97.5 % of the JV’s 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 JV’s total investment amount in exchange for a 50 % common ownership interest in the JV.

As of March 31, 2024, the Company held three SNFs and one ALF in multiple VIEs.

On January 3, 2024, the Company entered into a JV, pursuant to which the Company contributed $ 10.8 million into the JV that purchased one ALF located in California for $ 11.0 million.

The JV partner contributed the remaining $ 0.2 million of the total investment.

Total assets and total liabilities include VIE assets and liabilities as follows (dollars in thousands):

March 31, 2024 December 31, 2023

Real estate investments, net $ 78,573 $ 68,106

Cash and cash equivalents 798 —

Prepaid and other assets 4,480 2,800

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Total liabilities $ 7,067 $ 7,239

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

COMMITMENTS AND CONTINGENCIES

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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.

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.

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 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.

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

As of September 30, 2023, the Company had committed to fund expansions, construction and capital improvements at certain triple-net leased facilities totaling $ 11.8 million, of which $ 3.2 million is subject to rent increase at the time of funding.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 March 31, 2024 (in thousands):

Remaining Commitment

Capital expenditures (1)

Mortgage loans (2)

(1) As of March 31, 2024, the Company had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities totaling $ 13.1 million, of which $ 4.9 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

Concentrations of credit risk arise when one or more tenants, operators, or obligors related to the Company’s investments are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.

Major operator concentration - The Company has operators from which it derived 10% or more of its rental revenue for the three and nine months ended September 30, 2023 and 2022.

The following table sets forth information regarding the Company’s major operators as of September 30, 2023 and 2022:

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Major operator concentration - The Company has operators from which it derived 10% or more of its revenue for the three months ended March 31, 2024 and 2023.

The following table sets forth information regarding the Company’s major operators as of March 31, 2024 and 2023:

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

Operator SNF Campus ALF/ILF SNF Campus ALF/ILF Three Months Ended Nine Months Ended

September 30, 2023

Operator SNF Campus ALF/ILF SNF Campus ALF/ILF Three Months Ended

March 31, 2024 (1)

85 8 7 9,024 997 661 30 %

Priority Management Group 13 2 — 1,742 402 — 13 %

September 30, 2022

March 31, 2023 (2)

83 8 7 8,741 997 661 36 %

Priority Management Group 13 2 — 1,742 402 — 17 %

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

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

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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 three and nine months ended September 30, 2023 and 2022:

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 three months ended March 31, 2024 and 2023:

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

State SNF Campus ALF/ILF SNF Campus ALF/ILF Three Months Ended Nine Months Ended

September 30, 2023

State SNF Campus ALF/ILF SNF Campus ALF/ILF Three Months Ended

March 31, 2024 (1)

CA 42 9 9 5,000 1,527 723 31 %

TX 41 4 2 5,193 630 212 20 %

September 30, 2022

March 31, 2023 (2)

CA 27 8 5 3,048 1,359 437 28 %

TX 38 3 3 4,849 536 242 23 %

(1) Represents the Company’s rental income, exclusive of operating expense reimbursements and adjustments for collectibility.

(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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Unsecured Revolving Credit Facility Amendment

On October 10, 2023, the Company amended the Second Amended Credit Agreement to restate the definition of Consolidated Total Asset Value.

See Note 7, Debt , for additional information.

On October 20, 2023, the Company closed on the sale of one ALF consisting of 135 beds located in Florida with a carrying value of $ 1.6 million, which approximated the net sales proceeds received.

The facility was classified as held for sale as of September 30, 2023.

New Lease Agreement

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

The New Ridgeline Lease has 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 rent escalators.

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

Recent Acquisitions

On October 25, 2023, the Company entered and contributed $ 34.2 million into a JV that purchased two SNFs located in California for $ 35.1 million.

The JV partner contributed the remaining $ 0.9 million of equity.

Each SNF was acquired subject to a triple-net lease with affiliates of Covenant Care, LLC (“Covenant Care”) as the tenant and licensed operator.

The Company contributed to the JV an amount equal to 95 % of the JV’s total investment amount in the two newly-acquired SNFs and holds 100 % of the preferred equity ownership interests in the JV.

In addition, the Company contributed an amount equal to 2.5 % of the JV’s total investment amount in the two SNFs for a 50 % common ownership interest in the JV.

Both leases assumed as part of the transaction have a remaining initial term of approximately 6 years, with two five-year renewal options and 2 % fixed annual rent increases.

Annual cash rent under the leases is approximately $ 2.0 million.

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

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

The Company’s contribution was funded using proceeds from the ATM Program.

Recent Acquisitions and Investment

On April 1, 2024, the Company contributed $ 28.0 million to a JV that purchased two multi-service campuses located in California for $ 28.8 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 $ 0.8 million of the total investment in exchange for 50 % of the common equity interest in the JV.

In connection with the acquisition of the facilities, the Company entered into a new master lease with affiliates of Bayshire, LLC (“Bayshire”).

The new lease has an initial term of approximately 15 years, with two five-year renewal options.

Initial annual cash rent under the lease is approximately $ 2.7 million, increasing to approximately $ 2.9 million in the second year and $ 3.1 million in the third year, with 2 % fixed annual escalators thereafter.

The master lease provides for deferred rent in the first year of approximately $ 0.8 million.

On April 1, 2024, the Company acquired one multi-service campus located in California for approximately $ 32.3 million, which includes estimated capitalized acquisition costs.

In connection with the acquisition of the facility, the Company amended an existing master lease with affiliates of Bayshire.

The Bayshire lease, as amended, has a remaining initial term of approximately 10 years, with two five-year renewal options.

Annual cash rent under the amended lease increased by approximately $ 2.6 million, increasing to approximately $ 3.0 million in the second year with CPI-based annual escalators thereafter.

On May 1, 2024, the Company extended a $ 26.7 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 9.1 %, payable monthly.

The mortgage loan is set to mature on May 1, 2031 and includes a one year extension option.

The mortgage loan may (subject to certain limited exceptions) not be prepaid prior to July 31, 2029.

The mortgage loan includes a purchase option with an exercise window that opens during the initial 90-day period of each of the 4th, 5th and 6th loan years, with the purchase option price for the facilities being calculated by dividing the amount of the then annual base rent by an agreed upon lease yield.

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-Q

Item 1. Financial Statements