What changed in this filing

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Item 1. Financial Statements

2024-10-29 compared with 2024-08-02 · 292 added, 195 removed, 547 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Real estate investments, net $ 1,749,139 $ 1,567,119

Other real estate related investments (including accrued interest of $ 3,540 as of June 30, 2024 and $ 1,727 as of December 31, 2023)

Other real estate related investments (including accrued interest of $ 5,826 as of September 30, 2024 and $ 1,727 as of December 31, 2023)

740,730 180,368

8 unchanged sentences

Senior unsecured term loan, net — 199,559

Secured borrowing 75,000 —

Accounts payable, accrued liabilities and deferred rent liabilities 49,717 33,992

3 unchanged sentences

Preferred stock, $ 0.01 par value;

100,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023

100,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value;

500,000,000 shares authorized, 153,881,933 and 129,992,796 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

500,000,000 shares authorized, 171,122,858 and 129,992,796 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,950,802 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 June 30, For the Six Months Ended June 30,

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

2024 2023 2024 2023

9 unchanged sentences

Total expenses 42,962 41,941 133,298 124,710

Gain on sale of real estate, net 21 2,028 32 1,958

Unrealized loss on other real estate related investments, net ( 1,877 ) ( 2,151 ) ( 2,489 ) ( 2,605 )

Loss on extinguishment of debt ( 657 ) — ( 657 ) —

(Loss) gain on sale of real estate, net ( 2,286 ) — ( 2,254 ) 1,958

Unrealized gain (loss) on other real estate related investments, net 1,800 ( 5,251 ) ( 689 ) ( 7,856 )

Total other loss ( 1,143 ) ( 5,251 ) ( 3,600 ) ( 5,898 )

Net income (loss) 10,418 ( 484 ) 39,168 18,743

Net income 33,276 8,685 72,444 27,428

Net loss attributable to noncontrolling interests ( 165 ) ( 11 ) ( 501 ) ( 11 )

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

Net income attributable to CareTrust REIT, Inc.

$ 33,441 $ 8,696 $ 72,945 $ 27,439

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

Earnings per common share attributable to CareTrust REIT, Inc:

Basic $ 0.21 $ 0.08 $ 0.50 $ 0.27

30 unchanged sentences

Balance at June 30, 2024 153,881,933 1,539 2,456,187 ( 514,037 ) 1,943,689 2,084 1,945,773

Issuance of common stock, net 17,240,925 172 493,472 — 493,644 — 493,644

Amortization of stock-based compensation — — 1,143 — 1,143 — 1,143

Common dividends ($ 0.29 per share)

— — — ( 49,721 ) ( 49,721 ) — ( 49,721 )

Distributions to noncontrolling interests — — — — — ( 7 ) ( 7 )

Contributions from noncontrolling interests — — — — — 628 628

Net income (loss) — — — 33,441 33,441 ( 165 ) 33,276

Balance at September 30, 2024 171,122,858 $ 1,711 $ 2,950,802 $ ( 530,317 ) $ 2,422,196 $ 2,540 $ 2,424,736

See accompanying notes to condensed consolidated financial statements.

19 unchanged sentences

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

Issuance of common stock, net 16,285,274 163 318,925 — 319,088 — 319,088

Amortization of stock-based compensation — — 1,519 — 1,519 — 1,519

Common dividends ($ 0.28 per share)

— — — ( 32,403 ) ( 32,403 ) — ( 32,403 )

Contributions from noncontrolling interests — — — — — 1,073 1,073

Net income (loss) — — — 8,696 8,696 ( 11 ) 8,685

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

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Amortization of deferred financing costs 1,843 1,826

Loss on extinguishment of debt 282 —

Unrealized loss on other real estate related investments, net 689 7,856

1 unchanged sentence

Straight-line rental income 21 21

Amortization of lease incentive 4 —

Amortization of below market rent ( 1,150 ) —

Amortization of lease incentives 9 —

Amortization of below market leases ( 1,959 ) —

Noncash interest income ( 4,099 ) ( 129 )

Gain on sale of real estate, net ( 32 ) ( 1,958 )

Loss (gain) on sale of real estate, net 2,254 ( 1,958 )

Impairment of real estate investments 36,872 31,510

17 unchanged sentences

Borrowings under unsecured revolving credit facility — 185,000

Payments of deferred financing costs ( 24 ) ( 21 )

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

Payments on senior unsecured term loan ( 200,000 ) —

Payment on secured borrowing ( 75,000 ) —

Payments on extinguishment of debt and deferred financing costs ( 399 ) ( 21 )

Net-settle adjustment on restricted stock ( 2,483 ) ( 1,479 )

13 unchanged sentences

Sale of real estate settled with note receivable $ 1,000 $ 2,000

Liabilities assumed by buyer in connection with sale of real estate $ 2,776 $ —

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 June 30, 2024, the Company owned, directly or through joint ventures, and leased to independent operators 235 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 25,058 operational beds and units located in 30 states with the highest concentration of properties by rental income located in California and Texas.

As of June 30, 2024, the Company also had other real estate related investments consisting of two preferred equity investments, 11 real estate secured loans receivable and four mezzanine loans receivable with a carrying value of $ 433.5 million.

As of September 30, 2024, the Company owned, directly or through joint ventures, and leased to independent operators 226 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 24,512 operational beds and units located in 31 states with the highest concentration of properties by rental income located in California and Texas.

As of September 30, 2024, the Company also had other real estate related investments consisting of three preferred equity investments, 12 real estate secured loans receivable and four mezzanine loans receivable with a carrying value of $ 740.7 million.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 unchanged sentences

REAL ESTATE INVESTMENTS, NET

The following table summarizes the Company’s investment in owned properties, and properties held in consolidated joint ventures, held for use as of June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 2024 December 31, 2023

The following table summarizes the Company’s investment in owned properties, and properties held in consolidated joint ventures, held for use as of September 30, 2024 and December 31, 2023 (dollars in thousands):

September 30, 2024 December 31, 2023

Land $ 331,321 $ 279,276

5 unchanged sentences

Real estate investments, net $ 1,749,139 $ 1,567,119

As of June 30, 2024, all of the Company’s owned and held for investment facilities were leased to various operators under triple-net leases.

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

As of September 30, 2024, all of the Company’s owned and held for investment facilities were leased to various operators under triple-net leases.

During the third quarter of 2022, the Company entered into a triple-net lease agreement for two of the Company’s facilities which are being repurposed to behavioral health facilities, one of which was classified as held for sale during the three months ended September 30, 2024.

All of the triple-net 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.

As of June 30, 2024, 20 facilities were held for sale.

As of September 30, 2024, 8 facilities were held for sale.

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

As of June 30, 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 (six months) $ 110,578

As of September 30, 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 (three months) $ 56,317

Thereafter 1,066,803

3 unchanged sentences

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

Asset Type (1)

Properties Lease Expiration Option Period Open Date (2)

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

Option Type (2)

5 unchanged sentences

SNF / Campus 1 May 2034 6/1/2027 (8)

(1) Excludes a purchase option on an 11 building SNF portfolio classified as held for sale as of June 30, 2024 and representing $ 5.1 million of current cash rent.

The tenant is currently not eligible to elect the option.

(1) 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 June 30, 2024.

(3) Based on annualized cash revenue for contracts in place as of September 30, 2024.

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

7 unchanged sentences

If the operator exercises its option to extend the term of the master lease, beginning on June 1, 2035 and ending nine months thereafter, the operator will have a purchase option for all facilities then remaining in the master lease.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Rental Income

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Rental Income 2024 2023 2024 2023

2 unchanged sentences

Straight-line rent ( 7 ) ( 7 ) ( 21 ) ( 21 )

Amortization of lease incentive ( 4 ) — ( 4 ) —

Amortization of below-market lease intangible 575 — 1,150 —

Amortization of lease incentives ( 5 ) — ( 9 ) —

Amortization of below-market leases 809 — 1,959 —

Total $ 57,153 $ 51,218 $ 166,062 $ 145,126

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(1) Includes initial cash rent and tenant operating expense reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company.

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 June 30, 2024 and 2023 were $ 1.9 million and $ 1.2 million, respectively.

Tenant operating expense reimbursements for the six months ended June 30, 2024 and 2023 were $ 3.4 million and $ 1.9 million, respectively.

Tenant operating expense reimbursements for the three months ended September 30, 2024 and 2023 were $ 1.7 million and $ 2.0 million, respectively.

Tenant operating expense reimbursements for the nine months ended September 30, 2024 and 2023 were $ 5.1 million and $ 3.9 million, respectively.

Recent Real Estate Acquisitions

The following table summarizes the Company’s acquisitions for the six months ended June 30, 2024 (dollars in thousands):

The following table summarizes the Company’s acquisitions for the nine months ended September 30, 2024 (dollars in thousands):

Type of Property Purchase Price (1)

2 unchanged sentences

Skilled nursing (4)

$ 182,024 $ 14,612 9 894

Multi-service campuses (5)

6 unchanged sentences

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

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

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

(5) Includes two multi-service campuses held through a joint venture.

3 unchanged sentences

Lease Amendments and Terminations

Lease Termination and Amended Ensign Lease.

Effective September 1, 2024, one SNF in Kansas was removed from a master lease with a skilled nursing operator and the Company terminated the master lease.

Annual cash rent under the terminated master lease prior to lease termination was approximately $ 0.8 million.

In connection with the lease termination, the Company amended and extended one existing triple-net master lease with subsidiaries of The Ensign Group, Inc.

(“Ensign”) to include the one SNF.

The amended lease has a remaining term of approximately 15 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 $ 0.6 million.

Lease Termination and New Jaybird Lease.

Effective August 1, 2024, two ALFs in Illinois were removed from a master lease with a seniors housing operator and the Company terminated the master lease.

In connection with the lease termination, the Company entered into a new master lease (the “Jaybird Lease”) with affiliates of Jaybird Senior Living, Inc.

(“Jaybird”) with respect to the two ALFs.

The new Jaybird Lease commenced on August 1, 2024 with an initial term of approximately 12 years, featuring two five-year renewal options and CPI-based rent escalators.

Under the Jaybird Lease, Jaybird will receive three months of abated rent, followed by fifteen months of rent calculated as a percentage of the tenants’ gross revenue.

Subsequently, the next twelve months will have a fixed annual cash rent amount of $ 1.8 million.

Annual rent under the terminated master lease was $ 1.8 million.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

New Bayshire Lease.

5 unchanged sentences

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.

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

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.

10 unchanged sentences

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.

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.

Amended Pennant Lease.

On July 6, 2023, the Company amended its master lease with the Pennant Group, Inc.

(“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.

Noble VA Lease Termination and New Pennant Lease.

1 unchanged sentence

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 the Pennant Group, Inc.

(“Pennant”) with respect to the two ALFs.

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.

4 unchanged sentences

Impairment of Real Estate Investments Held for Sale

During the three and six months ended June 30, 2024, the Company recognized aggregate impairment charges of $ 25.7 million and $ 28.5 million, respectively, related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated statements of operations.

During the three and six months ended June 30, 2023, the Company recognized aggregate impairment charges of $ 21.4 million and $ 23.3 million, respectively, related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated statements of operations.

As of June 30, 2024, there were 20 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.

During the three and nine months ended September 30, 2024, the Company recognized aggregate impairment charges of $ 8.4 million and $ 36.9 million, respectively, related to properties held for sale, which is reported in impairment of real estate investments in the condensed consolidated income statements.

During the three and nine months ended September 30, 2023, the Company recognized aggregate impairment charges of $ 0.2 million and $ 23.5 million, respectively, 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 September 30, 2024, the Company determined that two facilities held for sale no longer met the criteria to be held for sale and were reclassified as held for investment.

As of September 30, 2024, there were 8 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 (as defined below) 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:

1 unchanged sentence

There are inherent uncertainties in making these assumptions.

For the Company’s impairment calculations during the six months ended June 30, 2024, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 11,000 to $ 46,000 , with a weighted average price per unit of $ 24,000 .

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

The Company disposed of this facility during the three months ended June 30, 2024 and recorded a gain on sale of approximately $ 21,000 .

For the Company’s impairment calculations during the six months ended June 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 $ 21,000 .

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

For the Company’s impairment calculations during the nine months ended September 30, 2024, the Company’s fair value estimates primarily relied on a market approach and utilized prices per unit ranging from $ 5,000 to $ 94,000 , with a weighted average price per unit of $ 36,000 .

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 .

Impairment of Real Estate Investments Held for Investment

During the three and nine 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 as of September 30, 2023, 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 (as defined below) 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 a price per unit of $ 7,000 .

Asset Sales and Held for Sale Reclassifications

The following table summarizes the Company’s dispositions for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Three Months Ended June 30, Six Months Ended June 30,

On August 30, 2024, the Company completed the sale of a portfolio of 11 SNFs located in Iowa and Georgia, leased to affiliates of Arboreta Healthcare, Inc., as shown in the table below.

The following table summarizes the Company’s dispositions for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 2024 2023

3 unchanged sentences

Net carrying value 9,998 — 11,106 14,506

Net gain on sale $ 21 $ 2,028 $ 32 $ 1,958

(1) Net sales proceeds for the six months ended June 30, 2024 includes $ 1.0 million of seller financing in connection with the sale of one ALF in January 2024.

Net sales proceeds for the three and six months ended June 30, 2023 includes $ 2.0 million of seller financing in connection with the sale of one ALF in June 2023.

Net (loss) gain on sale $ ( 2,286 ) $ — $ ( 2,254 ) $ 1,958

(1) Net sales proceeds for the nine months ended September 30, 2024 includes $ 1.0 million of seller financing in connection with the sale of one ALF in January 2024.

Net sales proceeds for the three and nine months ended September 30, 2024 includes $ 2.8 million of liabilities assumed by the buyer in connection with the sale of 11 SNFs.

Net sales proceeds for the nine months ended September 30, 2023 includes $ 2.0 million of seller financing in connection with the sale of one ALF in June 2023.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 ( 36,872 ) —

June 30, 2024 $ 28,753 20

Assets reclassified to held for investment ( 5,008 ) ( 2 )

September 30, 2024

December 31, 2022 $ 12,291 5

2 unchanged sentences

Impairment of real estate held for sale ( 23,508 ) —

June 30, 2023 $ 21,554 15

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

September 30, 2023

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

As of June 30, 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 June 30, 2024

As of September 30, 2024 and December 31, 2023, the Company’s other real estate related investments, inclusive of accrued interest, consisted of the following (dollars in thousands):

Facility Count and Type

As of September 30, 2024

Loans Receivable, at Fair Value:

SNF Campus ALF ILF Principal Balance as of June 30, 2024

Fair Value as of June 30, 2024

SNF Campus ALF ILF Principal Balance as of September 30, 2024

Fair Value as of September 30, 2024

Fair Value as of December 31, 2023

2 unchanged sentences

Mortgage secured loans receivable (3)

59 4 19 2 $ 617,872 $ 611,627 $ 156,769 8.8 % 5/31/2025 - 6/29/2033

Mezzanine loans receivable (3)

40 3 2 — 77,165 74,822 21,799 12.8 % 7/25/2027 - 6/30/2032

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

(2) Three 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 June 30, 2024 was 5.34 %.

Facility Count and Type As of June 30, 2024

$ 695,037 $ 686,449 $ 178,568

As of September 30, 2024

Other Investments:

SNF Campus ALF ILF Principal Balance as of June 30, 2024

Book Value as of June 30, 2024

Principal Balance as of September 30, 2024

Book Value as of September 30, 2024

Book Value as of December 31, 2023

2 unchanged sentences

Total $ 53,782 $ 54,281 $ 1,801

The following table summarizes the Company’s other real estate related investments activity for the six months ended June 30, 2024 and 2023 (dollars in thousands):

Six Months Ended June 30,

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

(2) Three 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 September 30, 2024 was 4.84 %.

(3) If the Company also has extended mezzanine financing to an affiliate of the borrower under a mortgage loan receivable, the applicable facility counts are included in both respective totals.

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, 2024 and 2023 (dollars in thousands):

Nine Months Ended September 30,

Origination of other real estate related investments $ 556,951 $ 47,534

9 unchanged sentences

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.

24 unchanged sentences

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

On June 3, 2024, the Company extended a $ 165.0 million mortgage loan to a regional health care real estate owner.

5 unchanged sentences

Concurrently with closing, KeyBank National Association purchased a $ 75.0 million participation in the mortgage loan from the Company.

On July 30, 2024, the Company exercised the call option on the $ 75.0 million secured borrowing at a call purchase price equal to the principal amount plus accrued and unpaid interest and an exit fee of $ 0.4 million.

See Note 7, Debt , for additional information.

2 unchanged sentences

Prepayment of the preferred equity investment is restricted, subject to certain carveouts, prior to the senior mortgage loan being paid off in full.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

On August 1, 2024, the Company extended a $ 260.0 million mortgage loan to a skilled nursing real estate owner.

The loan is secured by a first priority mortgage lien on a real estate portfolio of 37 SNFs, ALFs and multi-service campuses located in various states and bears interest at a fixed rate of 8.4 %, payable monthly.

The mortgage loan is set to mature on August 1, 2029 and has a 24-month lockout period on prepayment subject to certain exceptions.

The mortgage loan may otherwise be prepaid in part or in whole after the 24-month lockout period with agreed upon exit fees, as applicable.

In addition, on August 1, 2024, the Company funded a $ 43.0 million preferred equity investment in an uptier holding company of the 37 -property skilled nursing and assisted living portfolio.

The Company's initial contractual yield on its preferred equity investment is 11 %.

Other Loans Receivables

As of June 30, 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 June 30, 2024

Investment Principal Balance as of June 30, 2024

Book Value as of June 30, 2024

As of September 30, 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 September 30, 2024

Investment Principal Balance as of September 30, 2024

Book Value as of September 30, 2024

Book Value as of December 31, 2023

3 unchanged sentences

Total $ 17,979 $ 15,952 $ 15,062

The following table summarizes the Company’s other loans receivable activity for the six months ended June 30, 2024 and 2023 (dollars in thousands):

Six Months Ended June 30,

Origination of loans receivable $ 985 $ 1,019

(1) One other loan receivable with a principal balance of $ 4.9 million matured on June 30, 2024.

The Company and the borrower are in the process of negotiating terms for an extension of the maturity date.

The other loan receivable is considered collectible as of September 30, 2024.

The following table summarizes the Company’s other loans receivable activity for the nine months ended September 30, 2024 and 2023 (dollars in thousands):

Nine Months Ended September 30,

Origination of other loans receivable $ 985 $ 5,160

Principal payments ( 100 ) ( 703 )

1 unchanged sentence

Net change in other loans receivable $ 890 $ 4,490

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

During both the six months ended June 30, 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 and six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

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

During both the nine months ended September 30, 2024 and 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 sum marizes the interest and other income recognized from the Company’s loans receivable and other investments during the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Investment 2024 2023 2024 2023

11 unchanged sentences

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

4 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 June 30, 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 June 30, 2024

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of September 30, 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 September 30, 2024

Mortgage secured loans receivable $ — $ — $ 611,627 $ 611,627

11 unchanged sentences

Accrued interest, net 3,034 585

Unrealized loss on other real estate related investments, net ( 2,039 ) ( 450 )

Balance as of June 30, 2024

Unrealized (loss) gain on other real estate related investments, net ( 962 ) 273

Balance as of September 30, 2024

$ 611,627 $ 74,822

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 and six months ended June 30, 2024, the Company recorded an unrealized loss of $ 2.4 million and $ 3.2 million, respectively, on the Company’s secured and mezzanine loans receivable due to rising interest rates, partially offset by unrealized gains of $ 0.5 million and $ 0.7 million, respectively, due to increases in expected cash flows on floating rate loans.

During the three months ended September 30, 2024, the Company recorded unrealized gains of $ 5.9 million, which were partially offset by unrealized losses of $ 4.1 million, on its secured and mezzanine loans receivable to bring the interest rates in line with market rates.

During the nine months ended September 30, 2024, the Company recorded unrealized losses on its secured and mezzanine loans receivable of $ 7.3 million, which were partially offset by unrealized gains of $ 6.6 million, to bring the interest rates in line with market rates.

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 June 30, 2024 and December 31, 2023, the Company did no t have any loans that were 90 days or more past due.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 June 30, 2024:

Type Book Value as of June 30, 2024

As of September 30, 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 September 30, 2024

Valuation Technique Unobservable Inputs Range

1 unchanged sentence

Mezzanine loans receivable 74,822 Discounted cash flow Discount Rate 12 % - 15 %

For the six months ended June 30, 2024, there were no classification changes in assets and liabilities with Level 3 inputs in the fair value hierarchy.

For the nine months ended September 30, 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 Company’s preferred equity investments and the Notes (as defined in Note 7, Debt, below) as of June 30, 2024 and December 31, 2023 is as follows (dollars in thousands):

June 30, 2024 December 31, 2023

A summary of the face value, carrying amount and fair value of the Company’s preferred equity investments and the Notes (as defined in Note 7, Debt, below) as of September 30, 2024 and December 31, 2023 is as follows (dollars in thousands):

September 30, 2024 December 31, 2023

Value Carrying

14 unchanged sentences

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.

Secured borrowing:

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

The following table summarizes the balance of the Company’s indebtedness as of June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 2024 December 31, 2023

The following table summarizes the balance of the Company’s indebtedness as of September 30, 2024 and December 31, 2023 (dollars in thousands):

September 30, 2024 December 31, 2023

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

2 unchanged sentences

Unsecured revolving credit facility (1)

Secured borrowing (2)

$ 400,000 $ ( 3,295 ) $ 396,705 $ 600,000 $ ( 4,402 ) $ 595,598

$ 675,000 $ ( 3,852 ) $ 671,148 $ 600,000 $ ( 4,402 ) $ 595,598

(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.

(2) See Note 5, Other Real Estate Related and Other Investments , for more information on the secured borrowing.

Senior Unsecured Notes Payable

7 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.

14 unchanged sentences

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

As of June 30, 2024, 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 September 30, 2024, the Company was in compliance with all applicable financial covenants under the indenture governing the Notes.

Unsecured Revolving Credit Facility and Term Loan

7 unchanged sentences

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 June 30, 2024, the Operating Partnership had $ 200.0 million of borrowings outstanding under the Term Loan and no borrowings outstanding under the Revolving Facility.

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

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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).

On September 19, 2024 (the “Prepayment Date”), the Company elected to prepay all $ 200.0 million aggregate principal amount of their outstanding Term Loan.

The Term Loan was prepaid at the principal amount of the Term Loan, plus accrued and unpaid interest thereon up to, but not including, the Prepayment Date.

During the third quarter of 2024, the Company recorded a loss on extinguishment of debt of $ 0.3 million related to the write-off of deferred financing costs associated with the prepayment of the Term Loan.

As of September 30, 2024, the Operating Partnership had 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.

Prior to prepayment, the Term Loan had a maturity date of February 8, 2026.

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).

2 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 June 30, 2024, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

As of September 30, 2024, the Company was in compliance with all applicable financial covenants under the Second Amended Credit Agreement.

Secured Borrowing

On June 3, 2024, KeyBank National Association purchased a $ 75.0 million undivided participation interest in a $ 165.0 million mortgage loan from the Company (see Note 5, Other Real Estate Related and Other Investments , for additional information), which bears interest at a rate of SOFR, with a term SOFR floor of 3.00 %, plus 2.5 % or 2.25 %, depending on the debt yield of the loan, and payable monthly.

On June 3, 2024, KeyBank National Association purchased a $ 75.0 million undivided participation interest in a $ 165.0 million mortgage loan from the Company (see Note 5, Other Real Estate Related and Other Investments , for additional information), which bore interest at a rate of SOFR, with a term SOFR floor of 3.00 %, plus 2.5 % or 2.25 %, depending on the debt yield of the loan, and payable monthly.

As the transaction did not qualify as a sale in accordance with GAAP, the Company recorded the participation interest as a secured borrowing in the amount of $ 75.0 million in the condensed consolidated balance sheet.

The participating interest may be prepaid in whole before the maturity date for an exit fee of up to 0.50 % of the loan plus unpaid interest .

The participation interest provides for a put option, subject to certain restrictions, and a call option for the then-outstanding loan amount plus accrued and unpaid interest.

As of June 30, 2024, the interest rate in effect for the secured borrowing was 7.83 %.

On July 30, 2024, the Company exercised the call option on the $ 75.0 million secured borrowing.

See Note 14, Subsequent Events , for additional information.

At-The-Market Offering —On May 6, 2024, 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”).

The participating interest could be prepaid in whole before the maturity date for an exit fee of up to 0.50 % of the loan plus unpaid interest .

The participation interest provided for a put option, subject to certain restrictions, and a call option for the then-outstanding loan amount plus accrued and unpaid interest.

On July 30, 2024, the Company exercised the call option on the $ 75.0 million secured borrowing and recorded a loss on extinguishment of debt of $ 0.4 million related to the exit fee.

The exit fee is included in loss on extinguishment of debt in the condensed consolidated income statements.

At-The-Market Offering —On August 29, 2024, the Company entered into a new equity distribution agreement to issue and sell, from time to time, up to $ 750.0 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 (together, with all previous at-the-market equity offering programs, the “Previous ATM Programs” 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 —

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.

The following table summarizes the ATM Program activity for the three and six months ended June 30, 2024 (in thousands, except per share amounts):

For the Three Months Ended For the Six Months Ended

June 30, 2024

The following table summarizes the ATM Program activity for the three and nine months ended September 30, 2024 and 2023 (in thousands, except per share amounts):

For the Three Months Ended For the Nine Months Ended

September 30, 2024

September 30, 2023 September 30, 2024

September 30, 2023

Number of shares 17,241 16,285 40,986 16,285

2 unchanged sentences

$ 500,085 $ 323,886 $ 1,079,852 $ 323,886

(1) Total gross proceeds is before $ 3.8 million and $ 7.2 million of commissions paid to the sales agents during the three and six months ended June 30, 2024, respectively, under the ATM Program.

During the three and six months ended June 30, 2023, the Company executed forward equity sales under the ATM Program with a financial institution acting as a forward purchaser to sell 6,736,089 shares of common stock at a weighted average sales price of $ 19.71 per share before commissions and offering expenses.

The Company did not receive any proceeds from the sales of its shares of common stock by the forward sellers.

As of June 30, 2023, the Company had not settled any portion of these forward equity sales.

No forward equity sales were executed or settled under the ATM Program during the three and six months ended June 30, 2024, and there were no outstanding ATM forward contracts that had not settled as of June 30, 2024.

As of June 30, 2024, the Company had $ 193.5 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 six months of 2024 (dollars in thousands, except per share amounts):

(1) Total gross proceeds is before $ 6.2 million and $ 4.0 million of commissions paid to the sales agents and forward adjustments during the three months ended September 30, 2024 and 2023, respectively, under the ATM Program.

Total gross proceeds is before $ 13.4 million and $ 4.0 million of commissions paid to the sales agents and forward adjustments during the nine months ended September 30, 2024 and 2023, respectively, under the ATM Program.

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.

No forward equity sales were executed or settled under the ATM Program during the three and nine months ended September 30, 2024, and there were no outstanding ATM forward contracts that had not settled as of September 30, 2024.

As of September 30, 2024, the Company had $ 440.1 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 nine months of 2024 (dollars in thousands, except per share amounts):

For the Three Months Ended

March 31, 2024 June 30, 2024

March 31, 2024 June 30, 2024 September 30, 2024

Dividends declared per share $ 0.29 $ 0.29 $ 0.29

Dividends payment date April 15, 2024 July 15, 2024

Dividends payment date April 15, 2024 July 15, 2024 October 15, 2024

Dividends payable as of record date $ 41,192 $ 44,721 $ 49,721

Dividends record date March 28, 2024 June 28, 2024

Dividends record date March 28, 2024 June 28, 2024 September 30, 2024

STOCK-BASED COMPENSATION

4 unchanged sentences

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

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.

6 unchanged sentences

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 six months ended June 30, 2024:

The following table summarizes the status of the restricted stock award and performance award activity for the nine months ended September 30, 2024 :

Shares Weighted Average Share Price

3 unchanged sentences

Forfeited ( 35,161 ) 20.48

Unvested balance at June 30, 2024 327,336 $ 21.43

As of June 30, 2024, the weighted-average remaining vesting period of such awards w as 1.7 years.

Unvested balance at September 30, 2024 327,336 $ 21.43

As of September 30, 2024, the weighted-average remaining vesting period of such award s was 1.5 years.

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2024 2023 2024 2023

Stock-based compensation expense $ 1,143 $ 1,519 $ 4,669 $ 3,379

For the three and six months ended June 30, 2023, approximately $ 0.6 million of previously recognized stock-based compensation expense related to the PSAs was reversed as the awards were not expected to meet the performance

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 were 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, 2024, there was $ 6.3 million of unamortized stock-based compensation expense related to the unvested RSAs and TSR Units.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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

As of June 30, 2024, there was $ 7.4 million of unamortized stock-based compensation expense related to the unvested RSAs and TSR Units.

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 six months ended June 30, 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 June 30, For the Six Months Ended June 30,

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 and nine months ended September 30, 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 (dollars and shares in thousands, except per share amounts):

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

2024 2023 2024 2023

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

Net income attributable to CareTrust REIT, Inc.

$ 33,441 $ 8,696 $ 72,945 $ 27,439

5 unchanged sentences

Weighted-average diluted common shares outstanding 159,850 104,311 146,153 100,918

Earnings (loss) per common share attributable to CareTrust REIT, Inc., basic $ 0.07 $ ( 0.01 ) $ 0.28 $ 0.19

Earnings (loss) per common share attributable to CareTrust REIT, Inc., diluted $ 0.07 $ ( 0.01 ) $ 0.28 $ 0.19

Earnings per common share attributable to CareTrust REIT, Inc., basic $ 0.21 $ 0.08 $ 0.50 $ 0.27

Earnings per common share attributable to CareTrust REIT, Inc., diluted $ 0.21 $ 0.08 $ 0.50 $ 0.27

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

327 317 327 317

(1) For the three and six months ended June 30, 2024, RSAs are antidilutive.

For the three months ended June 30, 2023, RSAs and TSR Units are antidilutive.

For the six months ended June 30, 2023, certain TSR Units and RSAs are antidilutive.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

(1) For the three and nine months ended September 30, 2024, RSAs are antidilutive.

For the three months ended September 30, 2023, RSAs were antidilutive.

For the nine months ended September 30, 2023, RSAs and certain TSR Units were antidilutive.

VARIABLE INTEREST ENTITIES

3 unchanged sentences

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 June 30, 2024, the Company held three SNFs, two multi-service campuses and one ALF in multiple VIEs.

As of September 30, 2024, the Company held four SNFs, two multi-service campuses 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.

2 unchanged sentences

The JV partner contributed the remaining $ 0.7 million of the total investment.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

On August 7, 2024, the Company entered into a JV, pursuant to which the Company contributed $ 24.5 million into the JV that purchased one SNF located in California for $ 25.1 million.

The JV partner contributed the remaining $ 0.6 million of the total investment.

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

June 30, 2024

September 30, 2024

December 31, 2023

14 unchanged sentences

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

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.

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 June 30, 2024 (in thousands):

The table below summarizes the Company’s existing, known commitments and contingencies as of September 30, 2024 (in thousands):

Remaining Commitment

2 unchanged sentences

Other loans receivable (3)

(1) As of June 30, 2024, the Company had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities totaling $ 14.3 million, of which $ 6.5 million is subject to rent increase at the time of funding.

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

Earn-out obligation (4)

(1) As of September 30, 2024, the Company had committed to fund expansions, construction, capital improvements and ESG incentives at certain triple-net leased facilities totaling $ 14.8 million, of which $ 7.2 million is subject to rent increase at the time of funding.

(2) One mortgage loan includes an earn-out advance upon satisfaction of certain conditions.

On October 11, 2024, these conditions were satisfied and the earn-out was funded.

(3) Represents working capital loan commitments.

(4) Includes an earn-out obligation of up to $ 10.0 million under a purchase and sale agreement for one SNF in Virginia, which was acquired during 2024.

The earn-out is available, contingent on the operator achieving certain thresholds per the agreement, beginning in October 2025 through October 2026.

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 revenue for the three and six months ended June 30, 2024 and 2023.

The following table sets forth information regarding the Company’s major operators as of June 30, 2024 and 2023:

Major operator concentration – The Company has operators from which it derived 10% or more of its revenue for the three and nine months ended September 30, 2024 and 2023.

The following table sets forth information regarding the Company’s major operators as of September 30, 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 Six Months Ended

June 30, 2024 (1)

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

September 30, 2024 (1)

86 8 7 9,116 997 661 25 % 28 %

Priority Management Group 13 2 — 1,742 402 — 11 % 12 %

June 30, 2023 (2)

September 30, 2023 (2)

83 8 7 8,741 997 661 34 % 36 %

Priority Management Group 13 2 — 1,742 402 — 15 % 16 %

(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.

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

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

(3) Ensign is subject to the registration and reporting requirements of the SEC and is required to file with the SEC annual reports containing audited financial information and quarterly reports containing unaudited financial information.

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

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 and six months ended June 30, 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 Six Months Ended

June 30, 2024 (1)

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

September 30, 2024 (1)

CA 43 12 10 5,117 2,004 872 28 % 29 %

TX 41 4 2 5,193 630 212 17 % 19 %

June 30, 2023 (2)

September 30, 2023 (2)

CA 30 9 5 3,494 1,527 437 29 % 28 %

TX 40 3 2 5,126 536 212 22 % 23 %

(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.

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

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

SUBSEQUENT EVENTS

1 unchanged sentence

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

Recent Acquisitions

On October 1, 2024, the Company acquired two SNFs and one multi-service campus in Maryland for $ 55.5 million, which includes estimated capitalized acquisition costs.

In connection with the acquisition of the facilities, the Company entered into a new master lease with a skilled nursing operator.

The new master lease has an initial term of approximately 15 years, with two five-year renewal options and CPI-based rent escalators.

Initial annual cash rent under the new master lease is $ 5.2 million.

Recent Investments

On August 1, 2024, the Company extended a $ 260.0 million mortgage loan to a skilled nursing real estate owner.

The mortgage loan is set to mature on August 1, 2029 and has a 24-month lockout period on prepayment subject to certain exceptions.

The mortgage loan may otherwise be prepaid in part or in whole after the 24-month lockout period with agreed upon exit fees, as applicable.

In addition, on August 1, 2024, the Company funded a $ 43.0 million preferred equity investment in an uptier holding company of the 37 -property skilled nursing and assisted living portfolio.

The Company's initial contractual yield on its preferred equity investment is 11 %.

Secured Borrowing

On October 1, 2024, and in connection with the $ 55.5 million skilled nursing acquisition described above, the Company extended a $ 19.2 million mortgage loan to a skilled nursing operator.

The loan is secured by a first priority ground leasehold mortgage lien on a SNF located in Maryland and bears interest at an initial annual rate of 9.35 % with annual CPI-based escalators, payable monthly.

The mortgage loan has a term of 15 years and is set to mature on September 30, 2039, with two five-year extension options.

The mortgage loan provides for a put option, giving the borrower the right to require the lender to purchase the underlying ground leasehold and property associated with the mortgage loan.

The exercise window for the put option is 30 days prior to the maturity date.

The mortgage loan also provides for a purchase option in favor of the Company (subject to certain requirements) with two exercise windows.

The first exercise window is on or before October 1, 2026.

The second purchase option window opens January 1, 2039, and remains open for 6 months.

On October 1, 2024, the Company extended a $ 9.8 million mortgage loan to a skilled nursing real estate owner.

The loan is secured by a first priority mortgage lien on a SNF located in Colorado and bears interest at a fixed rate of 8.5 %, payable monthly.

The mortgage loan is set to mature on September 30, 2034.

The mortgage provides a one-year extension option and may (subject to certain restrictions) be prepaid in whole, after the 18th month following the loan closing, for an exit fee ranging from 0 % to 2 % of the loan plus unpaid interest payments.

Entry into a Material Definitive Agreement

On October 29, 2024, in connection with a joint venture arrangement (the “Tennessee JV”) between the Operating Partnership and an unaffiliated third party, the Operating Partnership became bound by the terms of an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which the Tennessee JV has agreed to acquire 31 skilled nursing facilities (the “Tennessee SNF Facilities”) for an aggregate purchase price of approximately $ 500 million, exclusive of transaction costs.

In connection with the Tennessee JV’s acquisition of the Tennessee SNF Facilities, the Operating Partnership is expected to

CARETRUST REIT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

contribute approximately $ 442 million toward the aggregate purchase price to the Tennessee JV and, in exchange, the Operating Partnership will own 100 % of the preferred equity ownership interests in the Tennessee JV representing 92.5 % of the total investment and 50 % of the common ownership interests in the Tennessee JV representing 3.75 % of the total investment.

The Tennessee SNF Facilities consist of a total of 3,290 licensed beds, with 30 of the facilities located in Tennessee and one in Alabama.

The Company has contributed $ 8.5 million to the Tennessee JV, which was used to partially fund the earnest money deposit under the Purchase Agreement.

Completion of the Tennessee JV’s acquisition of the Tennessee SNF Facilities is subject to customary closing conditions, and is expected to close in two phases during December 2024.

At closing, the Tennessee SNF Facilities are anticipated to be operated by affiliates of PACS Group, Inc.

( twelve facilities), Ensign ( nine facilities), and Links Healthcare Group ( seven facilities), who are all current tenants of the Company, as well as one new operator relationship ( three facilities), under long-term master leases.

Three of Ensign’s nine facilities will be acquired by Ensign’s real estate subsidiary with the remaining six to be included in a new master lease.

Initial annual base rent to the Tennessee JV relating to the Tennessee SNF Facilities is expected to aggregate approximately $ 44.4 million.

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