What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-12 compared with 2024-02-08 · 717 added, 348 removed, 1343 unchanged (44% of the section changed)

89 unchanged sentences

(incorporated by reference to Exhibit 10.5 to CareTrust REIT, Inc.’s Current Report on Form 8-K, filed on June 5, 2014).

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

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

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

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

9 unchanged sentences

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

Third Amended and Restated Credit and Guaranty Agreement, dated as of December 18, 2024, by and among CTR Partnership, L.P., as borrower, CareTrust REIT, Inc., as guarantor, CareTrust GP, LLC and the other guarantors named therein and KeyBank National Association, as administrative agent, an issuing lender and swingline lender and the other parties thereto (incorporated by reference to Exhibit 10.1 to CareTrust REIT.

Inc.’s Current Report on Form 8-K, filed on December 19, 2024).

Asset Purchase Agreement, dated October 21, 2024.

CareTrust REIT, Inc.

Policy on Insider Trading

List of Subsidiaries of CareTrust REIT, Inc.

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

Policy Regarding the Recoupment of Certain Compensation Payments

Policy Regarding the Recoupment of Certain Compensation Payments (incorporated by reference to Exhibit 97.1 to CareTrust REIT Inc.’s Annual Report on Form 10-K, filed on February 8, 2024).

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

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/s/ WILLIAM M.

WAGNER Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) February 8, 2024

WAGNER Chief Financial Officer and Treasurer (Principal Financial Officer) February 12, 2025

/s/ LAUREN BEALE Chief Accounting Officer (Principal Accounting Officer) February 12, 2025

/s/ DIANA LAING Director February 12, 2025

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Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Equity for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Equity and Redeemable Noncontrolling Interest for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022

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We have audited the accompanying consolidated balance sheets of CareTrust REIT, Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, equity and redeemable noncontrolling interest, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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

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

As of December 31, 2024, the Company had real estate investments held for sale of $57.3 million.

For the year ended December 31, 2024, the Company recognized impairment charges of $37.3 million related to real estate investments held for sale.

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

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

• We assessed the reasonableness of the valuation methodology used and the concluded real estate investment fair value by obtaining sales comparison data.

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

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

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

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

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

/s/ Deloitte & Touche LLP

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Real estate investments, net $ 2,226,740 $ 1,567,119

Financing receivable, at fair value (including accrued interest of $ 281 as of December 31, 2024)

Other real estate related investments (including accrued interest of $ 4,725 and $ 1,727 as of December 31, 2024 and 2023, respectively)

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Senior unsecured term loan, net — 199,559

Unsecured revolving credit facility — 125,000

Accounts payable, accrued liabilities and deferred rent liabilities 56,318 33,992

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Commitments and contingencies (Note 13)

Redeemable noncontrolling interest 18,243 —

Preferred stock, $ 0.01 par value;

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Rental income $ 228,261 $ 198,599 $ 187,506

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

Interest income from financing receivable 1,009 — —

Interest income from other real estate related investments and other income 67,016 19,171 8,626

Total revenues 296,286 217,770 196,132

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Impairment of real estate investments 42,225 36,301 79,062

Transaction costs 1,326 — —

Provision for loan losses, net 4,900 — 3,844

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Total expenses 178,067 159,781 192,767

Other income (loss):

Loss on extinguishment of debt ( 657 ) — —

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

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

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

(Loss) gain on sale of real estate, net ( 2,208 ) 2,218 ( 3,769 )

Unrealized gain (loss) on other real estate related investments, net 9,045 ( 6,485 ) ( 7,102 )

Total other income (loss) 6,180 ( 4,267 ) ( 10,871 )

Net income (loss) 124,399 53,722 ( 7,506 )

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CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF EQUITY

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

(in thousands, except share and per share amounts)

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of Earnings Total Stockholders’ Equity Noncontrolling Interests Total

Equity Redeemable Noncontrolling Interest

Shares Amount

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Issuance of common stock, net 2,405,000 24 47,212 — 47,236 — 47,236 —

Vesting of restricted common stock, net of shares withheld for employee taxes 90,876 1 ( 1,331 ) — ( 1,330 ) — ( 1,330 )

Vesting of stock-based compensation awards, net of shares withheld for employee taxes 308,439 3 ( 4,472 ) — ( 4,469 ) — ( 4,469 ) —

Amortization of stock-based compensation — — 5,758 — 5,758 — 5,758 —

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

Net income — — — 71,982 71,982 — 71,982

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

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

Issuance of common stock, net 30,868,714 309 634,137 — 634,446 — 634,446 —

Vesting of restricted common stock, net of shares withheld for employee taxes 308,439 3 ( 4,472 ) — ( 4,469 ) — ( 4,469 )

Vesting of stock-based compensation awards, net of shares withheld for employee taxes 113,970 1 ( 1,480 ) — ( 1,479 ) — ( 1,479 ) —

Amortization of stock-based compensation — — 5,153 — 5,153 — 5,153 —

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

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

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

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

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

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

Issuance of common stock, net 56,855,925 569 1,552,325 — 1,552,894 — 1,552,894 —

Vesting of restricted common stock, net of shares withheld for employee taxes 113,970 1 ( 1,480 ) — ( 1,479 ) — ( 1,479 )

Vesting of stock-based compensation awards, net of shares withheld for employee taxes 144,289 1 ( 2,485 ) — ( 2,484 ) — ( 2,484 ) —

Amortization of stock-based compensation — — 6,130 — 6,130 — 6,130 —

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Loss on extinguishment of debt 282 — —

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

Unrealized (gain) loss on other real estate related investments, net ( 9,045 ) 6,485 7,102

Amortization of stock-based compensation 6,130 5,153 5,758

Straight-line rental income 28 29 ( 17 )

Amortization of below market rent ( 384 ) — —

Amortization of lease incentives 22 — —

Amortization of below market leases ( 2,885 ) ( 384 ) —

Adjustment for collectibility of rental income — — 1,417

Noncash interest income ( 3,279 ) ( 407 ) ( 1,165 )

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

Loss (gain) on sale of real estate, net 2,208 ( 2,218 ) 3,769

Impairment of real estate investments 42,225 36,301 79,062

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Investment in real estate related investments and other loans receivable ( 559,188 ) ( 60,319 ) ( 149,650 )

Investment in financing receivable ( 95,723 ) — —

Principal payments received on real estate related investments and other loans receivable 4,512 26,525 6,308

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Proceeds from the issuance of common stock, net 1,552,894 634,446 47,236

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

Proceeds from the secured borrowing 75,000 — —

Borrowings under unsecured revolving credit facility — 185,000 160,000

Payments on senior unsecured notes payable — — ( 300,000 )

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

Payment on secured borrowing ( 75,000 ) — —

Payments on unsecured revolving credit facility — ( 310,000 ) ( 115,000 )

Payments on debt extinguishment and deferred financing costs ( 68 ) ( 5,361 ) ( 14,095 )

Payments on extinguishment of debt and deferred financing costs ( 9,188 ) ( 68 ) ( 5,361 )

Net-settle adjustment on restricted stock ( 2,484 ) ( 1,479 ) ( 4,469 )

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Net cash provided by (used in) financing activities 1,188,806 394,318 ( 23,732 )

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

Net (decrease) increase in cash and cash equivalents ( 80,626 ) 281,270 ( 6,717 )

Cash and cash equivalents as of the beginning of period 294,448 13,178 19,895

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Transfer of pre-acquisition costs to acquired assets $ 58 $ — $ 7

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

Sale of real estate settled with note receivable $ 1,000 $ 2,000 $ 12,000

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

See accompanying notes to consolidated financial statements.

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

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

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

As of December 31, 2024, the Company owned, directly or in consolidated joint ventures, and leased to independent operators, 258 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 28,088 operational beds and units located in 32 states with the highest concentration of properties by rental income located in California and Texas.

As of December 31, 2024, the Company also had other real estate related investments consisting of three preferred equity investments, 15 real estate secured loans receivable, and five mezzanine loans receivable with a carrying value of $ 795.2 million and one financing receivable with a carrying value of $ 96.0 million.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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.

For any investment in a joint venture that is not considered to be a 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.

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

Redeemable Noncontrolling Interest —One of the Company’s noncontrolling interest holders has the ability to put its equity interests to the Company during specified option exercise periods, subject to certain conditions.

The put option is payable in cash and subject to changes in redemption value.

Accordingly, the Company records the redeemable noncontrolling interest outside of permanent equity.

The redeemable noncontrolling interest was initially measured at fair value on the date of issuance and is adjusted for additional contributions and distributions and the proportionate share of the net earnings or losses.

When the redemption of the noncontrolling interest becomes probable, the Company will record the redeemable noncontrolling interest at the greater of its carrying amount or redemption value at the end of each reporting period by making an election either to accrete changes in the redemption value of the redeemable noncontrolling interest over the period from the date it is probable of exercise to the earliest redemption date or to recognize the entire adjustment on the date redemption becomes probable.

Redeemable noncontrolling interest adjustments of carrying value to redemption value are reflected in additional paid-in-capital on the Company’s consolidated balance sheets.

The adjustment of carrying value to the redemption value that reflects a redemption in excess of fair value is included as an adjustment to net income available to the Company’s stockholders in the calculation of earnings per share.

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

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Otherwise, tenant recoveries for taxes and insurance are classified as additional rental revenues recognized by the lessor on a gross basis in its statements of operations.

As part of the Company’s acquisitions and/or amendments, the Company may commit to provide incentive payments to its lessees.

During the year ended December 31, 2024, the Company funded $ 2.9 million in lease incentives.

Lease incentives are amortized over the initial term of the respective lease as an adjustment to rental revenue.

Lease incentives are included in prepaid expenses and other assets, net on the Company’s consolidated balance sheets.

The Company’s assessment of collectibility of its tenant receivables includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection.

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

Interest Income —Interest income is recognized as earned over the term of the related other real estate related investment under the effective interest method, or on a straight-line basis if not materially different from the effective interest method.

Interest income is recorded on an accrual basis to the extent that such amounts are expected to be collected.

When concerns exist as to the ultimate collection of principal or interest due under a loan, the loan is placed on non-accrual status, and the Company will not recognize interest income until the cash is received, or the loan returns to accrual status.

If the Company determines that the collection of interest according to the contractual terms of the loan is probable, the Company will resume the accrual of interest.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimates and Assumptions —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

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

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Other intangible assets acquired include amounts for in-place lease values that are based on an evaluation of the specific characteristics of each property and the acquired tenant lease(s).

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

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

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

The following table summarizes the Company’s intangible lease liabilities (dollars in thousands):

December 31, 2024 December 31, 2023

Gross intangible lease liability $ 9,858 $ 7,289

Accumulated amortization ( 3,269 ) ( 384 )

Intangible liabilities, net $ 6,589 $ 6,905

Weighted average remaining amortization period in years 1.8 3

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

For the years ended December 31, 2024, 2023 and 2022, the Company recorded impairment charges of $ 42.2 million, $ 36.3 million and $ 79.1 million, respectively.

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

Financing Receivable —The Company may from time to time enter into a contract to acquire an asset and lease it back to the seller in a sale and leaseback transaction.

In accordance with ASC 842, Leases , the Company is required to determine whether the transaction qualifies as a sale with control of the asset being transferred to the Company.

A failed sale and leaseback transaction is accounted for as a financing receivable in accordance with ASC 310, Receivables.

If control of the asset subsequently is deemed to have transferred to the Company, the financing receivable would be reclassified as real estate investments.

No gain or loss would be recognized, and the related assets and liabilities would be recorded at their relative fair values on the date control is transferred.

One of the Company’s investments is accounted for as a financing receivable within the Company’s consolidated balance sheets, since control of the underlying assets did not transfer to the Company due to the existence of options for the seller-lessee to repurchase the real estate assets, which generally preclude accounting for the transfer of real estate assets as a sale.

The Company elected the fair value option for the financing receivable, and thereby, acquisition costs incurred in connection with entering into the financing receivable were expensed and recorded in transaction costs in the consolidated statements of operations.

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

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

Interest income from financing receivable on the Company’s consolidated statements of operations is recognized under the effective interest method.

Other Real Estate Related Investments —Included in other real estate related investments on the Company’s consolidated balance sheets at December 31, 2024, are three preferred equity investments, 15 real estate secured loans receivable and five mezzanine loans receivable.

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

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

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

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company elected the practical expedient not to record the preferred equity investments at fair value as the fair value is not readily determinable.

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

The Company recognizes return income on a monthly basis based on the outstanding investment including any accrued and unpaid return, to the extent there is outside contributed equity or cumulative earnings from operations.

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

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

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

During the year ended December 31, 2024, the Company determined that the remaining contractual obligations under one other loan receivable was not collectible and recorded a 4.9 million expected credit loss.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 0.8 million related to a loan previously written-off.

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Stock-Based Compensation —The Company accounts for share-based payment awards in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”).

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

ASC 718 requires all entities to apply a fair value-based measurement

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

method in accounting for share-based payment transactions with directors, officers and employees.

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

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Net income (loss) reflects stock-based compensation expense of $ 6.1 million, $ 5.2 million and $ 5.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

Concentration of Credit Risk —The Company is subject to concentrations of credit risk consisting primarily of contractual obligations of operators and borrowers under its lease and lending agreements.

See Note 14, Concentration of Risk , for a discussion of major operator concentration.

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The Company has one reportable segment consisting of investments in healthcare-related real estate assets.

See Note 11, Segment Reporting , for additional information.

Earnings Per Share —The Company calculates earnings per share (“EPS”) in accordance with ASC 260, Earnings Per Share .

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Diluted EPS reflects the additional dilution for all potentially-dilutive securities.

See Note 10, Earnings (Loss) Per Common Share , for additional information.

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

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

Recent Accounting Pronouncements

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

2023-07, Segment Reporting (Topic 280):

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

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and the inclusion of a segment reporting footnote.

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

Early adoption is permitted.

The Company adopted ASU 2023-07 during the year ended December 31, 2024.

See Note 11, Segment Reporting, for further detail.

Not Yet Adopted —On November 4, 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosures of income statement expenses for public business entities.

The ASU requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REAL ESTATE INVESTMENTS, NET

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Real estate investments, net $ 2,226,740 $ 1,567,119

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant Master Leases

Ensign — As of December 31, 2024, 97 of the Company’s 258 facilities were leased to subsidiaries of The Ensign Group, Inc.

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

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In addition to rent, the subsidiaries of Ensign that are tenants under the Ensign Master Leases are solely responsible for the costs related to the leased properties (including property taxes, insurance, and maintenance and repair costs).

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

During the year ended December 31, 2020, the Company acquired four additional facilities leased to subsidiaries of Ensign on a triple-net basis under two separate master lease agreements, each of which contains a purchase option.

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

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

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

During December 2024, the Company received written notice that Ensign will exercise the purchase option and as such these four facilities have been classified as held for sale as of December 31, 2024.

See Note 15, Subsequent Events , for additional information.

On December 31, 2024, the Company, through a consolidated joint venture, acquired six additional facilities leased to subsidiaries of Ensign on a triple-net basis under one separate master lease agreement, which commenced January 1, 2025 (the “Ensign TN Master Lease”).

The annualized contractual rental income under the Ensign TN Master Lease is $ 7.1 million and is escalated annually, in January, by an amount equal to the product of (1) the prior year’s rent, and (2) the product of (x) 2 and (y) the annual CPI increase (not to exceed 2.5 %).

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

(“Pennant”) under the Pennant Master Lease (defined below), which represent $ 7.5 million of total annualized contractual rental income as of December 31, 2024.

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

PACS — As of December 31, 2024, 14 of the Company’s properties were leased to affiliates of PACS Group, Inc.

(“PACS”) on a triple-net basis under one long-term lease (the “PACS Master Lease”), and have a total of 1,827 operational beds.

One of the facilities is included in held for sale as of December 31, 2024.

The PACS Master Lease commenced on October 26, 2017, and provides for an initial term of 15 years, with two five-year renewal options.

During the year ended December 31, 2024, the Company, through a joint venture, acquired 11 facilities, which have a total of 1,186 operational beds, leased to subsidiaries of PACS commencing on December 1, 2024, under a new triple-net master lease agreement (the “PACS TN Master Lease”).

The PACS TN Master Lease has an initial term of 15 years, with two five-year renewal options.

As of December 31, 2024, annualized contractual rental income from the PACS Master Lease was $ 20.0 million (excluding the facility classified as held for sale), and annualized contractual rental income from all PACS leases was $ 37.9 million (excluding $ 0.3 million of rent abatement in the first year of the PACS TN Master Lease), representing 8 % and 15 % of total annualized contractual rental income, respectively.

Rent is escalated annually in November under the PACS Master Lease by an amount equal to the product of (1) the lesser of the percentage change in the CPI (but not less than zero ) or 3 %, and (2) the prior year’s rent.

Rent under the PACS TN Master Lease is escalated annually in December by an amount equal to the product of (1) the percentage change in the CPI and (2) the prior year’s rent (subject to a 2 % floor and a 4 % cap).

The PACS TN Master Lease also provides rent abatement of $ 0.3 million in the first year.

Subsequent to December 31, 2024, the PACS TN Master Lease was amended, see Note 15, Subsequent Events, for additional information.

PMG — As of December 31, 2024, 15 of the Company’s facilities were leased to subsidiaries of Priority Management Group (“PMG”) on a triple-net basis under one long-term lease (the “PMG Master Lease”).

The PMG Master Lease commenced on December 1, 2016, and provides an initial term of fifteen years , with two five-year renewal options.

As of December 31, 2024, annualized contractual rental income from the PMG Master Lease was $ 31.9 million and is escalated annually by an amount equal to the product of (1) the lesser of the percentage change in the CPI (but not less than zero ) or 3.0 %, and (2) the prior year’s rent.

In addition to rent, the subsidiaries of PMG that are tenants under the PMG Master Lease are solely responsible for the costs related to the leased properties (including property taxes, insurance, and maintenance and repair costs).

In addition to rent, the subsidiaries of PMG that are tenants under the PMG Master Lease are

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

solely responsible for the costs related to the leased properties (including property taxes, insurance, and maintenance and repair costs).

As of December 31, 2024, 103 of the Company’s 258 facilities were leased to various other operators under triple-net leases.

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

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

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

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

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

As of December 31, 2024, one of the Company’s 258 facilities was non-operational and was disposed of subsequent to year end.

As of December 31, 2024, 10 facilities were held for sale.

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

See Note 4, Impairment of Real Estate Investments, Assets Held for Sale, Net and Asset Sales, and Note 15, Subsequent Events, for additional information.

As of December 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 non-operational assets, was as follows (dollars in thousands):

2025 $ 273,728

Thereafter 1,588,781

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tenant Purchase Options

1 unchanged sentence

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)

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SNF 1 March 2029 04/1/2022 (4)

SNF / Campus 1 (8)

October 2032 1/1/2024 (6)

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

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

Tenant is currently not eligible to elect the option.

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

SNF / Campus 2 October 2032 11/1/2026 (5)

SNF / Campus 1 May 2034 6/1/2026 (8)

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

SNF 1 November 2034 12/1/2027 (4)

SNF 2 November 2039 12/1/2027 (6)

SNF 2 November 2039 12/1/2028 (6)

SNF 1 November 2039 12/1/2029 (6)

SNF 1 November 2039 12/1/2030 (6)

(1) The Company has not received notice of exercise for the option periods that are currently open, except as described in footnote (11) below.

(2) Option type includes:

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

(6) Option window is open for one year from the option period open date.

(7) Purchase option reflects two option types.

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

(8) Purchase option window is open for nine months from the option period open date.

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

The current cash rent shown is an average of the range of $ 3.2 million to $ 3.5 million.

(10) Purchase option provides for the purchase of one of five facilities.

The current cash rent shown is an average of the range of $ 1.0 million to $ 1.6 million.

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.

(11) The operator notified the Company of their intent to exercise the purchase option of the four SNFs in December 2024.

The Company classified the four facilities as held for sale as of December 31, 2024 and subsequently sold the facilities in January 2025.

See Note 15, Subsequent Events, for additional information.

(12) Purchase option provides for the purchase of two of six facilities.

The current cash rent shown is an average of the range of $ 2.4 million to $ 4.6 million.

(13) Purchase option provides for the purchase of one of six facilities.

The current cash rent shown is an average of the range of $ 0.9 million to $ 2.3 million.

Rental Income

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For the Year Ended December 31,

2023 2022 2021

Rental Income 2024 2023 2022

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Straight-line rent ( 28 ) ( 29 ) 17

Amortization of lease incentives ( 22 ) — —

Amortization of below-market lease intangible 2,885 384 —

1 unchanged sentence

— — ( 1,417 )

Lease termination revenue (3)

Total $ 228,261 $ 198,599 $ 187,506

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

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

CARETRUST REIT, INC.

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Recent Real Estate Acquisitions

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

The following table summarizes the Company’s acquisitions for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands):

Type of Property Purchase Price (1)

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90,639 7,467 5 683

Assisted living 39,318 3,495 4 241

ALF / ILF (4)

12,749 1,022 2 102

Total $ 815,859 $ 74,413 49 5,293

1 unchanged sentence

Skilled nursing (4) (5)

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

Multi-service campuses (5)

25,276 1,916 1 168

ALF / ILF 39,318 3,495 4 241

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

2 unchanged sentences

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

Assisted living 12,395 — (7) 2 98

Total $ 21,921 $ 2,050 2 265

(1) Purchase price includes capitalized acquisition costs.

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

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

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

(4) Includes three SNFs held through joint ventures.

(4) Includes facilities held in consolidated joint ventures.

See Note 12, Variable Interest Entities , for additional information.

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

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

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

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

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

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

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

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

(6) Initial annual cash rent for 11 properties does not consider rent abatement of $ 0.3 million.

Lease Amendments and Terminations

Ridgeline Lease Termination and NC Jaybird Lease.

Effective December 31, 2024, the Company terminated its master lease with affiliates of Ridgeline Properties, LLC (“Ridgeline”).

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

(“Jaybird”) with respect to two ALFs in North Carolina previously leased to Ridgeline.

The NC Jaybird Lease commenced on January 1, 2025 with an initial term of approximately 12 years, featuring two five-year renewal options and CPI-based rent escalators.

Under the NC Jaybird Lease, Jaybird will receive three months of abated rent, followed by 15 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 $ 0.8 million increasing annually based on CPI.

Annual rent under the terminated master lease for the two ALFs in North Carolina was $ 0.8 million.

Four facilities which were under the Ridgeline master lease are currently held for sale and two facilities are in the process of transferring operations.

Amended PACS Master Lease .

On November 1, 2024, the Company acquired four skilled nursing facilities.

The facilities were leased to affiliates of PACS.

In conjunction with the acquisition of the four facilities, the Company amended the existing PACS Master Lease to include the four skilled nursing facilities.

The PACS Master Lease had a remaining term at the date of amendment of approximately 8 years.

Annual cash rent under the amended lease increased by approximately $ 5.0 million, with $ 1.1 million in deferred rent over the first twenty-four months to be repaid over twenty-four months , beginning in the third lease year.

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 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.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 15 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 with annual CPI-based rent escalators.

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

New Bayshire Lease.

On April 1, 2024, a new master lease with affiliates of Bayshire, LLC (“Bayshire”) commenced to lease one SNF that was previously under a short-term master lease until Bayshire received regulatory approval.

The short-term master lease was terminated.

The Bayshire master lease had a term of approximately 15 years at the date of the lease, with two five-year renewal options and 3 % fixed rent escalators.

Initial annual cash rent under the new Bayshire master lease was $ 2.6 million.

The Bayshire lease provides for a rent deferral of $ 0.4 million in the first year to be repaid in 15 installments beginning in year two.

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 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.

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.

New Embassy Lease and Hillstone Lease Amendment and Termination.

9 unchanged sentences

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Noble NJ Lease Termination and New Ridgeline NJ Lease.

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

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

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

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

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

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

Premier Termination and Amended Ridgeline Lease.

4 unchanged sentences

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.

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amended Pennant Lease.

25 unchanged sentences

Annual cash rent under each of the two applicable Ensign Master Leases, as amended, increased by approximately $ 0.4 million and annual cash rent under the Pennant Master Lease, as amended, decreased by $ 0.8 million.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 1, 2022, operations at one ALF in Arizona operated by affiliates of Pennant were transferred to affiliates of Ensign.

4 unchanged sentences

On February 1, 2022, the Company acquired one SNF.

In conjunction with the acquisition, the Company amended its existing triple-net master lease with affiliates of Eduro Healthcare, LLC (“Eduro”) to include the one SNF and extended the initial lease term.

In conjunction with the acquisition, the Company amended its existing triple-net master lease with affiliates of Eduro to include the one SNF and extended the initial lease term.

The Eduro master lease, as amended, had a remaining term at the date of amendment of approximately 12 years, with two five-year renewal options and CPI-based rent escalators.

Annual cash rent under the Eduro master lease, as amended, increased by approximately $ 0.8 million.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amended WLC Master Lease.

3 unchanged sentences

Annual cash rent under the WLC master lease, as amended, increased by approximately $ 1.2 million.

Amended Noble Master Leases and New Noble NJ Master Lease.

During the three months ended September 30, 2021, the Company did not collect a portion of rent from affiliates of Noble Senior Services and Noble VA Holdings, LLC (collectively, “Noble”).

On September 23, 2021, the Company amended its two existing triple-net master leases with Noble.

The lease amendment granted a deferral for a total of $ 1.8 million of unpaid base rent, which represented approximately 4 % of the Company’s total contractual base rent for the three months ended September 30, 2021.

In connection with its agreement to the rent deferral, the Company also entered into a purchase agreement with Noble to acquire two assisted living facilities owned by Noble.

The lease amendment required the deferred rent, as well as all contractual rent for the fourth quarter of 2021, to be paid in full upon the closing of the purchase of the two facilities.

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

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

Amended Ensign Master Lease .

On August 1, 2021, the Company acquired two skilled nursing facilities.

The facilities were leased to affiliates of Ensign.

In conjunction with the acquisition of the two facilities, the Company amended and extended the initial term of an existing Ensign Master Lease to include the two skilled nursing facilities.

The Ensign Master Lease, as amended, had a remaining term at the date of amendment of approximately 17 years, with three five-year renewal options and CPI-based rent escalators.

Annual cash rent under the amended lease increased by approximately $ 2.2 million, with GAAP rent increasing by $ 2.5 million due to a $ 5.0 million prepayment of rent made at closing, which is being amortized on a straight-line basis over the remaining lease term.

Five Oaks Lease Termination and Amended Ensign Master Lease.

On June 1, 2021, operating affiliates of Ensign acquired certain operations and assets of Five Oaks Healthcare, LLC (“Five Oaks”) under an agreement with Five Oaks.

The agreement granted Ensign the right to occupy and operate four of the Company’s skilled nursing facilities in Washington that were previously being operated by Five Oaks.

In conjunction with consenting to the transfer, the Company terminated the existing Five Oaks master lease, and amended and extended the term of an existing triple-net master lease with Ensign to include the four skilled nursing facilities.

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

Annual cash rent under the terminated Five Oaks master lease was approximately $ 2.6 million, and annual cash rent under the amended Ensign lease increased by the same amount.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Premier Partial Lease Termination and Amended Noble VA Master Lease .

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

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

The Noble VA master lease, as amended, had a remaining term at the date of amendment of approximately 13 years, with two five-year renewal options and CPI-based rent escalators.

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

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

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

Impairment of Real Estate Investments Held for Sale

During the year ended December 31, 2024, the Company recognized aggregate impairment charges of $ 42.2 million, of which $ 18.8 million related to properties held for sale, $ 9.4 million related to properties held for investment, and $ 14.0 million related to properties that were sold.

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

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

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

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

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

Impairment of Real Estate Investments Held for Sale

As of December 31, 2024, there were 10 facilities classified as held for sale, all of which have been recorded at the lesser of their carrying value or 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.

4 unchanged sentences

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

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

Impairment of Real Estate Investments Held for Investment

During the quarter ended December 31, 2024, the Company recognized an impairment charge of $ 5.0 million related to one ALF with a carrying value of $ 5.0 million which was non-operational.

In January 2025, the Company deeded the improvements back to the ground lessor for no consideration.

During the third quarter of 2024, the Company determined that two ALFs, with a carrying value of $ 5.0 million, that were classified as held for sale at June 30, 2024 no longer met the held for sale criteria.

During the second quarter of 2024, the Company recognized $ 4.4 million of impairment charges in connection with the write down of the assets’ carrying values to their estimated fair value less costs to sell.

The Company reclassified these ALFs out of assets held for sale at their fair value at the date of the decision not to sell of approximately $ 5.0 million, or a weighted average price per unit of $ 45,000 .

During the year ended December 31, 2024, the Company recognized approximately $ 4.4 million in impairment charges related to these two ALFs.

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

2 unchanged sentences

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 .

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

price per unit of $ 125,000 .

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

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

14 unchanged sentences

Net carrying value 19,923 16,095 60,918

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

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

Net (loss) gain on sale $ ( 2,208 ) $ 2,218 $ ( 3,769 )

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

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

Net sales proceeds includes $ 2.0 million of seller financing in connection with the sale of one ALF in June 2023.

Net sales proceeds includes $ 12.0 million of seller financing in connection with the sale of six SNFs and one multi-service campus in September 2022.

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s assets held for sale activity for the years ended December 31, 2024 and 2023 (dollars in thousands):

Net Carrying Value Number of Facilities

4 unchanged sentences

December 31, 2023 15,011 14

Additions to assets held for sale 104,447 15

Assets sold ( 19,923 ) ( 17 )

Impairment of real estate held for sale ( 37,266 ) —

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

December 31, 2024 $ 57,261 10

CARETRUST REIT, INC.

1 unchanged sentence

OTHER REAL ESTATE RELATED AND OTHER INVESTMENTS

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

As of December 31, 2023

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

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

Other Real Estate Related Investments:

Facility Count and Type As of December 31, 2024

Loans Receivable, at Fair Value:

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

Fair Value as of December 31, 2024 (1)

Fair Value as of December 31, 2023 (1)

Weighted Average Contractual Interest Rate Maturity Date

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

Weighted Average Contractual Interest Rate (2), (3)

Maturity Date

Mortgage secured loans receivable (4)

62 4 19 2 $ 658,400 $ 660,392 $ 156,769 8.8 % 5/31/2025 - 9/30/2039

Mezzanine loans receivable 18 SNF/Campus

Mezzanine loans receivable (4)

40 4 2 — 82,287 80,612 21,799 12.8 % 7/25/2027 - 12/31/2034

Total $ 740,687 $ 741,004 $ 178,568

As of December 31, 2024

Principal Balance as of December 31, 2024

Book Value as of December 31, 2024

Book Value as of December 31, 2023

Weighted Average Contractual Interest Rate Maturity Date

Preferred Equity $ 53,782 $ 54,199 $ 1,801 11.1 % N/A

Total $ 53,782 $ 54,199 $ 1,801

Facility Count and Type As of December 31, 2024

Financing Receivable, at Fair Value:

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

Fair Value as of December 31, 2024 (5)

Fair Value as of December 31, 2023

Weighted Average Effective Interest Rate (6)

Maturity Date

Financing Receivable 39 — 5 2 $ 95,723 $ 96,004 $ — 12.0 % 11/30/2039

Total $ 95,723 $ 96,004 $ —

(1) Fair value of mortgage secured loans receivable includes $ 3.4 million and $ 1.5 million of accrued interest as of December 31, 2024 and 2023, respectively.

Fair value of mezzanine loans receivable includes $ 0.9 million and $ 0.2 million of accrued interest as of December 31, 2024 and 2023, respectively.

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

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

(3) 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 December 31, 2024 was 4.34 %.

Rates are net of subservicing fees.

(4) 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.

(5) Fair value of financing receivable includes $ 0.3 million of accrued interest for the year ended December 31, 2024.

(6) The Company leased these facilities back to the seller under a 15-year contract, with two five-year renewal options.

The agreement provides for an initial contractual cash yield of 11.0 % for the first three years , with annual CPI-based escalators beginning in year four, subject to a 3 % cap.

The agreement provides for deferred payments equal to 2.0 % of the contractual cash yield in the first year and 0.5 % of the contractual cash yield in the second year.

At the time the seller-lessee exercises its purchase options, option proceeds will be used to repay any outstanding deferred payments as well as additional payments such that the Company receives a contractual cash yield of 12.5 % on its gross investment in the applicable properties through the option exercise date.

If any deferred amounts remain unpaid, beginning in year eight, the deferred amounts are to be repaid in 24 equal monthly payments.

The Company has not received notice of exercise for the purchase option period currently open.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s other real estate related investments activity for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands):

2 unchanged sentences

Accrued interest, net 2,998 388 1,165

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

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

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

Unrealized gain (loss) on other real estate related investments, net 9,045 ( 6,485 ) ( 7,102 )

Payments of other real estate related investments ( 4,412 ) ( 25,537 ) —

Net change in other real estate related investments $ 614,834 $ 22,200 $ 141,213

The fair value option is elected on an instrument by instrument basis and must be applied to an entire instrument and is irrevocable once elected.

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

2024 Other Real Estate Related Investment Transactions

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

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

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

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

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

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

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

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

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.

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

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

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

The mortgage loan is secured by three SNFs.

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

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

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 portfolio 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.

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 not be prepaid prior to July 31, 2029, subject to certain limited exceptions.

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.

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

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

The mortgage loan is secured by eight SNFs located in North Carolina and bears interest at a rate of SOFR plus 4.25 %, with a term SOFR floor of 5.15 %, payable monthly and net of a 0.25 % subservicing fee.

Commencing on June 1, 2027, monthly principal payments will be due.

The mortgage loan is set to mature on June 1, 2029, and includes two six-month extension options.

The mortgage loan may not be prepaid prior to June 1, 2026, subject to certain limited exceptions.

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

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.

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.

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

On October 1, 2024, and in connection with a $ 55.5 million skilled nursing acquisition, 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 between 90 to 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.

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

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 18 th month following the loan closing, for an exit fee ranging from 0 % to 2 % of the loan plus unpaid interest payments.

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

On December 20, 2024, the Company extended a $ 5.1 million mezzanine loan for one multi service campus located in Maryland secured by a pledge of membership interests in an up-tier holding company of the borrower group.

The loan bears interest at a rate of 13 %, with annual CPI-based escalators.

The mezzanine loan is set to mature on December 31, 2034.

The mezzanine loan may not be prepaid in whole or in part prior to maturity.

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

On December 27, 2024, the Company extended an $ 11.3 million mortgage loan to a skilled nursing real estate owner.

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

The mortgage loan is set to mature on December 27, 2034.

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

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

CARETRUST REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2023 Other Real Estate Related Investment Transactions

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

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

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

The maturity date was subsequently extended to May 31, 2025.

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

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

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

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

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

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

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

3 unchanged sentences

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

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

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

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

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

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

The mortgage loan is secured by three SNFs.

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

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

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

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

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