What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-29 · 190 added, 201 removed, 208 unchanged (65% of the section changed)

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Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

(i) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;

(ii) the risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect;

(iii) the impact of healthcare reform legislation, including minimum staffing level requirements, on the operating results and financial conditions of our tenants;

(iv) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them;

(v) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant;

(vi) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms;

(vii) the ability to generate sufficient cash flows to service our outstanding indebtedness;

(viii) access to debt and equity capital markets;

(ix) fluctuating interest rates;

(x) the impact of public health crises, including significant COVID-19 outbreaks as well as other pandemics or epidemics;

(xi) the ability to retain our key management personnel;

(xii) the ability to maintain our status as a real estate investment trust (“REIT”);

(xiii) changes in the U.S.

(i) the possibility of an offer or firm intention to make an offer for Care REIT plc by any third party;

(ii) our ability to complete the acquisition of Care REIT, integrate its operations and achieve the benefits expected to result from the acquisition;

(iii) the ability and willingness of our tenants and borrowers to meet and/or perform their obligations under the agreements we have entered into with them, including without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities;

(iv) the risk that we may have to incur additional impairment charges related to our assets held for sale if we are unable to sell such assets at the prices we expect;

(v) the impact of healthcare reform legislation, including minimum staffing level requirements, on the operating results and financial conditions of our tenants and borrowers;

(vi) the ability of our tenants and borrowers to comply with applicable laws, rules and regulations in the operation of the properties we lease to them or finance;

(vii) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant;

(viii) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities and the ability to acquire and lease the respective properties to such tenants on favorable terms;

(ix) the ability to generate sufficient cash flows to service our outstanding indebtedness;

(x) access to debt and equity capital markets;

(xi) fluctuating interest rates;

(xii) the impact of public health crises, including significant COVID-19 outbreaks as well as other pandemics or epidemics;

(xiii) the ability to retain our key management personnel;

(xiv) the ability to maintain our status as a real estate investment trust (“REIT”);

(xv) changes in the U.S.

tax law and other state, federal or local laws, whether or not specific to REITs;

(xiv) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments;

and (xv) any additional factors included under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the “SEC”).

(xvi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments;

and (xvii) any additional factors included under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the “SEC”).

Forward-looking statements speak only as of the date of this report.

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CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, financing, development and leasing of skilled nursing, seniors housing and other healthcare-related properties.

As of September 30, 2024, we owned, directly or indirectly 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, we 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.

As of March 31, 2025, we owned, directly or indirectly in consolidated joint ventures, and leased to independent operators 255 skilled nursing facilities (“SNFs”), multi-service campuses, assisted living facilities (“ALFs”) and independent living facilities (“ILFs”) consisting of 27,672 operational beds and units located in 32 states with the highest concentration of properties by rental income located in California, Texas and Tennessee.

As of March 31, 2025, we 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 $799.8 million and one financing receivable with a carrying value of $96.6 million.

Recent Developments

Planned Acquisition

On March 11, 2025, the Company announced (the “Rule 2.7 Announcement”) pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers (the “Code”) a firm intention to make a cash offer (the “Offer”) to acquire (the “Acquisition”), through its wholly-owned direct subsidiary, CR United Bidco Limited (“Bidco”), the entire issued and to be issued ordinary share capital (other than Scheme Restricted Shares (as defined in the Rule 2.7 Announcement)) of Care REIT plc (“Target”).

Target is a UK-based real estate investment trust listed on the Main Market of the London Stock Exchange focused on investment in care homes throughout the United Kingdom.

The Acquisition is intended to be effected by means of a scheme of arrangement (the “Scheme”) under Part 26 of the United Kingdom Companies Act 2006.

Under the terms of the Scheme, Target shareholders, other than any Sanctions Disqualified Shareholders (as defined in the Rule 2.7 Announcement) will be entitled to receive 108 pence in cash for each Target share they hold, which values the Target’s existing issued and to be issued ordinary share capital at approximately $597 million, and, together with the assumption of Target’s net debt of approximately $259 million, represents a total purchase price of approximately $856 million.

Payments will be in Great British Pounds but are expressed in US dollars based on the exchange rate of 0.7501 GBP to 1.00 USD on April 30, 2025.

The transaction has been unanimously approved by the boards of directors of both the Company and Target and has also been approved by the requisite majorities of Target shareholders at the Target shareholder meetings convened to approve it.

Completion of the acquisition is further conditioned on (i) sanction of the Scheme by the High Court of Justice of England and Wales and (ii) other customary conditions (the “Conditions”).

The Offer is subject to termination if not completed by 11:59 pm (London time) on July 9, 2025 (or such later date (if any) as the Company and Target may agree with the consent of the United Kingdom Panel on Takeovers and Mergers and as the Court may approve (if such approval(s) is/are required)).

Subject to the satisfaction or waiver of the Conditions, it is expected that the Acquisition will be completed in May 2025.

Market Trends and Uncertainties

Recent macroeconomic conditions, particularly inflation (including higher supply costs), elevated interest rates and related changes to consumer spending, including, but not limited to, causing individuals to delay or defer moves to seniors housing, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial

obligations to us.

Higher interest rates have also increased our costs of capital to finance acquisitions and increased our borrowing costs.

Recent macroeconomic conditions, particularly market uncertainty, declining consumer sentiment, inflation (including higher supply costs and shortages), elevated interest rates and related changes to consumer spending, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us.

Higher interest rates and market volatility have also increased our costs of capital to finance acquisitions and increased our borrowing costs.

We continue to monitor changes in the interest rate environment and the effect of changing rates on our business.

In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges.

As a result of the above factors, our tenants are continuing to experience elevated operating costs at their facilities.

At a portfolio wide level, occupancy levels at our seniors housing facilities, comprising our ALFs and ILFs, continue to remain below occupancy levels at the onset of the COVID-19 pandemic.

Within our SNFs, occupancy levels have continued to improve since their trough in January 2021 and have reached or exceeded occupancy levels prior to the onset of the COVID-19 pandemic, for most of our tenants.

As a result of impacts experienced by our operators since the onset of the COVID-19 pandemic and due to recent market trends and uncertainties, the ability of some of our tenants and borrowers to meet their financial obligations to us in full has been negatively impacted.

As a result of impacts experienced by our operators due to recent market trends and uncertainties, the ability of some of our tenants and borrowers to meet their financial obligations to us in full has been negatively impacted.

From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we have also restructured tenants’ long-term obligations.

See “Impairment of Real Estate Assets, Assets Held for Sale and Asset Sales” below.

During the three months ended September 30, 2024, we collected 98.7% of contractual rents and interest due from our operators and borrowers excluding cash deposits.

During the three months ended March 31, 2025, we collected 99.2% of contractual rents and interest due from our operators and borrowers excluding cash deposits.

In the event our tenants or borrowers are unable to satisfy their obligations to us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental and interest income would be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges or fair value adjustments.

Regulatory Updates

On October 13, 2023, California Senate Bill No.

525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.

As a result of SB 525, certain health care facilities (including licensed skilled nursing facilities) operating in California are required to increase the wages of their covered health care employees to at least $21 per hour, which was initially required to be effective from June 1, 2024 to May 31, 2026, $22 or $23 per hour (depending on facility type) from June 1, 2026 to May 31, 2028, and $25 per hour after June 1, 2028.

After the initial implementation was delayed by the Governor of California in June 2024, SB 525 went into effect on October 16, 2024.

The Centers for Medicare and Medicaid Services (“CMS”) issued a final rule on July 31, 2024, updating Medicare payment policies and rates for SNFs for fiscal year 2025.

This update includes a 4.2% increase in Medicare Part A payments to SNFs, totaling approximately $1.4 billion.

In April 2025, the Centers for Medicare and Medicaid Services (“CMS”) proposed a payment rate update to SNF reimbursements for fiscal 2026, which includes a net increase of 2.8% in Medicare Part A payments to SNFs.

In July 2024, CMS approved its payment rate update to SNF reimbursements for fiscal year 2025, which includes a net increase of 4.2%, or approximately $1.4 billion, in Medicare Part A payments to SNFs.

These increases are expected to partially offset some of our tenants’ higher operating costs.

On April 22, 2024, CMS issued a final rule regarding minimum staffing requirements and increased inspections at nursing homes in order to establish comprehensive nurse staffing requirements.

The rule consists of three core staffing requirements:

In April 2025, a U.S.

District Court vacated a CMS final rule regarding minimum staffing requirements, which was previously issued on April 22, 2024 and consisted of three core staffing requirements:

(1) overall minimum standard of 3.48 total nurse staff hours per resident day;

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and (3) a requirement to have a registered nurse onsite 24 hours a day, seven days a week.

The rule includes a staggered implementation approach for which CMS will publish additional details on compliance as the implementation dates approach.

The rule also includes possible waivers and temporary hardship exemptions for select facilities, however no funding for the additional staff will be provided.

We are currently evaluating the impact of the rule, but believe the unfunded mandate to increase staff may have a material and adverse impact on the financial condition of our tenants.

The rule included a staggered implementation approach for which CMS was required

to publish additional details on compliance as the implementation dates approached.

The rule also included possible waivers and temporary hardship exemptions for select facilities;

however, no funding for the additional staff would be provided.

On October 13, 2023, California Senate Bill No.

525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities.

After the initial implementation was delayed by the Governor of California in June 2024, SB 525 went into effect on October 16, 2024.

Recent Investments

The following table summarizes our acquisitions from January 1, 2024 through October 29, 2024 (dollars in thousands):

The following table summarizes our acquisitions from January 1, 2025 through May 1, 2025 (dollars in thousands):

Type of Property Purchase Price (1)

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Assisted living 20,637 1,896 1 160

11,036 1,022 1 86

Total $ 75,747 $ 7,375 3 507

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See Note 3, Real Estate Investments, Net , and Note 12, Variable Interest Entities , for additional information.

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

See Note 3, Real Estate Investments, Net , and Note 11, Variable Interest Entities for additional information.

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

See Note 3, Real Estate Investments, Net , and Note 11, Variable Interest Entities for additional information.

The following table summarizes our other real estate related investments from January 1, 2024 through October 29, 2024 (dollars in thousands):

Investment Type (1)

Investment Annual Initial Interest Income (2)

(5) Includes one multi-service campus held through a joint venture.

The following table summarizes our other real estate related investments from January 1, 2025 through May 1, 2025 (dollars in thousands):

Investment Type Investment Annual Initial Interest Income (1)

Number of Properties Number of Beds/Units (2)

Mortgage secured loan receivable $ 485,365 $ 43,241 49 5,112

Mezzanine loans receivable $ 6,389 $ 842 1 148

Preferred equity 52,000 5,734 N/A N/A

Total $ 6,389 $ 842 1 148

(1) Table excludes a $1.0 million mortgage loan originated in connection with the sale of one ALF during the period presented.

(1) Represents annualized acquisition-date interest income, less subservicing fees, if applicable.

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(2) The number of beds/units includes operating beds at the investment date.

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 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.

We 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), The Ensign Group (nine facilities), and Links Healthcare Group (seven facilities), who are all current tenants of ours, 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.

Financing Activities

On September 19, 2024, we prepaid in full the $200.0 million aggregate principal amount outstanding under the Term Loan (as defined under “― Liquidity and Capital Resources ― Material Cash Requirements” below).

See Note 7, Debt , for additional information.

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

See Note 7, Debt , for additional information.

At-The-Market Offering of Common Stock

On August 29, 2024, we 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 our common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated our 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 our 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 our shares of common stock under the ATM Program.

On January 21, 2025, we 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 our common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated our previous $750.0 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 our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of shares of our common stock under the ATM Program.

There were no outstanding ATM forward contracts that had not settled as of March 31, 2025.

In the event we enter into an ATM forward contract to sell shares of common stock pursuant to the ATM Program, we 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 our discretion, prior to the final settlement date, at which time we 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 we 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 tables summarize 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

The following tables summarize the ATM Program activity for the three months ended March 31, 2025 and 2024 (in thousands, except per share amounts).

For the Three Months Ended

March 31, 2025 March 31, 2024

Number of shares 553 11,600

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$ 15,964 $ 273,233

(1) Total gross proceeds is before $6.2 million and $13.4 million of commissions paid to the sales agents during the three and nine months ended September 30, 2024, respectively, under the ATM Program.

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

During the three and nine months ended September 30, 2023, we 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, we 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, we had $440.1 million available for future issuances under the New ATM Program.

(1) Total gross proceeds is before $0.2 million and $3.4 million of commissions paid to the sales agents during the three months ended March 31, 2025 and 2024, respectively, under the ATM Program.

As of March 31, 2025, we had $734.0 million available for future issuances under the New ATM Program.

In April 2025, we sold 3.4 million shares for gross proceeds of $99.5 million at an average sales price per share of $28.90.

As of May 1, 2025, we had $634.5 million available for future issuances under the New ATM Program.

Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales

During the three months ended September 30, 2024, we determined that one ALF met the held for sale criteria and classified this property as held for sale as of September 30, 2024.

During the three months ended September 30, 2024, we 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.

During the three and nine months ended September 30, 2024, we recognized an impairment charge 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.

We did not recognize any impairment charges during the three months ended March 31, 2025.

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

Asset Sales and Held for Sale Reclassifications

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Upon designation as held for sale, we cease depreciation and record the investment at the lower of carrying value or estimated fair value less costs to sell, which could result in an impairment of the real estate investments held for sale, if necessary.

On August 30, 2024, we 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 our dispositions for the three and nine months ended September 30, 2024 (dollars in thousands):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

The following table summarizes our dispositions for the three months ended March 31, 2025 (dollars in thousands):

For the Three Months Ended March 31,

Number of facilities (1)

Net sales proceeds $ 44,401

$ 7,712 $ 8,852

Net carrying value 40,525

Net loss on sale $ (2,286) $ (2,254)

(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.

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

Net gain on sale $ 3,876

(1) One non-operational previously impaired facility sold during the three months ended March 31, 2025 was not classified as held for sale as of December 31, 2024.

The following table summarizes our assets held for sale activity for the period presented (dollars in thousands):

Net Carrying Value Number of Facilities

December 31, 2024 $ 57,261 10

Additions to assets held for sale 54,021 10

Assets sold (40,525) (4)

Impairment of real estate held for sale (36,872) —

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

September 30, 2024 $ 16,046 8

March 31, 2025 $ 16,736 6

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024:

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024:

Three Months Ended Increase

(Decrease) Percentage

September 30, 2024 June 30, 2024

March 31, 2025 December 31, 2024

(dollars in thousands)

Rental income $ 71,646 $ 62,199 $ 9,447 15 %

Interest and other income 20,228 13,484 6,744 50 %

Interest income from financing receivable 2,807 1,009 1,798 178 %

Interest income from other real estate related investments and other income 22,168 23,736 (1,568) (7) %

Depreciation and amortization 17,841 15,514 2,327 15 %

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Impairment of real estate investments — 5,353 (5,353) (100) %

Transaction costs 888 1,326 (438) (33) %

Provision for loan losses, net — 4,900 (4,900) (100) %

Property operating expenses 105 1,322 (1,217) (92) %

General and administrative 9,023 9,286 (263) (3) %

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

(Loss) gain on sale of real estate, net (2,286) 21 (2,307) *

Unrealized gain (loss) on other real estate related investments, net 1,800 (1,877) 3,677 *

Other income:

Gain on sale of real estate, net 3,876 46 3,830 *

Unrealized gain on other real estate related investments, net 1,287 9,734 (8,447) (87) %

Net loss attributable to noncontrolling interests (609) (180) (429) 238 %

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Three Months Ended Increase (Decrease)

(in thousands) September 30, 2024 June 30, 2024

(in thousands) March 31, 2025 December 31, 2024

Contractual cash rent $ 68,500 $ 59,690 $ 8,810

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

Total contractual rent increased by $1.5 million due to a $1.6 million increase in rental income from real estate investments made after March 31, 2024, a $0.9 million increase in rental rates for our existing tenants, and an increase of $0.1 million related to the transfer of one facility to a new operator, partially offset by a $0.9 million decrease in rental income related to certain tenants on a cash basis method of accounting and a decrease of $0.2 million in tenant reimbursements.

Total contractual rent increased by $9.5 million due to a $9.1 million increase in rental income from real estate investments made after September 30, 2024, an increase of $0.7 million in tenant reimbursements, a $0.5 million increase in rental rates for our existing tenants, and an increase of $0.1 million related to the transfer of one facility to a new operator, partially offset by a $0.7 million decrease due to assets sold during the first quarter of 2025 and a $0.2 million decrease in rental income recognized related to certain tenants on a cash basis method of accounting.

Interest income from financing receivable.

The $1.8 million increase in interest income from financing receivable was due to an investment classified as a financing receivable in December 2024.

Interest and other income.

The $6.7 million, or 50%, increase in interest and other income was primarily due to an increase of $7.6 million of interest income on new loan investments made after March 31, 2024, and an increase of $0.1 million of interest income due to a higher number of days during the three months ended September 30, 2024 compared to the three months ended June 30, 2024, partially offset by a decrease of $0.8 million of interest earned on money market funds and a decrease of $0.2 million related to a loan origination fee received during the three months ended June 30, 2024.

The $1.6 million, or 7%, decrease in interest and other income was primarily due to a decrease of $1.8 million of interest earned on money market funds and escrow deposits and a decrease of $0.4 million of

interest income due to a lower number of days during the three months ended March 31, 2025 compared to the three months ended December 31, 2024, partially offset by an increase of $0.6 million of interest income on new loan investments made after September 30, 2024.

Depreciation and amortization.

The $0.1 million, or 1%, increase in depreciation and amortization was primarily due to an increase of $0.7 million due to acquisitions and capital improvements made after March 31, 2024, partially offset by a

decrease of $0.4 million due to classifying assets as held for sale and a decrease of $0.2 million due to assets becoming fully depreciated after March 31, 2024.

The $2.3 million, or 15%, increase in depreciation and amortization was primarily due to an increase of $2.9 million due to acquisitions and capital improvements made after September 30, 2024, partially offset by a decrease of $0.5 million due to classifying assets as held for sale after September 30, 2024 and a decrease of $0.1 million due to assets becoming fully depreciated after September 30, 2024.

Interest expense.

Interest expense decreased by approximately $0.4 million as detailed below:

Change in interest expense for the three months ended September 30, 2024 compared to the three months ended June 30, 2024

Interest expense increased by approximately $1.5 million as detailed below:

Change in interest expense for the three months ended March 31, 2025 compared to the three months ended December 31, 2024

(in thousands)

Decreases to interest expense due to:

Decrease due to the prepayment of Term Loan $ (499)

Total decreases to interest expense (499)

Increases to interest expense due to:

Increase in interest rates for the Term Loan 80

Increase in outstanding borrowing amount for the Revolving Facility $ 1,421

Other changes in interest expense 126

Total increase increases to interest expense 101

Total change to interest expense $ 1,547

Property taxes.

The $0.1 million, or 7%, increase in property taxes was primarily due to reassessments and increased effective tax rates.

The $0.1 million, or 6%, increase in property taxes was primarily due to an increase of $0.2 million due to reassessments and increased effective tax rates, partially offset by a decrease of $0.1 million related to properties that were sold subsequent to September 30, 2024.

Impairment of real estate investments.

During the three months ended September 30, 2024, we recognized impairment charges of $8.4 million related to properties held for sale.

See above under “Recent Developments — Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales” for additional information.

During the three months ended June 30, 2024, we recognized impairment charges of $25.7 million primarily related to classifying eight properties as held for sale.

During the three months ended December 31, 2024, we recognized impairment charges of $5.4 million related to properties we plan to sell or repurpose or have sold.

No impairment charges were recognized during the three months ended March 31, 2025.

Transaction costs.

During the three months ended March 31, 2025, we recognized $0.9 million of unsuccessful acquisition pursuit costs that we classify as transaction costs.

During the three months ended December 31, 2024, we recognized $1.3 million of transaction costs related to the investment in a financing receivable for which we elected the fair value option.

Provision for loan losses, net.

During the three months ended December 31, 2024, we recorded a $4.9 million expected credit loss related to one other loan receivable with a principal balance of $4.9 million that has been placed on non-accrual status.

No provision for loan losses was recognized during the three months ended March 31, 2025.

Property operating expenses.

During the three months ended September 30, 2024 and June 30, 2024, we recognized $3.5 million and $0.3 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold.

During the three months ended March 31, 2025, we recognized $0.5 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold, partially offset by $0.4 million in recoveries.

During the three months ended December 31, 2024, we recognized $1.3 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant, or have sold.

General and administrative expense.

General and administrative expense increased by $0.5 million as de tailed below:

General and administrative expense decreased by $0.3 million as detailed below:

Three Months Ended Increase (Decrease)

(in thousands) September 30, 2024 June 30, 2024

Incentive compensation $ 2,500 $ 1,500 $ 1,000

Cash compensation 1,571 1,542 29

(in thousands) March 31, 2025 December 31, 2024

Share-based compensation $ 3,909 $ 1,461 $ 2,448

Cash compensation 2,090 1,597 493

Incentive compensation 1,225 4,199 (2,974)

Professional services 876 848 28

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General and administrative expense $ 9,023 $ 9,286 $ (263)

Loss on extinguishment of debt.

During the three months ended September 30, 2024, we recorded a $0.7 million loss on extinguishment of debt related to the exit fee associated with the call of the secured borrowing and the write-off of deferred financing costs associated with the prepayment of the Term Loan (as defined below).

No loss on extinguishment of debt was recognized during the three months ended June 30, 2024.

(Loss) gain on sale of real estate, net.

During the three months ended September 30, 2024, we recorded a $2.3 million loss on sale of real estate related to the sale of 11 SNFs.

During the three months ended June 30, 2024, we recorded a $21,000 gain on sale of real estate related to the sale of one SNF.

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

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

During the three months ended June 30, 2024, we recorded a $2.4 million unrealized loss on our secured and mezzanine loans receivable due to an increase in estimated

credit spreads, partially offset by unrealized gains of $0.5 million due to an increase in expected cash flows on floating rate loans.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023:

Nine Months Ended Increase

Gain on sale of real estate, net.

During the three months ended March 31, 2025, we recorded a $3.9 million gain on sale of real estate related to the sale of three SNFs and one multi-service campus.

During the three months ended December 31, 2024, we recorded a $46,000 gain on sale of real estate related to the sale of three ALFs.

Unrealized gain on other real estate related investments, net.

During the three months ended March 31, 2025, we recorded $1.8 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.5 million, to bring the interest rates in line with market rates.

During the three months ended December 31, 2024, we recorded $11.1 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $1.4 million, primarily due to a decrease in interest rates.

Net loss attributable to noncontrolling interests.

The $0.4 million increase in net loss attributable to noncontrolling interests was due to an investment entered into subsequent to September 30, 2024.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024:

Three Months Ended Increase

(Decrease) Percentage

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

(dollars in thousands)

Rental income $ 71,646 $ 53,502 $ 18,144 34 %

Interest and other income 43,280 12,910 30,370 *

Interest income from financing receivable 2,807 — 2,807 *

Interest income from other real estate related investments and other income 22,168 9,568 12,600 132 %

Depreciation and amortization 17,841 13,448 4,393 33 %

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Impairment of real estate investments — 2,744 (2,744) (100) %

Transaction costs 888 — 888 *

Property operating expenses 105 660 (555) (84) %

General and administrative 9,023 6,838 2,185 32 %

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

(Loss) gain on sale of real estate, net (2,254) 1,958 (4,212) *

Unrealized loss on other real estate related investments, net (689) (7,856) 7,167 (91) %

Net loss attributable to noncontrolling interests (501) (11) (490) *

Other income (loss):

Gain on sale of real estate, net 3,876 11 3,865 *

Unrealized gain (loss) on other real estate related investments, net 1,287 (612) 1,899 (310) %

Net (loss) income attributable to noncontrolling interests (609) 4 (613) *

• Not meaningful

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Rental income increased by $18.1 million as detailed below:

Nine Months Ended

Three Months Ended

Increase (Decrease)

(in thousands) September 30, 2024 September 30, 2023

(in thousands) March 31, 2025 March 31, 2024

Contractual cash rent $ 68,500 $ 51,430 $ 17,070

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Total contractual rent includes initial contractual 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.

Total contractual rent increased by $19.0 million due to a $15.7 million increase in rental income from real estate investments made after December 31, 2022, a $3.9 million increase in rental rates for our existing tenants, a $1.2 million increase in tenant reimbursements, and a $0.5 million increase in rental income due to the transfer of facilities between operators, partially offset by a $1.9 million decrease in rental income related to certain tenants on a cash basis method of accounting, and a $0.4 million decrease in rental income related to dispositions made after December 31, 2022.

Interest and other income.

The $30.4 million increase in interest and other income was primarily due to an increase of $19.0 million due to the origination of loans receivable after December 31, 2022, an increase of $12.5 million of interest income on money market funds, an increase of $0.5 million due to originations of other loans, and an increase of $0.2 million related to a loan origination fee received during the nine months ended September 30, 2024, partially offset by a decrease of

$1.3 million of interest income due to loan repayments and a decrease of $0.5 million related to a prepayment penalty on one mezzanine loan receivable during the nine months ended September 30, 2023.

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.

Total contractual rent increased by $17.8 million due to an $18.4 million increase in rental income from real estate investments made after December 31, 2023, a $1.6 million increase in rental rates for our existing tenants and a $0.8 million increase in tenant reimbursements, partially offset by a $2.3 million decrease in rental income recognized related to certain tenants on a cash basis method of accounting and a $0.7 million decrease in rental income related to dispositions made after December 31, 2023.

Interest income from financing receivable.

During the three months ended March 31, 2025, we recorded $2.8 million of interest income related to an investment classified as a financing receivable in December 2024.

Interest income from other real estate related investments and other income.

The $12.6 million increase in interest and other income was primarily due to an increase of $13.2 million due to the origination of loans receivable after December 31, 2023 and an increase of $0.1 million due to originations of other loans, partially offset by a decrease of $0.4 million of interest income on money market funds and escrow deposits, a decrease of $0.2 million related to a partial prepayment and a $0.1 million decrease of interest income due to placing one other loan on non-accrual status.

Depreciation and amortization.

The $3.3 million, or 9%, increase in depreciation and amortization was primarily due to an increase of $6.5 million related to acquisitions and capital improvements made after December 31, 2022, partially offset by a decrease of $2.1 million due to assets becoming fully depreciated after December 31, 2022 and a decrease of $1.1 million due to classifying assets as held for sale after December 31, 2022.

The $4.4 million, or 33%, increase in depreciation and amortization was primarily due to an increase of $5.9 million related to acquisitions and capital improvements made after December 31, 2023, partially offset by a decrease of $0.9 million due to classifying assets as held for sale after December 31, 2023 and a decrease of $0.6 million due to assets becoming fully depreciated after December 31, 2023.

Interest expense.

Interest expense decreased by $1.6 million as detailed below:

Change in interest expense for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Change in interest expense for the three months ended March 31, 2025 compared to the three months ended March 31, 2024

(in thousands)

Decreases to interest expense due to:

Decrease in outstanding borrowing amount for the Revolving Facility $ (8,519)

Decrease due to prepayment of Term Loan $ (3,558)

Other changes in interest expense (29)

Total decreases to interest expense (3,558)

Increases to interest expense due to:

Issuance of secured borrowing 931

Increase in interest rates for the Term Loan 687

Increase in outstanding borrowing amount for the Revolving Facility 1,421

Other changes in interest expense 578

Total increases to interest expense 1,999

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Property taxes.

The $1.5 million, or 33%, increase in property taxes was due to a $2.5 million increase related to acquisitions made after December 31, 2022, partially offset by $1.0 million of changes in estimates during the nine months ended September 30, 2024 of property taxes paid directly by us as a result of certain assets being designated as held for sale and being disposed of.

The $0.3 million, or 15%, increase in property taxes was due to a $0.5 million increase related to acquisitions made after December 31, 2023, partially offset by a decrease of $0.1 million due to reassessments and a decrease of $0.1 million related to properties that were sold subsequent to December 31, 2023.

Impairment of real estate investments.

During the nine months ended September 30, 2024, we recognized impairment charges of $30.4 million related to properties classified as held for sale, $4.4 million related to properties held for investment, and $2.1 million related to properties that were sold.

See above under “Recent Developments — Impairment of Real Estate Assets, Assets Held for Sale, and Asset Sales” for additional information.

During the nine months ended September 30, 2023, we recognized impairment charges of $23.1 million related to properties classified as held for sale, $8.0 million related to properties held for investment, and $0.4 million related to properties that were sold.

During the three months ended March 31, 2024, we recognized impairment charges of $2.7 million related to properties classified as held for sale.

We did not recognize any impairment charges during the three months ended March 31, 2025.

Transaction costs.

During the three months ended March 31, 2025, we recognized $0.9 million of unsuccessful acquisition pursuit costs that we classify as transaction costs.

We did not recognize any transaction costs during the three months ended March 31, 2024.

Property operating expenses.

During the nine months ended September 30, 2024 and 2023, we recognized $4.4 million and $2.9 million, respectively, of property operating expenses related to assets we plan to sell or repurpose, re-tenant or have sold.

During the three months ended March 31, 2024, we recognized $0.7 million of property operating expenses related to assets we plan to sell or repurpose, re-tenant or have sold.

General and administrative expense.

General and administrative expense increased by $2.2 million as detailed below:

Nine Months Ended

Three Months Ended

Increase/(Decrease)

(in thousands) September 30, 2024 September 30, 2023

Incentive compensation $ 5,500 $ 3,700 $ 1,800

Cash compensation 4,878 4,256 622

(in thousands) March 31, 2025 March 31, 2024

Share-based compensation $ 3,909 $ 2,120 $ 1,789

Cash compensation 2,090 1,765 325

Incentive compensation 1,225 1,500 (275)

Professional services 876 738 138

2 unchanged sentences

General and administrative expense $ 9,023 $ 6,838 $ 2,185

Loss on extinguishment of debt.

During the nine months ended September 30, 2024, we recorded a $0.7 million loss on extinguishment of debt related to the exit fee associated with the call of the secured borrowing and the write-off of deferred financing costs associated with the prepayment of the Term Loan (as defined below).

No loss on extinguishment of debt was recognized during the nine months ended September 30, 2023.

(Loss) gain on sale of real estate, net.

During the nine months ended September 30, 2024, we recorded a $2.3 million loss on sale of real estate, net related to the sale of 13 SNFs and one ALF.

During the nine months ended September 30, 2023, we recorded a $2.1 million gain on sale of real estate related to the sale of one SNF and one ALF, partially offset by a $0.1 million loss on sale of real estate related to the sale of two ALFs.

Unrealized loss on other real estate related investments, net.

During the nine months ended September 30, 2024, we recorded a $7.3 million unrealized loss on our secured and mezzanine loans receivable due to an increase in interest rates during the first half of 2024, partially offset by unrealized gains of $6.6 million primarily due to a decrease in interest rates during the third quarter of 2024.

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

Gain on sale of real estate, net.

During the three months ended March 31, 2025, we recorded a $3.9 million gain on sale of real estate related to the sale of three SNFs and one multi-service campus.

During the three months ended March 31, 2024, we recorded an $11,000 gain on sale of real estate, net related to the sale of one SNF and one ALF.

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

During the three months ended March 31, 2024, we recorded a $0.8 million unrealized loss on our secured and mezzanine loans receivable due to an increase in interest rates, partially offset by unrealized gains of $0.2 million due to an increase in expected cash flows on floating rate loans.

Net loss (income) attributable to noncontrolling interests.

The $0.6 million increase in net loss attributable to noncontrolling interests was due to an investment entered into subsequent to December 31, 2023.

Liquidity and Capital Resources

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• capital expenditures for improvements to our properties.

In addition, in connection with our planned acquisition of Care REIT plc, we expect to pay an aggregate of approximately $597 million in cash to the Target shareholders, other than any Sanctions Disqualified Shareholders (as defined in the Rule 2.7 Announcement).

We have deposited $606.0 million in an escrow account to be used to satisfy the purchase consideration in connection with planned acquisition, which is classified as restricted cash on our condensed consolidated balance sheet as of March 31, 2025.

In connection with the planned acquisition, we would also assume Target’s net debt of approximately $259 million .

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions and other investments (including mortgage and mezzanine loan originations), capital expenditures, and scheduled debt maturities.

We intend to invest in and/or develop additional healthcare and seniors housing properties as suitable opportunities arise and so long as adequate sources of financing are available.

We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Second Amended Credit Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of common stock or other securities.

We expect that future investments in and/or development of properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, borrowings available to us under the Third Amended Credit Facility (as defined below), future borrowings or the proceeds from sales of shares of our common stock pursuant to our ATM Program or additional issuances of common stock or other securities.

In addition, we may seek financing from U.S.

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Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions and refinancing of existing mortgage loans.

We believe that our expected operating cash flow from rent collections and interest payments on our other real estate related investments, together with our cash balance, available borrowing capacity under the Revolving Facility (as defined below) and availability under the ATM Program will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements and other needs for at least the next 12 months.

We believe that our expected operating cash flow from rent collections and interest payments on our other real estate related investments, together with our cash balance, available borrowing capacity under the Third Amended Revolving Facility (as defined below) and availability under the ATM Program will be sufficient to meet ongoing debt service requirements, dividend plans, operating lease obligations, capital expenditures, working capital requirements, the financing of our planned acquisition of Care REIT plc and other needs for at least the next 12 months.

We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.

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The shelf registration statement allows us or certain of our subsidiaries, as applicable, to offer and sell shares of common stock, preferred stock, warrants, rights, units and debt securities through underwriters, dealers or agents or directly to purchasers, in one or more offerings on a continuous or delayed basis, in amounts, at prices and on terms we determine at the time of the offering.

On August 29, 2024, we entered into the New ATM Program.

In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under

the ATM Program.

On January 21, 2025, we entered into the New ATM Program.

In addition to the issuance and sale of shares of our common stock, we may also enter into one or more ATM forward contracts with sales agents for the sale of shares of our common stock under the ATM Program.

See “At-The-Market Offering of Common Stock” for information regarding activity under the ATM Program.

1 unchanged sentence

However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock or other debt or equity securities, on terms that are acceptable to us or at all.

As of September 30, 2024, we are in compliance with all debt covenants on our outstanding indebtedness.

As of March 31, 2025, we are in compliance with all debt covenants on our outstanding indebtedness.

The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented (dollars in thousands):

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Net cash provided by operating activities $ 71,382 $ 48,820

1 unchanged sentence

Net cash provided by financing activities 383,216 231,146

Net increase (decrease) in cash and cash equivalents 82,654 (9,693)

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

Cash and cash equivalents as of the end of period $ 377,102 $ 3,485

Net cash provided by operating activities increased for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Operating cash inflows are derived primarily from the rental payments received under our lease agreements, including as a result of new investments, and interest payments on our other real estate related investments.

Net increase in cash, cash equivalents and restricted cash 418,688 156,725

Cash, cash equivalents and restricted cash as of the beginning of period 213,822 294,448

Cash, cash equivalents and restricted cash as of the end of period $ 632,510 $ 451,173

Net cash provided by operating activities increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Operating cash inflows are derived primarily from the rental payments received under our lease agreements and interest income received on our other real estate related investments, including as a result of new investments.

Operating cash outflows consist primarily of interest expense on our borrowings and general and administrative expenses.

The net increase of $56.9 million in cash provided by operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 is primarily due to an increase in rental income received, an increase in interest income received on our other real estate related investments, and a decrease in cash paid for interest expense, partially offset by an increase in cash paid for general and administrative expense.

Cash used in investing activities for the nine months ended September 30, 2024 was primarily comprised of $777.1 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate, $52.0 million in preferred equity investments and $4.2 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $5.1 million in net proceeds from the sale of real estate and $0.1 million in principal payments received on other loans receivable.

Cash used in investing activities for the nine months ended September 30, 2023 was primarily comprised of $253.3 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate and $9.1 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $15.7 million of principal payments received from our other real estate related investments and other loans receivable and $14.5 million in net proceeds from real estate sales.

Our cash flows provided by financing activities for the nine months ended September 30, 2024 were primarily comprised of $1.1 billion in net proceeds from the issuance of common stock, $75.0 million in proceeds from a secured borrowing and $1.2 million in contributions from noncontrolling interests, partially offset by a $200.0 million prepayment of the Term Loan, $122.4 million in dividends paid, a $75.0 million payment on the secured borrowing, a $2.5 million net settlement adjustment on restricted stock, and $0.4 million payment on extinguishment of debt and deferred financing costs.

Our cash flows provided by financing activities for the nine months ended September 30, 2023 were primarily comprised of $319.0 million in net proceeds from the issuance of common stock and $1.1 million in contributions from noncontrolling interests, partially offset by $125.0 million in net payments under our Revolving Facility, $83.1 million in dividends paid and a $1.5 million net settlement adjustment on restricted stock.

The net increase of $22.6 million in cash provided by operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is primarily due to an increase in rental income received, an increase in interest income received on our other real estate related investments, and a decrease in cash paid for interest expense, partially offset by an increase in cash paid for general and administrative expense.

Cash used in investing activities for the three months ended March 31, 2025 was primarily comprised of $82.6 million in acquisitions of real estate, investment in real estate related investments and escrow deposits for potential acquisitions of real estate and $2.3 million of purchases of equipment, furniture and fixtures and improvements to real estate, partially offset by $44.4 million in net proceeds from the sale of real estate and $4.6 million in principal payments received from our other real estate related investments and other loans receivable.

Cash used in investing activities for the three months ended March 31, 2024 was primarily comprised of $122.9 million in acquisitions of real estate, investment in real estate related investments and other loans receivable and escrow deposits for potential acquisitions of real estate and $0.4 million of purchases of equipment, furniture and fixtures and improvements to real estate.

Our cash flows provided by financing activities for the three months ended March 31, 2025 were primarily comprised of $425.0 million in borrowings under our Third Amended Revolving Facility (as defined below), $15.5 million in net proceeds from the issuance of common stock and $1.4 million in contributions from noncontrolling interests, partially offset by $54.4 million in dividends paid, a $3.3 million net settlement adjustment on restricted stock, $0.9 million in distributions to noncontrolling interests, and a $0.1 million payment of deferred financing costs.

Our cash flows provided by financing activities for the three months ended March 31, 2024 were primarily comprised of $269.8 million in net proceeds from the issuance of common stock and $0.4 million in contributions from noncontrolling interests, partially offset by $36.5 million in dividends paid and a $2.5 million net settlement adjustment on restricted stock.

Material Cash Requirements

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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.

The obligations under the Notes are guaranteed, jointly and severally, on an unsecured basis, by us and all of our subsidiaries (other than the Issuers) that guarantee obligations under the Second Amended Credit Facility (as defined below).

As of September 30, 2024, we were in compliance with all applicable financial covenants under the indenture governing the Notes.

As of March 31, 2025, we were in compliance with all applicable financial covenants under the indenture governing the Notes.

See Note 7, Debt, to our condensed consolidated financial statements included in this report for further information about the Notes.

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

On September 19, 2024 (the “Prepayment Date”), we prepaid all $200.0 million aggregate principal amount of our 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, we 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, we had no borrowings outstanding under the Revolving Facility.

On December 18, 2024, we, together with certain of our subsidiaries, entered into a third amended and restated credit and guaranty agreement with KeyBank National Association, as administrative agent, an issuing bank and swingline lender, and the lenders party thereto (as amended from time to time, the “Third Amended Credit Agreement”).

The Third Amended Credit Agreement, which amends and restates our Second Amended Credit Agreement provides for an unsecured revolving credit facility (the “Third Amended Revolving Facility”) with revolving commitments in an aggregate principal amount of $1.2 billion, including a letter of credit subfacility for 10% of the then available revolving commitments and a swingline loan subfacility for 10% of the then available revolving commitments.

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

The Third Amended Credit Agreement also provides that, subject to customary conditions, including obtaining lender commitments and pro forma compliance with financial maintenance covenants under the Third Amended Credit Agreement, the Operating Partnership may seek to increase the aggregate principal amount of the revolving commitments and/or establish one or more new tranches of term loans under the Third Amended Credit Facility in an aggregate amount not to exceed $800.0 million.

As of March 31, 2025, we had borrowings outstanding of $425.0 million under the Third Amended Revolving Facility.

The Revolving Facility has a maturity date of February 9, 2029, and includes, at our sole discretion, two six-month extension options.

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

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

The interest rates applicable to loans under the Term Loan were, 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 our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our 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 our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our 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 off the credit ratings of our senior long-term unsecured debt).

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

See Note 7, Debt, to our condensed consolidated financial statements included in this report for further information about the Second Amended Credit Agreement.

Capital Expenditures and Earn-Out Payments for Real Estate

As of September 30, 2024, we had committed to fund expansions, construction, capital improvements and ESG incentives, which provides eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties, 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.

The interest rates applicable to loans under the Third Amended Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.05% to 0.55% per annum or Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the Third Amended Credit Agreement) plus a margin ranging from 1.05% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt).

In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Third Amended Revolving Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our 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 off the credit ratings of the Company’s senior long-term unsecured debt).

As of March 31, 2025, we were in compliance with all applicable financial covenants under the Third Amended Credit Agreement.

See Note 7, Debt, to our condensed consolidated financial statements included in this report for further information about the Third Amended Credit Agreement.

Commitments and Contingencies

As of March 31, 2025, we had committed to fund expansions, construction, capital improvements and ESG incentives, which provides eligible triple-net tenants with monetary inducements to make sustainable improvements to our properties, at certain triple-net leased facilities totaling $7.2 million, of which $6.3 million is subject to rent increase at the time of funding.

We expect to fund the capital expenditures in the next one to two years.

As of September 30, 2024, we entered into a purchase and sale agreement which provided for an earn-out obligation of up to $10.0 million for one SNF in Virginia which was acquired during 2024.

As of March 31, 2025, we have non-real estate secured loan commitments of $12.2 million.

We are also party to a purchase and sale agreement which provides for an earn-out obligation of up to $10.0 million 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.

See Note 12, Commitments and Contingencies, to our condensed consolidated financial statements included in this report for further i nformation regarding our obligation to finance certain capital expenditures under our triple-net leases.

In addition, one mortgage loan includes an earn-out advance of $9.0 million upon satisfaction of certain conditions.

See Note 13, Commitments and Contingencies, to our condensed consolidated financial statements included in this report for further information.

Dividend Plans

We are required to pay dividends in order to maintain our REIT status and we expect to make quarterly dividend payments in cash with the annual dividend amount no less than 90% of our annual REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.

See Note 8, Equity, to our condensed consolidated financial statements included in this report for a summary of the cash dividends per share of our common stock declared by our board of directors for the three months ended September 30, 2024 .

Critical Accounting Policies and Estimates

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Please refer to “Critical Accounting Policies and Estimates” in the “Management’s Discussion and Analysis of Financial Condition and Results of Ope rations” section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 12, 2025, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

There have been no material changes in such critical accounting policies during the nine months ended September 30, 2024.

There have been no material changes in such critical accounting policies during the three months ended March 31, 2025.

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 2. Management’s Discussion and Analysis