What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-04 compared with 2025-05-05 · 291 added, 126 removed, 365 unchanged (53% of the section changed)

2 unchanged sentences

We are a REIT organized under Maryland law that primarily owns medical office and life science properties, senior living communities and other healthcare related properties throughout the United States.

As of March 31, 2025, we owned 343 properties located in 34 states and Washington, D.C., including 11 properties classified as held for sale and two closed senior living communities.

As of March 31, 2025, we owned an equity interest in each of the Seaport JV and the LSMD JV that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that were 99% leased with an average (by annualized rental income) remaining lease term of 14.9 years.

As of June 30, 2025, we owned 341 properties located in 34 states and Washington, D.C., including 21 properties classified as held for sale and one closed senior living community.

As of June 30, 2025, we owned an equity interest in each of the Seaport JV and the LSMD JV that own medical office and life science properties located in five states with an aggregate of approximately 2.2 million rentable square feet that were 99% leased with an average (by annualized rental income) remaining lease term of 14.7 years.

We are encouraged by positive trends, including increases in rates, margins and occupancy, in our SHOP segment.

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PORTFOLIO OVERVIEW

The following tables present an overview of our portfolio as of March 31, 2025 (dollars in thousands, except investment per square foot or unit data):

As of March 31, 2025 Number

The following tables present an overview of our portfolio as of June 30, 2025 (dollars in thousands, except investment per square foot or unit data):

As of June 30, 2025 Number

of Properties Square Feet or Number of Units Gross Book Value of Real Estate Assets (1)

11 unchanged sentences

Total 341 $ 6,775,125 100.0 % $ 382,712 100.0 % $ 70,132 100.0 %

T a ble of Contents

As of and For the Three Months Ended March 31,

As of and For the Three Months Ended June 30,

SHOP 80.6 % 79.0 %

Medical Office and Life Science Portfolio (4)

82.9 % 81.5 %

SHOP 80.2 % 78.9 %

Triple net leased senior living communities 100.0 % 100.0 %

5 unchanged sentences

(4) Medical office and life science property occupancy data includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants and (iii) space being fitted out for occupancy.

During the three months ended March 31, 2025, we entered into new and renewal leases in our Medical Office and Life Science Portfolio segment as summarized in the following table (dollars and square feet in thousands, except per square foot amounts):

Three Months Ended March 31, 2025

During the three and six months ended June 30, 2025, we entered into new and renewal leases in our Medical Office and Life Science Portfolio segment as summarized in the following tables (dollars and square feet in thousands, except per square foot amounts):

Three Months Ended June 30, 2025

New Leases Renewals Total

8 unchanged sentences

$ 5.91 $ 3.08 $ 3.18

Six Months Ended June 30, 2025

New Leases Renewals Total

Square feet leased during the quarter 124 127 251

Weighted average rental rate change (by rentable square feet) 21.1 % 10.3 % 15.4 %

Weighted average lease term (years) 11.4 6.3 8.9

Total leasing costs and concession commitments (1)

$ 9,997 $ 2,505 $ 12,502

Total leasing costs and concession commitments per square foot (1)

$ 80.55 $ 19.75 $ 49.81

Total leasing costs and concession commitments per square foot per year (1)

$ 7.04 $ 3.12 $ 5.61

(1) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.

Lease Expiration Schedules

As of March 31, 2025, lease expirations in our Medical Office and Life Science Portfolio segment were as follows (dollars in thousands):

As of June 30, 2025, lease expirations in our Medical Office and Life Science Portfolio segment were as follows (dollars in thousands):

Year Number of Tenants Square Feet Leased % of Total Leased Square Feet Cumulative % of Total Leased Square Feet Annualized Rental Income (1)

12 unchanged sentences

Weighted average remaining lease term (in years) 4.8 5.1

(1) Annualized rental income is based on rents pursuant to existing leases as of March 31, 2025, including straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties.

T a ble of Contents

As of March 31, 2025, lease expirations at our triple net leased wellness centers and senior living communities leased to third party operators were as follows (dollars in thousands):

(1) Annualized rental income is based on rents pursuant to existing leases as of June 30, 2025, including straight line rent adjustments and estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties.

As of June 30, 2025, lease expirations at our triple net leased wellness centers and senior living communities leased to third party operators were as follows (dollars in thousands):

Year Number of Properties Number of Units or Square Feet Annualized Rental Income (1)

12 unchanged sentences

14,068 47.6 % 100.0 %

18 $ 29,497 100.0 %

Total 18 $ 29,518 100.0 %

Weighted average remaining lease term (in years) 9.1 10.2

(1) Annualized rental income is based on rents pursuant to existing leases as of March 31, 2025.

(1) Annualized rental income is based on rents pursuant to existing leases as of June 30, 2025.

Annualized rental income includes estimated percentage rents and straight line rent adjustments and excludes lease value amortization.

(2) Excludes one closed senior living community classified as held for sale as of March 31, 2025.

RESULTS OF OPERATIONS (dollars and square feet in thousands, unless otherwise noted)

We operate in, and report financial information for, the following two segments:

Medical Office and Life Science Portfolio and SHOP.

Our Medical Office and Life Science Portfolio segment primarily consists of medical office properties leased to medical providers and other medical related businesses, as well as life science properties primarily leased to biotech laboratories and other similar tenants.

SHOP and Medical Office and Life Science Portfolio.

Our SHOP segment consists of managed senior living communities that provide short term and long term residential living and, in some instances, care and other services for residents where we pay fees to managers to operate the communities on our behalf.

We also report “All Other” operations, which consists of triple net leased wellness centers and senior living communities that are leased to third party operators from which we receive rents, which we do not consider to be sufficiently material to constitute a separate reportable segment, and any other income or expenses that are not attributable to a specific reportable segment.

The following table summarizes the results of operations of each of our segments for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Medical Office and Life Science Portfolio $ 49,763 $ 54,149

The following table summarizes the results of operations of each of our segments for the three and six months ended June 30, 2025 and 2024:

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

2025 2024 2025 2024

SHOP $ 327,545 $ 308,522 $ 655,851 $ 616,648

Medical Office and Life Science Portfolio 48,056 54,555 97,819 108,704

All Other 7,111 8,315 15,906 16,816

Total revenues $ 382,712 $ 371,392 $ 769,576 $ 742,168

Medical Office and Life Science Portfolio $ (18,736) $ (7,113)

SHOP $ (38,415) $ (17,988) $ (41,502) $ (40,268)

Medical Office and Life Science Portfolio (5,284) (30,847) (24,020) (37,960)

All Other (47,940) (49,026) (35,103) (105,892)

1 unchanged sentence

The following section analyzes and discusses the results of operations of each of our segments for the periods presented.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024 (dollars and square feet in thousands, except average monthly rate):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended March 31, 2025 to the three months ended March 31, 2024.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 (dollars and square feet in thousands, except average monthly rate):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the three months ended June 30, 2025 to the three months ended June 30, 2024.

Our definition of NOI and our reconciliation of net income (loss) to NOI and a description of why we believe NOI is an appropriate supplemental measure are included below under the heading “Non-GAAP Financial Measures.”

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 $ Change % Change

NOI by segment:

Medical Office and Life Science Portfolio $ 26,856 $ 30,252 $ (3,396) (11.2) %

SHOP $ 36,615 $ 28,984 $ 7,631 26.3 %

Medical Office and Life Science Portfolio 26,487 30,273 (3,786) (12.5) %

All Other 7,030 8,070 (1,040) (12.9) %

4 unchanged sentences

Impairment of assets 30,993 6,545 24,448 nm

Gain (loss) on sale of properties 110,140 (5,874) 116,014 nm

Gain on insurance recoveries 7,522 — 7,522 nm

Loss on sale of properties (7,429) (13,213) 5,784 (43.8) %

Interest and other income 2,982 2,403 579 24.1 %

1 unchanged sentence

(50,926) (58,702) 7,776 (13.2) %

Loss on modification or early extinguishment of debt (29,071) — (29,071) nm

Loss before income taxes and equity in net earnings of investees (10,424) (87,970) 77,546 (88.2) %

Income tax expense (49) (187) 138 (73.8) %

Equity in net earnings of investees 1,487 1,898 (411) (21.7) %

Loss on modification or early extinguishment of debt (126) (209) 83 (39.7) %

Loss before income taxes and equity in net earnings (losses) of investees (93,878) (85,384) (8,494) 9.9 %

Income tax expense (843) (170) (673) nm

Equity in net earnings (losses) of investees 3,082 (12,307) 15,389 (125.0) %

Net loss $ (91,639) $ (97,861) $ 6,222 (6.4) %

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Comparable Properties (1)

All Properties

As of and For the Three Months As of and For the Three Months

Ended June 30, Ended June 30,

2025 2024 2025 2024

Total properties 201 201 230 232

Number of units 22,443 22,443 24,872 25,230

Occupancy 81.0 % 80.0 % 80.6 % 79.0 %

Average monthly rate (2)

$ 5,364 $ 5,099 $ 5,440 $ 5,161

Three Months Ended June 30,

Comparable (1)

Non-Comparable

Properties Results Properties Results Consolidated Properties Results

2025 2024 Change Change 2025 2024 2025 2024 Change Change

Residents fees and services $ 292,724 $ 276,419 $ 16,305 5.9 % $ 34,821 $ 32,103 $ 327,545 $ 308,522 $ 19,023 6.2 %

Property operating expenses (255,352) (244,879) 10,473 4.3 % (35,578) (34,659) (290,930) (279,538) 11,392 4.1 %

NOI $ 37,372 $ 31,540 $ 5,832 18.5 % $ (757) $ (2,556) $ 36,615 $ 28,984 $ 7,631 26.3 %

(1) Consists of senior living communities that we have owned and which have been in service, reported in the same segment and operated by the same operator continuously since April 1, 2024;

excludes communities classified as held for sale, closed or out of service, if any.

(2) Average monthly rate reflects the average monthly residents fees and services per occupied unit for the period presented.

The average monthly rate is calculated based on the actual number of days during the period.

Residents fees and services.

Residents fees and services are the revenues earned at our managed senior living communities.

We recognize these revenues as services are provided and related fees are accrued.

Residents fees and services increased at our comparable properties primarily due to increases in occupancy and average monthly rate at our communities as shown in the table above.

The activity for our non-comparable properties primarily reflects the 15 communities classified as held for sale as of June 30, 2025 and nine communities transitioned to an existing third party manager during the 2024 period.

Property operating expenses.

Property operating expenses consist of real estate taxes, utility expenses, insurance, wages and benefit costs of community level personnel, repairs and maintenance expense, management fees, cleaning expense and other direct costs of operating these communities.

Property operating expenses increased at our comparable properties primarily due to increases in labor costs, marketing, contract labor costs and management fees as a result of higher revenues and other direct costs, partially offset by decreased insurance costs due to a reduction in premiums.

Net operating income.

The change in NOI reflects the net changes in residents fees and services and property operating expenses described above.

Medical Office and Life Science Portfolio :

1 unchanged sentence

All Properties

As of March 31, As of March 31,

As of June 30, As of June 30,

2025 2024 2025 2024

2 unchanged sentences

Occupancy 89.9 % 92.0 % 82.9 % 81.5 %

Three Months Ended March 31,

Three Months Ended June 30,

Comparable (1)

5 unchanged sentences

NOI $ 26,721 $ 27,241 $ (520) (1.9) % $ (234) $ 3,032 $ 26,487 $ 30,273 $ (3,786) (12.5) %

(1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2024;

(1) Consists of medical office and life science properties that we have owned and which have been in service continuously since April 1, 2024;

excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and properties owned by unconsolidated joint ventures in each of which we own an equity interest.

Rental income.

Rental income increased at our comparable properties primarily due to increases in property operating expense reimbursements at certain of our properties and a termination fee totaling $600 paid during the three months ended March 31, 2025 by a former tenant at one of our properties.

This space was subsequently re-leased to another tenant in April 2025.

The increase in rental income at our comparable properties was partially offset by decreased transient parking at one of our properties.

income decreased at our non-comparable properties primarily due to dispositions since January 1, 2024 and vacancies at two of our properties classified as held for sale.

Rental income decreased at our comparable properties primarily due to vacancies at certain of our properties.

Rental income decreased at our non-comparable properties primarily due to dispositions since April 1, 2024.

Property operating expenses.

Property operating expenses consist of real estate taxes, utility expenses, insurance, management fees, salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense and other direct costs of operating these properties.

The increase in property operating expenses at our comparable properties is primarily due to an increase in snow removal expenses, repairs and maintenance and utilities due to increases in usage and rates at certain of our properties.

The increases in property operating expenses at our comparable properties were partially offset by a decrease in real estate taxes at certain of our properties due to refunds realized and a reduction in assessed values as a result of successful appeals during the three months ended March 31, 2025.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since January 1, 2024.

The decrease in property operating expenses at our comparable properties is primarily due to a decrease in insurance costs and other direct costs.

Property operating expenses decreased at our non-comparable properties primarily due to dispositions since April 1, 2024.

Net operating income.

The change in NOI reflects the net changes in rental income and property operating expenses described above.

All Other (1) :

Comparable Properties (2)

All Properties

As of and For the Three Months As of and For the Three Months

Ended March 31, Ended March 31,

As of and For the Three Months Ended June 30, As of and For the Three Months Ended June 30,

2025 2024 2025 2024

Total properties:

Triple net leased senior living communities 8 8 9 27

Wellness centers 10 10 10 10

Rent coverage:

Triple net leased senior living communities (3)

1.88 x 1.89 x 1.88 x 1.89 x

Wellness centers (3)

2.93 x 1.80 x 2.93 x 1.80 x

Three Months Ended June 30,

Comparable (2)

Non-Comparable

Properties Results Properties Results Consolidated Properties Results

2025 2024 Change Change 2025 2024 2025 2024 Change Change

Rental income $ 7,111 $ 6,290 $ 821 13.1 % $ — $ 2,025 $ 7,111 $ 8,315 $ (1,204) (14.5) %

Property operating expenses (81) (245) (164) (66.9) % — — (81) (245) (164) (66.9) %

NOI $ 7,030 $ 6,045 $ 985 16.3 % $ — $ 2,025 $ 7,030 $ 8,070 $ (1,040) (12.9) %

(1) All Other operations consist of all of our other operations, including certain wellness centers and senior living communities that are leased to third party operators, which segment we do not consider to be sufficiently material to constitute a separate reportable segment, and any other income or expenses that are not attributable to a specific reportable segment.

(2) Consists of properties that we have owned and which have been reported in the same segment and leased to the same operator continuously since April 1, 2024;

excludes properties classified as held for sale, if any.

(3) All tenant operating data presented are based upon the operating results provided by our tenants for the most recent prior period for which tenant operating results are available to us.

Rent coverage is calculated using the annualized operating cash flows from our triple net lease tenants' operations of our properties, before subordinated charges, if any, divided by annualized rental income.

We have not independently verified tenant operating data.

Excludes data for historical periods prior to our ownership of certain properties.

Rental income.

Rental income increased at our comparable properties primarily due to new leases for one of our wellness center tenants.

The activity for our non-comparable properties primarily reflects the 18 triple net leased senior living communities that we sold in February 2025.

Property operating expenses.

Property operating expenses consist of real estate taxes, insurance and other expenses that are not paid directly by our tenants.

The decrease in property operating expenses for our comparable properties primarily reflects real estate taxes and other expenses paid directly by our tenants during the three months ended June 30, 2025, which were previously paid by us during prior periods.

Net operating income.

The change in NOI reflects the net changes in rental income and property operating expenses described above.

Consolidated :

Depreciation and amortization expense.

Depreciation and amortization expense decreased primarily due to dispositions since April 1, 2024 and certain depreciable assets becoming fully depreciated, partially offset by the purchase of capital improvements at certain of our properties.

General and administrative expense .

General and administrative expense consists of fees paid to RMR under our business management agreement, legal and accounting fees, fees and expenses of our Trustees, equity compensation expense and other costs relating to our status as a publicly traded company.

General and administrative expense increased primarily due to $4,148 of estimated incentive management fees that we recognized for the three months ended June 30, 2025, compared to a $849 reversal as of June 30, 2024, as a result of our total shareholder return exceeding the returns for the MSCI U.S.

REIT/Health Care REIT Index over the applicable measurement period.

Acquisition and certain other transaction related costs.

Acquisition and certain other transaction related costs primarily represent costs incurred with acquisitions and non-recurring transactions that we expensed under GAAP.

Impairment of assets.

For information about our asset impairment charges, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

Loss on sale of properties.

For information regarding loss on sale of properties, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Interest and other income.

The increase in interest and other income is primarily due to higher average invested cash balances during the three months ended June 30, 2025 compared to the 2024 period.

Interest expense.

Interest expense decreased primarily due to the redemption during 2025 of an aggregate $380,000 of our remaining 9.75% senior unsecured notes due 2025.

Additionally, there was a decrease in discount accretion for our senior secured notes due 2026 due to the partial redemption of an aggregate $299,158 of these notes during 2025.

During the three months ended June 30, 2025 and 2024, we recognized discount accretion of $16,307 and $21,440, respectively, for our senior secured notes due 2026.

These decreases were partially offset by the execution of a $120,000 mortgage loan in May 2024 at a fixed interest rate of 6.864% per annum and four mortgage financings totaling $343,157 during 2025.

Loss on modification or early extinguishment of debt.

During the three months ended June 30, 2025, we recorded a loss on early extinguishment of debt in connection with the redemption of all $380,000 of our remaining 9.75% senior secured notes due 2025.

Income tax expense .

Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.

Equity in net earnings (losses) of investees.

Equity in net earnings (losses) of investees is the change in the fair value of our investments in our joint ventures and also represents our proportionate share of the earnings of our equity method investment in AlerisLife.

For further information regarding our investment in AlerisLife, see Notes 3 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 (dollars and square feet in thousands, except average monthly rate):

Unless otherwise indicated, references in this section to changes or comparisons of results, income or expenses refer to comparisons of the results for the six months ended June 30, 2025 to the six months ended June 30, 2024.

Six Months Ended June 30,

2025 2024 $ Change % Change

NOI by segment:

SHOP $ 73,443 $ 53,694 $ 19,749 36.8 %

Medical Office and Life Science Portfolio 53,343 60,525 (7,182) (11.9) %

All Other 15,884 16,280 (396) (2.4) %

Total NOI 142,670 130,499 12,171 9.3 %

Depreciation and amortization 134,591 138,490 (3,899) (2.8) %

General and administrative 20,177 13,830 6,347 45.9 %

Acquisition and certain other transaction related costs 99 1,912 (1,813) (94.8) %

Impairment of assets 69,465 18,687 50,778 nm

Gain (loss) on sale of properties 102,711 (19,087) 121,798 nm

Gain on insurance recoveries 7,522 — 7,522 100.0 %

Interest and other income 5,081 4,640 441 9.5 %

Interest expense

(108,757) (116,278) 7,521 (6.5) %

Loss on modification or early extinguishment of debt (29,197) (209) (28,988) nm

Loss before income tax expense and equity in net earnings (losses) of investees (104,302) (173,354) 69,052 (39.8) %

Income tax expense (892) (357) (535) 149.9 %

Equity in net earnings (losses) of investees 4,569 (10,409) 14,978 (143.9) %

Net loss $ (100,625) $ (184,120) $ 83,495 (45.3) %

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Comparable Properties (1)

All Properties

As of and For the Six Months Ended June 30, As of and For the Six Months Ended June 30,

2025 2024 2025 2024

Total properties 197 197 230 232

Number of units 22,202 22,202 24,872 25,230

2 unchanged sentences

$ 5,341 $ 5,095 $ 5,427 $ 5,163

Three Months Ended March 31,

Six Months Ended June 30,

Comparable (1)

10 unchanged sentences

Residents fees and services.

Residents fees and services are the revenues earned at our managed senior living communities.

We recognize these revenues as services are provided and related fees are accrued.

Residents fees and services increased at our comparable properties primarily due to increases in occupancy and average monthly rate at our communities as shown in the table above.

The activity for our non-comparable properties primarily reflects the five communities classified as held for sale as of March 31, 2025 and the 13 communities transitioned to an existing third party manager during the 2024 period.

The activity for our non-comparable properties primarily reflects the 15 communities classified as held for sale as of June 30, 2025 and 13 communities transitioned to an existing third party manager during the 2024 period.

Property operating expenses.

Property operating expenses increased at our comparable properties primarily due to increases in labor costs, management fees as a result of higher revenues, utilities, marketing, real estate taxes and other direct costs, partially offset by reduced insurance costs due to a reduction in premiums.

Property operating expenses increased at our comparable properties primarily due to increases in labor costs, management fees as a result of higher revenues, marketing and other direct costs, partially offset by decreased insurance costs due to a reduction in premiums.

Net operating income.

The change in NOI reflects the net changes in residents fees and services and property operating expenses described above.

Medical Office and Life Science Portfolio :

Comparable Properties (1)

All Properties

As of June 30, As of June 30,

2025 2024 2025 2024

Total properties

Total square feet 6,469 6,468 7,400 8,396

Occupancy 89.8 % 92.0 % 82.9 % 81.5 %

Six Months Ended June 30,

Comparable (1)

Non-Comparable

Properties Results Properties Results Consolidated Properties Results

2025 2024 Change Change 2025 2024 2025 2024 Change Change

Rental income $ 91,915 $ 92,850 $ (935) (1.0) % $ 5,904 $ 15,854 $ 97,819 $ 108,704 $ (10,885) (10.0) %

Property operating expenses (38,981) (38,988) (7) 0.0 % (5,495) (9,191) (44,476) (48,179) (3,703) (7.7) %

NOI $ 52,934 $ 53,862 $ (928) (1.7) % $ 409 $ 6,663 $ 53,343 $ 60,525 $ (7,182) (11.9) %

(1) Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2024;

excludes properties classified as held for sale or out of service undergoing redevelopment, if any, and properties owned by unconsolidated joint ventures in each of which we own an equity interest.

Rental income.

Rental income decreased at our comparable properties primarily due to vacancies at certain of our properties, partially offset by a termination fee totaling $600 paid during the six months ended June 30, 2025 by a former tenant at one of our properties.

This space was subsequently re-leased to another tenant in April 2025.

Rental income decreased at our non-comparable properties primarily due to dispositions since January 1, 2024.

Property operating expenses.

Property operating expenses decreased primarily due to dispositions since January 1, 2024.

Net operating income.

The change in NOI reflects the net changes in rental income and property operating expenses described above.

All Other (1) :

1 unchanged sentence

All Properties

As of and For the Three Months Ended March 31, As of and For the Three Months Ended March 31,

As of and For the Six Months Ended June 30, As of and For the Six Months Ended June 30,

2025 2024 2025 2024

7 unchanged sentences

2.93 x 1.80 x 2.93 x 1.80 x

Three Months Ended March 31,

Six Months Ended June 30,

Comparable (2)

16 unchanged sentences

Property operating expenses.

Property operating expenses consist of real estate taxes, insurance and other expenses that are not paid directly by our tenants.

The decrease in property operating expenses for our comparable properties primarily reflects real estate taxes and other expenses paid directly by our tenants during the three months ended March 31, 2025, which were previously paid by us during prior periods.

The decrease in property operating expenses for our comparable properties primarily reflects real estate taxes and other expenses paid directly by our tenants during the six months ended June 30, 2025, which were previously paid by us during prior periods.

Net operating income.

4 unchanged sentences

General and administrative expense .

General and administrative expense increased primarily due to $2,407 of estimated incentive management fees that we recognized for the three months ended March 31, 2025, compared to $849 for the three months ended March 31, 2024, as a result of our total shareholder return exceeding the returns for the MSCI U.S.

General and administrative expense increased primarily due to $6,555 of estimated incentive management fees that we recognized for the six months ended June 30, 2025 as a result of our total shareholder return exceeding the returns for the MSCI U.S.

REIT/Health Care REIT Index over the applicable measurement period.

Acquisition and certain other transaction related costs.

Acquisition and certain other transaction related costs primarily represent costs incurred with acquisitions and non-recurring transactions that we expensed under GAAP.

We incurred transition costs, including termination and other fees, during the 2024 period as a result of our transition of 13 communities to an existing third party manager.

Impairment of assets.

1 unchanged sentence

Gain (loss) on sale of properties.

For information regarding gain (loss) on sale of properties, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For information regarding gain (loss) on sale of properties, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 3 to our consolidated financial statements included in Part IV, Item 15 of our Annual Report.

Gain on insurance recoveries.

During the three months ended March 31, 2025, we recognized a gain on insurance recoveries related to cash received from our insurance provider in excess of our losses for a claim that was finalized.

During the six months ended June 30, 2025, we recognized a gain on insurance recoveries related to cash received from our insurance provider in excess of our losses for a claim that was finalized.

For further information regarding this gain on insurance recoveries, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Interest and other income.

The decrease in interest and other income is primarily due to lower average invested cash balances during the three months ended March 31, 2025 compared to the 2024 period.

The increase in interest and other income is primarily due to higher average invested cash balances during the six months ended June 30, 2025 compared to the 2024 period.

Interest expense.

Interest expense increased primarily due to the execution of a $120,000 mortgage loan in May 2024 at a fixed interest rate of 6.864% per annum and an increase in the discount accretion for our senior secured notes due 2026.

During the three months ended March 31, 2025 and 2024, we recognized discount accretion of $22,122 and $20,659, respectively, for our senior secured notes due 2026.

These increases were partially offset by the redemption during 2024 of an aggregate $120,000 of our outstanding 9.75% senior unsecured notes due 2025.

Interest expense decreased primarily due to the redemption during 2025 of an aggregate $380,000 of our remaining 9.75% senior unsecured notes due 2025.

Additionally, there was a decrease in discount accretion for our senior secured notes due 2026 due to the partial redemption of an aggregate $299,158 of these notes during 2025.

During the six months ended June 30, 2025 and 2024, we recognized discount accretion of $38,429 and $42,099, respectively, for our senior secured notes due 2026.

These decreases were partially offset by the execution of a $120,000 mortgage loan in May 2024 at a fixed interest rate of 6.864% per annum and four mortgage financings totaling $343,157 during 2025.

Loss on modification or early extinguishment of debt.

During the three months ended March 31, 2025 we recorded a loss on early extinguishment of debt in connection with the partial redemption of an aggregate $299,158 of our outstanding senior secured notes due 2026.

During the six months ended June 30, 2025, we recorded a loss on early extinguishment of debt in connection with the partial redemption of an aggregate $299,158 of our outstanding senior secured notes due 2026 and with the redemption of all $380,000 of our remaining 9.75% senior secured notes due 2025.

Income tax expense .

Income tax expense is the result of operating income we earned in certain jurisdictions where we are subject to state income taxes.

Equity in net earnings of investees.

Equity in net earnings of investees is the change in the fair value of our investments in our joint ventures and also represents our proportionate share of the earnings of our equity method investment in AlerisLife.

Equity in net earnings (losses) of investees.

For further information regarding our investment in AlerisLife, see Notes 3 and 11 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures (dollars in thousands, except per share amounts)

We present certain "non-GAAP financial measures" within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, including funds from operations, or FFO, normalized funds from operations, or Normalized FFO, and NOI for the three months ended March 31, 2025 and 2024.

These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity.

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Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

Our calculations of FFO and Normalized FFO for the three months ended March 31, 2025 and 2024 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO and Normalized FFO appear in the following table.

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 2025 and 2024 and reconciliations of net income (loss), the most directly comparable financial measure under GAAP reported in our condensed consolidated financial statements, to FFO and Normalized FFO appear in the following table.

This table also provides a comparison of distributions to shareholders, FFO and Normalized FFO and net income (loss) per share for these periods.

Three Months Ended March 31,

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

2025 2024 2025 2024

Net loss $ (91,639) $ (97,861) $ (100,625) $ (184,120)

Depreciation and amortization 66,266 68,357 134,591 138,490

(Gain) loss on sale of properties (110,140) 5,874

Loss (gain) on sale of properties 7,429 13,213 (102,711) 19,087

Impairment of assets 30,993 6,545 69,465 18,687

Equity in net earnings of investees (1,487) (1,898)

Equity in net (earnings) losses of investees (3,082) 12,307 (4,569) 10,409

Share of FFO from unconsolidated joint ventures 2,715 2,047 5,452 4,061

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Incentive management fees (1)

4,148 (849) 6,555 —

Acquisition and certain other transaction related costs 75 1,826 99 1,912

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The calculation of NOI by reportable segment is included above in this Item 2.

The following table includes the reconciliation of net loss to NOI for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

The following table includes the reconciliation of net loss to NOI for the three and six months ended June 30, 2025 and 2024.

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

2025 2024 2025 2024

Reconciliation of Net Loss to NOI:

Net loss $ (91,639) $ (97,861) $ (100,625) $ (184,120)

Equity in net earnings of investees (1,487) (1,898)

Equity in net (earnings) losses of investees (3,082) 12,307 (4,569) 10,409

Income tax expense 843 170 892 357

Loss before income taxes and equity in net earnings of investees

(10,424) (87,970)

Loss before income taxes and equity in net earnings (losses) of investees (93,878) (85,384) (104,302) (173,354)

Loss on modification or early extinguishment of debt 126 209 29,197 209

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Gain on insurance recoveries — — (7,522) —

(Gain) loss on sale of properties (110,140) 5,874

Loss (gain) on sale of properties 7,429 13,213 (102,711) 19,087

Impairment of assets 30,993 6,545 69,465 18,687

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Total NOI $ 70,132 $ 67,327 $ 142,670 $ 130,499

Medical Office and Life Science Portfolio NOI $ 26,856 $ 30,252

SHOP NOI $ 36,615 $ 28,984 $ 73,443 $ 53,694

Medical Office and Life Science Portfolio NOI 26,487 30,273 53,343 60,525

All Other NOI 7,030 8,070 15,884 16,280

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The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:

Three Months Ended March 31,

Six Months Ended June 30,

Cash and cash equivalents and restricted cash at beginning of period $ 149,854 $ 246,961

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We generally receive minimum rents from tenants at our medical office and life science properties, triple net leased wellness centers and senior living communities monthly, we receive residents fees and services revenues, net of expenses, from our managed senior living communities monthly and we receive percentage rents from tenants at certain of our triple net senior living communities monthly, quarterly or annually.

The change in cash (used in) provided by operating activities for the three months ended March 31, 2025 compared to the prior period was primarily due to the accreted interest of $34,700 paid during the 2025 period as a result of the partial redemption of our outstanding senior secured notes due 2026.

The decrease in cash provided by operating activities for the six months ended June 30, 2025 compared to the prior period was primarily due to the accreted interest of $34,700 paid during the 2025 period as a result of the partial redemption of our outstanding senior secured notes due 2026, partially offset by higher cash flows at our SHOP communities.

Our Investing Liquidity and Resources

The change in cash provided by (used in) investing activities for the three months ended March 31, 2025 compared to the prior period was primarily due to an increase in proceeds from the sale of properties, a $17,000 cash dividend paid to us by AlerisLife, our purchase on February 16, 2024 of approximately 34.0% of the then outstanding AlerisLife common shares from ABP Trust at the tender offer price of $1.31 per share for a total purchase price, including transaction related costs, of $15,459 and a decrease in real estate improvements.

These changes were partially offset by $5,800 of contributions made to the Seaport JV.

The change in cash provided by (used in) investing activities for the six months ended June 30, 2025 compared to the prior period was primarily due to an increase in proceeds from the sale of properties, a $17,000 cash dividend paid to us by AlerisLife and our purchase on February 16, 2024 of approximately 34.0% of the then outstanding AlerisLife common shares from ABP Trust at the tender offer price of $1.31 per share for a total purchase price, including transaction related costs, of $15,459.

These changes were partially offset by $8,500 of contributions made to the Seaport JV in the 2025 period.

The following is a summary of capital expenditures, development, redevelopment and other activities for the periods presented:

Three Months Ended March 31,

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

2025 2024 2025 2024

SHOP fixed assets and capital improvements $ 24,283 $ 21,623 $ 45,398 $ 31,714

Medical Office and Life Science Portfolio capital expenditures:

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Building improvements (2)

1,518 1,852 3,042 2,771

Recurring capital expenditures - Medical Office and Life Science Portfolio 5,046 8,261 10,417 15,209

Wellness centers lease related costs (1)

SHOP fixed assets and capital improvements 21,115 10,091

— 4,591 — 11,514

Total recurring capital expenditures $ 29,329 $ 34,475 $ 55,815 $ 58,437

Development, redevelopment and other activities - Medical Office and Life Science Portfolio (3)

Development, redevelopment and other activities - SHOP (3)

$ 4,660 $ 5,705 $ 10,228 $ 6,894

Development, redevelopment and other activities - Medical Office and Life Science Portfolio (3)

— 1,112 — 1,825

Total development, redevelopment and other activities $ 4,660 $ 6,817 $ 10,228 $ 8,719

Capital expenditures by segment:

Medical Office and Life Science Portfolio $ 5,371 $ 7,661

SHOP $ 28,943 $ 27,328 $ 55,626 $ 38,608

Medical Office and Life Science Portfolio 5,046 9,373 10,417 17,034

All Other - wellness centers

— 4,591 — 11,514

Total capital expenditures $ 33,989 $ 41,292 $ 66,043 $ 67,156

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We generally plan to continue investing capital in our properties, including redevelopment projects, to better position these properties in their respective markets in order to increase our returns in future years.

As of March 31, 2025, we had estimated unspent leasing related obligations at our medical office and life science properties of approximately $28,429, of which we expect to spend approximately $23,627 during the next 12 months.

As of June 30, 2025, we had estimated unspent leasing related obligations at our medical office and life science properties of approximately $25,528, of which we expect to spend approximately $22,968 during the next 12 months.

We expect to fund these obligations using operating cash flows, cash on hand, proceeds from the disposition of certain properties and future financing activities.

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Additionally, due to labor availability constraints and wage and commodity price inflation, the capital investments we plan to make may be delayed or cost more than we expect.

During the three months ended March 31, 2025, we sold 24 properties for an aggregate sales price of $320,825, excluding closing costs.

Subsequent to March 31, 2025, we sold one property for a sales price of $11,150, excluding closing costs.

As of May 2, 2025, we had 19 properties under agreements or letters of intent to sell for an aggregate sales price of $115,773, excluding closing costs.

The net proceeds from the sales of two of these properties, which have an expected aggregate sales price, excluding closing costs, of $13,118, are required to be used to partially redeem our outstanding senior secured notes due 2026, if the sales of such properties are completed.

During the six months ended June 30, 2025, we sold 26 properties for an aggregate sales price of $337,225, excluding closing costs.

Subsequent to June 30, 2025, we sold three properties for an aggregate sales price of $8,800, excluding closing costs.

As of August 1, 2025, we had 49 properties under agreements or letters of intent to sell for an aggregate sales price of $279,923, excluding closing costs.

The net proceeds from the sales of 11 of these properties, which have an expected aggregate sales price, excluding closing costs, of $90,588, are required to be used to partially redeem our outstanding senior secured notes due 2026, if the sales of such properties are completed.

We may not complete the sales of any or all of the properties we currently plan to sell.

Also, we may sell some or all of these properties at amounts that are less than currently expected and/or less than the carrying values of such properties and we may incur losses on any such sales as a result.

For further information regarding

our dispositions, see Note 3 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

For further information

regarding our dispositions, see Note 3 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

On February 14, 2025, AlerisLife paid an aggregate cash dividend of $50,000 to its stockholders.

Our pro rata share of this cash dividend was $17,000.

On July 15, 2025, AlerisLife paid an aggregate cash dividend of $10,000 to its stockholders.

Our pro rata share of this cash dividend was $3,400.

Our Financing Liquidity and Resources

The change in cash used in financing activities for the three months ended March 31, 2025 compared to the prior period was primarily due to the partial redemption of our outstanding senior secured notes due 2026, partially offset by our execution of a $140,000 mortgage loan in the 2025 period.

As of March 31, 2025, we had $302,577 of cash and cash equivalents.

The change in cash (used in) provided by financing activities for the six months ended June 30, 2025 compared to the prior period was primarily due to the redemption of our outstanding senior secured notes due 2025 and partial redemption of our outstanding senior secured notes due 2026, partially offset by our execution of four mortgage financings for aggregate proceeds, excluding closing costs, of $343,157 in the 2025 period.

In June 2025, we obtained a $150,000 revolving credit facility secured by 14 SHOP communities.

Our revolving credit facility is available for general business purposes, including acquisitions.

We can borrow, repay and reborrow funds available under our revolving credit facility, and no principal repayments are due, until maturity.

Availability of borrowings under our credit agreement is subject to satisfying certain financial covenants and other credit facility conditions.

Our revolving credit facility matures in June 2029 and we have two six-month extension options for the maturity date of the facility, subject to satisfaction of certain conditions and payment of an extension fee.

Interest payable on borrowings under our revolving credit facility is based on SOFR plus a premium of 2.50% to 3.00%, depending on our net leverage ratio, as defined in our credit agreement, which was 2.50% as of June 30, 2025.

We also pay an unused commitment fee of 25 to 35 basis points per annum based on amounts outstanding under our revolving credit facility.

As of June 30, 2025, the annual interest rate payable on borrowings under our revolving credit facility was 7.05%.

As of June 30, 2025 and August 1, 2025, we had no borrowings under our revolving credit facility and $150,000 available for borrowings.

As of June 30, 2025, we had $141,769 of cash and cash equivalents.

We typically use cash balances, net proceeds from offerings of securities, debt issuances or dispositions of assets and cash flows from our operations to fund our operations, debt repayments, distributions, acquisitions, investments, capital expenditures and other general business purposes.

During the three months ended March 31, 2025, we paid a quarterly cash distribution to our shareholders totaling approximately $2,413 using existing cash balances.

On April 10, 2025, we declared a quarterly distribution payable to common shareholders of record on April 22, 2025 in the amount of $0.01 per share, or approximately $2,413.

We expect to pay this distribution on or about May 15, 2025 using cash on hand.

During the six months ended June 30, 2025, we paid quarterly cash distributions to our shareholders totaling approximately $4,826 using existing cash balances.

On July 10, 2025, we declared a quarterly distribution payable to common shareholders of record on July 21, 2025 in the amount of $0.01 per share, or approximately $2,414.

We expect to pay this distribution on or about August 14, 2025 using cash on hand.

For further information regarding the distribution we paid during 2025, see Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Further, those conditions could also disrupt capital markets and limit our access to financing from public sources, particularly if the global financial markets experience significant disruptions.

Our $641,376 in outstanding senior secured notes due 2026 are fully and unconditionally guaranteed, on a joint, several and senior secured basis, by the Collateral Guarantors, and on a joint, several and unsecured basis, by all our subsidiaries other than the Collateral Guarantors and certain excluded subsidiaries.

than the Collateral Guarantors and certain excluded subsidiaries.

These notes and the guarantees provided by the Collateral Guarantors are secured by a first priority lien and security interest in each of the collateral properties and 100% of the equity interests in each of the Collateral Guarantors.

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If we exercise this option, interest payments will be due semiannually during the extension period at an initial interest rate of 11.25% with increases of 50 basis points every 90 days these senior secured notes remain outstanding.

We are currently under letters of intent to sell two additional properties securing our senior secured notes due 2026 for an aggregate sales price of $13,118, excluding closing costs.

We are currently under agreements or letters of intent to sell 11 properties securing our senior secured notes due 2026 for an aggregate sales price of $90,588, excluding closing costs.

The net proceeds from these sales are required to be used to partially redeem these senior secured notes, if these sales are completed.

In March 2025, we executed a $140,000 floating rate mortgage loan secured by 14 SHOP communities.

This mortgage loan matures in March 2028 and requires that interest be paid at an annual rate of SOFR plus a premium of 2.50% with interest-only payments through March 2027, and we have two six-month extension options of the interest-only period, subject to satisfaction of certain conditions.

This mortgage loan matures in March 2028 and requires that interest be paid at an annual rate of SOFR plus a premium of 2.50% with interest-only payments through April 2027, and we have two six-month extension options of the interest-only period, subject to satisfaction of certain conditions.

In connection with this mortgage loan, we have purchased an interest rate cap with a SOFR strike rate equal to 4.50% pursuant to the terms of the applicable loan agreement.

The net proceeds from this mortgage loan were

approximately $136,228 after deducting estimated closing costs, and in April 2025, we used these proceeds and cash on hand to partially redeem $140,000 of our then outstanding 9.75% senior unsecured notes due 2025.

In April 2025, we executed a $108,873 fixed rate mortgage loan secured by seven SHOP communities.

This mortgage loan matures in May 2035 and requires that interest be paid at an annual rate of 6.22%, with interest-only payments through May 2030.

Also in April 2025, we provided notice to the holders of our 9.75% senior unsecured notes due June 2025 to redeem $140,000 of these notes in May 2025 using these loan proceeds and cash on hand.

Additionally, we have executed term sheets with additional lenders for expected aggregate proceeds of $94,030 for loans that will be secured by an aggregate of six SHOP communities.

We intend to use these proceeds and cash on hand to fully redeem the remaining outstanding principal amount of our 9.75% senior unsecured notes due in June 2025, which is our next significant debt maturity.

The closings of the additional loans are subject to conditions;

accordingly, we cannot be sure if we will close such loans for the expected proceeds or at all or that these closings will not be delayed.

In April 2025, we executed a $108,873 fixed rate mortgage financing secured by seven SHOP communities.

These mortgage loans mature in May 2035 and require that interest be paid at an annual rate of 6.22% with interest-only payments through May 2030.

In May 2025, we executed a $64,000 fixed rate mortgage loan secured by four SHOP communities.

This mortgage loan matures in June 2030 and requires that interest be paid at an annual rate of 6.57%.

In May 2025, we executed a $30,284 fixed rate mortgage financing secured by two SHOP communities.

These mortgage loans mature in June 2035 and require that interest be paid at an annual rate of 6.36% with interest-only payments through June 2028.

From April through June 2025, we used the net proceeds from these 2025 mortgage financings, together with cash on hand, to fully redeem the remaining $380,000 principal balance of our 9.75% senior unsecured notes due June 2025.

Our next significant debt maturity is $641,376 in outstanding senior secured notes with a maturity date of January 15, 2026, which is subject to a one-time option to extend the maturity date by one year, to January 15, 2027.

For further information regarding our outstanding debt, see Note 5 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Debt Covenants (dollars in thousands)

Our principal debt obligations at March 31, 2025 were:

Our principal debt obligations at June 30, 2025 were:

(1) $1,600,000 outstanding principal amount of senior unsecured notes;

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Our senior notes are governed by our senior notes indentures and their supplements.

Our senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default.

Our senior notes indentures and their supplements also contain covenants that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts and require us to maintain various financial ratios.

As of March 31, 2025, we believe we were in compliance with all of the covenants under our senior notes indentures and their supplements and our other debt obligations.

Our credit agreement, our mortgage loan agreements and our senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default.

Our credit agreement and our senior notes indentures and their supplements also contain covenants that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts and require us to maintain various financial ratios.

As of June 30, 2025, we believe we were in compliance with all of the covenants under our debt agreements.

Although we continue to take steps to enhance our ability to maintain sufficient liquidity, as noted elsewhere in this Quarterly Report on Form 10-Q, a protracted negative impact on the economy or the industries in which our properties and businesses operate resulting from wage or commodity price inflation, high interest rates, geopolitical risks or other economic, market or industry conditions, including the delayed recovery of the senior housing industry, economic downturns or a possible recession, may cause increased pressure on our ability to satisfy financial and other covenants.

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See "—Our Financing Liquidity and Resources" above for information regarding recent changes to our issuer credit rating and senior debt ratings.

Our revolving credit facility contains cross default provisions to any other debts of more than $25,000.

Our senior unsecured notes indentures and their supplements contain cross default provisions to any other debts of more than $20,000 ($50,000 or more in the case of our senior notes indentures and supplements entered in February 2016, February 2018, June 2020, February 2021 and December 2023).

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Supplemental Guarantor Information (dollars in thousands)

On May 28, 2020, we issued $1,000,000 of our 9.75% senior notes due 2025.

We subsequently redeemed $500,000, $120,000 and $140,000 of this debt during 2022, 2024 and 2025 respectively, with $240,000 remaining outstanding as of May 2, 2025.

On February 3, 2021, we issued $500,000 of our 4.375% senior notes due 2031.

As of March 31, 2025, all $380,000 of our 9.75% senior notes due 2025 and all $500,000 of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

and related guarantees are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the applicable collateral, and are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

As of June 30, 2025, all $500,000 of our 4.375% senior notes due 2031 were fully and unconditionally guaranteed, on a joint, several and unsecured basis, by all of our subsidiaries except certain excluded subsidiaries.

The notes and related guarantees are effectively subordinated to all of our and the subsidiary guarantors' secured indebtedness, respectively, to the extent of the value of the applicable collateral, and are structurally subordinated to all indebtedness and other liabilities and any preferred equity of any of our subsidiaries that do not guarantee the notes.

Our remaining $1,100,000 of senior unsecured notes do not have the benefit of any guarantees.

A subsidiary guarantor's guarantee of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, and all other obligations of such subsidiary guarantor under the indenture governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and the indenture under certain circumstances, including on or after the date (a) the notes have an investment grade rating from two rating agencies and one of such investment grade ratings is a mid-BBB investment grade rating and (b) no default or event of default has occurred and is continuing under the indenture.

Our non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on our 9.75% senior notes due 2025 or our 4.375% senior notes due 2031 or the respective guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments.

The rights of holders of our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, as applicable, to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries' creditors and any preferred equity holders.

As a result, our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031 and the respective guarantees are structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee our 9.75% senior notes due 2025 and our 4.375% senior notes due 2031, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.

A subsidiary guarantor's guarantee of our 4.375% senior notes due 2031 and all other obligations of such subsidiary guarantor under the indenture governing the notes will automatically terminate and such subsidiary guarantor will automatically be released from all of its obligations under such subsidiary guarantee and the indenture under certain circumstances, including on or after the date (a) the notes have an investment grade rating from two rating agencies and one of such investment grade ratings is a mid-BBB investment grade rating and (b) no default or event of default has occurred and is continuing under the indenture.

Our non-guarantor subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due on our 4.375% senior notes due 2031 or their guarantees, or to make any funds available therefor, whether by dividend, distribution, loan or other payments.

The rights of holders of our 4.375% senior notes due 2031 to benefit from any of the assets of our non-guarantor subsidiaries are subject to the prior satisfaction of claims of those subsidiaries' creditors and any preferred equity holders.

As a result, our 4.375% senior notes due 2031 and their guarantees are structurally subordinated to all indebtedness, guarantees and other liabilities of our subsidiaries that do not guarantee our 4.375% senior notes due 2031, including guarantees of other indebtedness of ours, payment obligations under lease agreements, trade payables and preferred equity.

The following tables present summarized financial information for guarantor entities and issuer, on a combined basis after eliminating (i) intercompany transactions and balances among the guarantor entities and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Real estate properties, net $ 2,365,609 $ 2,465,179

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Total liabilities $ 2,366,907 $ 3,011,250

Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

Revenues $ 478,575

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Impact of Government Reimbursement

For the three months ended March 31, 2025, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.

For the six months ended June 30, 2025, substantially all of our NOI was generated from properties where a majority of the revenues are derived from our tenants' and residents' private resources, and a small amount of our NOI was generated from properties where a majority of the revenues are derived from Medicare and Medicaid payments.

Nonetheless, we own, and our tenants, managers and operators operate, facilities in many states that participate in federal and state healthcare payment programs, including the federal Medicare and state Medicaid programs and other federal and state healthcare payment programs.

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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