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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-04 · 231 added, 162 removed, 515 unchanged (43% of the section changed)

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Cautionary Statement Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995.

This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act adopted pursuant to the Private Securities Litigation Reform Act of 1995.

Statements that are not purely historical may be forward-looking.

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A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to, our dependence on our operators for revenue and cash flow;

operational and legal risks and liabilities under our new segment of RIDEA structure properties;

operational and legal risks and liabilities under our new SHOP segment;

government regulation of the health care industry;

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We create, sustain and enhance stockholder equity value and provide current income for distribution to stockholders through real estate investments in seniors housing and health care properties managed by experienced operators.

The following graph summarizes our gross investments as of June 30, 2025:

The following graph summarizes our gross investments as of September 30, 2025:

Our primary seniors housing and health care property classifications include skilled nursing centers (“SNF”), independent living communities (“ILF”), assisted living communities (“ALF”), memory care communities (“MC”) and combinations thereof.

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To meet these objectives, we attempt to invest in properties that provide opportunity for additional value and current returns to our stockholders and diversify our investment portfolio by geographic location, operator, property classification and form of investment.

Additionally, during the second quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (Commonly referred to as “RIDEA”) as permitted by the Housing and Economic Recovery Act of 2008.

We conduct and manage our business as two operating segments for internal reporting and internal decision-making purposes:

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For purposes of this quarterly report and other presentations, we generally include ILF, ALF, MC, and combinations thereof in the seniors housing communities classification (“SH”).

As of June 30, 2025, seniors housing and health care properties comprised approximately 99.4% of our gross investment portfolio.

As of September 30, 2025, seniors housing and health care properties comprised approximately 99.5% of our gross investment portfolio.

We have been operating since August 1992.

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Income from our investments represent our primary source of liquidity to fund distributions and are dependent upon the performance of the operators on their lease and loan obligations and the rates earned thereon.

To the extent that the operators experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations,

liquidity and/or financial condition.

the extent that the operators experience operating difficulties and are unable to generate sufficient cash to make payments to us, there could be a material adverse impact on our consolidated results of operations, liquidity and/or financial condition.

To mitigate this risk, we monitor our investments through a variety of methods determined by investment type, property type and operator.

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We believe that RIDEA structures provide us with additional investment opportunities.

During the second quarter of 2025, we terminated our Anthem Memory Care, LLC (“Anthem”) and New Perspective Senior Living, LLC (“New Perspective”) Triple-Net master leases and converted 12 memory care and one independent and assisted living communities covered under the master leases to our new SHOP segment.

During the second quarter of 2025, we terminated the Anthem Memory Care, LLC (“Anthem”) and New Perspective Senior Living, LLC (“New Perspective”) Triple-Net master leases and converted the 13 communities covered under the master leases to our new SHOP segment.

Additionally, we acquired eight seniors housing communities within our SHOP segment.

Accordingly, as of September 30, 2025, our SHOP segment is comprised of 21 independent living, assisted living and memory care communities that are managed on behalf of LTC by five independent operators pursuant to the terms of separate management agreements.

To develop and implement RIDEA structures, we may need to continue to commit financial and operational resources.

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Real Estate Portfolio Overview

The following tables summarize our real estate investment portfolio as of June 30, 2025 ( dollar amounts in thousands ):

Six Months Ended

June 30, 2025

The following tables summarize our real estate investment portfolio as of September 30, 2025 ( dollar amounts in thousands ):

Nine Months Ended

September 30, 2025

Rental Income

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Skilled Nursing

Under Development (3)

Total Mortgage Loans

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Skilled Nursing

Under Development (3)

Total Portfolio

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(2) Includes three parcels of land held-for-use and one behavioral health care hospital.

(3) We funded $1,177 under a $26,120 mortgage loan commitment for the construction of a 116-unit ILF, ALF and MC located in Illinois.

The loan bears interest at a current rate of 9.0 % and an IRR of 9.5%.

(4) Excludes $8,448 variable rental income from lessee reimbursement of our real estate taxes, $4,573 rental income related to termination of master leases and converting the communities into our new SHOP and $1,514 write-off of straight-line rent.

(5) Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

(6) Excludes $1,300 of interest income related to mortgage loan receivables that have been paid off.

(7) Included in the Interest and other income line item of our Consolidated Statements of Income .

Excludes $2,672 interest income from loans that have been paid off.

(8) Excludes income from the redemption of our preferred equity investment in a joint venture.

As of June 30, 2025, we had $1.7 billion in net carrying value of investments as follows ( dollar amounts in thousands ):

As of September 30, 2025, we had $2.0 billion in net carrying value of investments as follows ( dollar amounts in thousands ):

Owned-Triple-Net

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Three Months Ended

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

Real Estate Investment segment:

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Interest income-other notes

Effective interest income (4)

Effective interest adjustment (4)

Interest income from notes receivable

Unconsolidated joint ventures

Income from unconsolidated joint ventures

Total revenue-Real Estate Investments segment

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NOI-SHOP segment (5)

(1) At June 30, 2025, the straight-line rent receivable balance on our Consolidated Balance Sheets was $20,187.

(2) At June 30, 2025, the financing receivables effective interest receivable balance which is included in the Interest receivable line item on our Consolidated Balance Sheets was $6,138.

(3) At June 30, 2025, the mortgage loans receivable effective interest receivable balance which is included in the interest receivable line item on our Consolidated Balance Sheets was $54,787.

(4) At June 30, 2025, the other notes receivable effective interest receivable balance which is included in the interest receivable line item on our Consolidated Balance Sheets was $1,563.

(1) At September 30, 2025, the straight-line rent receivable balance on our Consolidated Balance Sheets was $18,545.

(2) At September 30, 2025, the financing receivables effective interest receivable balance which is included in the Interest receivable line item on our Consolidated Balance Sheets was $6,517.

(3) At September 30, 2025, the mortgage loans receivable effective interest receivable balance which is included in the interest receivable line item on our Consolidated Balance Sheets was $13,698.

(4) At September 30, 2025, the other notes receivable effective interest receivable balance which is included in the interest receivable line item on our Consolidated Balance Sheets was $97.

(5) See Non-GAAP Financial Measures below for additional information and reconciliation.

The following table outlines information related to our Triple-Net lease extensions during the six months ended June 30, 2025 ( dollar amounts in thousands ):

The following table outlines information related to our Triple-Net lease extensions during the nine months ended September 30, 2025 ( dollar amounts in thousands ):

Type of Property

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December 31, 2026

(1) Subsequent to June 30, 2025, Genesis Healthcare, Inc.

(1) Subsequent to September 30, 2025, Genesis Healthcare, Inc.

(“Genesis”) filed for Chapter 11 bankruptcy.

Genesis has paid their contractual rent through August 2025.

Genesis has paid their contractual rent through November 2025.

(2) The purchase option window provided in the master lease, which expired on December 31, 2024, was extended for another year to December 31, 2025.

Additionally, During the six months ended June 30, 2025, we terminated two existing leases with the same operator and combined them into a single master lease.

The new master lease has a five-year term with one 1-year extension option and four 5-year extension options.

Additionally, During 2025, we terminated two existing leases with the same operator and combined them into a single master lease.

The new combined master lease has a five-year term with one 1-year extension option and four 5-year extension options.

Annual cash rent is $2.5 million for the first lease year escalating by 2.0% annually thereafter.

The terms and economics of the new master lease are similar to those of the two leases that were terminated.

The terms and economics of the new combined master lease are similar to those of the two leases that were terminated.

In connection with the termination of these leases, we wrote-off straight-line rent receivable and lease incentive balances totaling $0.5 million.

Also, as previously discussed, during the six months ended June 30, 2025, we terminated our Anthem Triple-Net master leases and converted the communities covered under the master leases into our new SHOP segment.

During the fourth quarter of 2025, we expect to convert these seniors housing communities under the new combined master lease from our triple-net portfolio into our SHOP segment.

Upon conversion, the new combined master lease will be terminated, and we will enter into a management agreement with an operator new to us.

In conjunction with the new master lease termination, we expect to write-off a $1.0 million working capital note during the fourth quarter of 2025.

Also, as previously discussed, during 2025, we terminated the Anthem Triple-Net master leases and converted the communities covered under the master leases into our new SHOP segment.

In conjunction with the conversion, we wrote-off Anthem’s working capital note of $2.7 million and the related interest receivable of $0.4 million.

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Additionally, ALG operates a 45-unit assisted living and memory care community in North Carolina under a mortgage loan, which was scheduled to mature in January 2025.

During the three months ended March 31, 2025, the mortgage loan maturity was extended to September 2025.

ALG has paid their contractual rent and interest obligations through July 2025.

During 2025, the mortgage loan maturity was extended to May 2026.

ALG has paid their contractual rent and interest obligations through November 2025.

Anthem Memory Care

Anthem operated 12 memory care communities located in California, Colorado, Kansas, Illinois and Ohio under Triple-Net master leases.

During the second quarter of 2025, we terminated our Anthem Triple-Net master leases and converted the 12 memory care communities covered under the master leases into our new SHOP segment.

In conjunction with the conversion, we wrote-off Anthem’s working capital note of $2.7 million and the related interest receivable of $0.4 million during the six months ended June 30, 2025.

During the second quarter of 2025, we terminated the Anthem Triple-Net master leases and converted the 12 memory care communities covered under the master leases into our new SHOP segment.

In conjunction with the conversion, we wrote-off Anthem’s working capital note of $2.7 million and the related interest receivable of $0.4 million during the second quarter of 2025.

Genesis Healthcare, Inc.

Subsequent to June 30, 2025, Genesis filed for Chapter 11 bankruptcy.

During the second quarter of 2025, we received Genesis’ written notice of its exercise of a 5-year extension option, which would extend the term of the lease to April 30, 2031.

During the third quarter of 2025, Genesis filed for Chapter 11 bankruptcy.

Accordingly, we wrote-off straight-line rent receivable balance of $1.3 million related to Genesis’ master lease.

Affiliates of Genesis lease six skilled nursing centers in New Mexico (five) and Alabama (one) with a total of 782 beds under a master lease with LTC.

The master lease matures on April 30, 2026 and provides three 5-year renewal options.

During the three months ended June 30, 2025, we received Genesis’ written notice of its exercise of a 5-year extension option, which would extend the term of the lease to April 30, 2031.

Genesis has paid their contractual rent through August 2025.

Genesis has paid their contractual rent through November 2025.

Prestige Healthcare

Prestige Healthcare (“Prestige”) operates 21 skilled nursing centers located in Michigan secured under four mortgage loans and two skilled nursing centers located in South Carolina under a master lease.

Prestige is our largest operator based upon revenues and assets representing 14.8% of our total revenues and 14.5% of our total assets as of June 30, 2025.

Under one of the mortgage loans with Prestige secured by 14 properties, the minimum mortgage interest payment due to us was based on an annual current pay rate of 8.5% on the outstanding loan balance.

The difference between the contractual interest rate and the current pay interest rate on the outstanding loan balance remains an obligation of Prestige and is payable through the application of security deposits we hold on behalf of Prestige or is payable at maturity

Prestige is our largest operator based upon revenues and assets representing 13.3% of our total revenues and 12.7% of our total assets as of September 30, 2025.

Prior to an amendment in July 2025, under one of the mortgage loans with Prestige secured by 14 properties, the minimum mortgage interest payment due to us was based on an annual current pay rate of 8.5% on the outstanding loan balance.

The difference between the contractual interest rate and the current pay interest rate on the outstanding loan balance remained an obligation of Prestige and was payable through the application of security deposits we hold on behalf of Prestige or was payable at maturity

During the first quarter of 2025, we received full contractual cash interest of $5.0 million from Prestige through $3.8 million of cash receipts and application of $1.2 million of Prestige’s security.

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None of Prestige’s security was used to pay the difference between the contractual interest rate and the 8.5% current pay interest rate.

At June 30, 2025, Prestige’s security totaled $6.1 million.

Subsequent to June 30, 2025, the Prestige mortgage loan was amended to provide Prestige an option to prepay the mortgage loan at par and without penalty within a 12-month window beginning in July 2026.

Prestige will have to provide us with a 90-day notice of its intention to exercise the option and the ability for Prestige to exercise the pre-payment option is contingent on several factors including Prestige being current and in good standing on all its mortgage loans with LTC and obtaining replacement financing.

In consideration of granting the prepayment option, the amendment eliminates the 8.5% current pay rate and reverts monthly interest payments to the full contractual interest rate of 11.14%, effective July 1, 2025, and escalated annually.

As of June 30, 2025, we have $41.5 million of accrued effective interest related to the Prestige loan, which is expected to be recovered through payments collected through the contractual maturity of the loan.

If Prestige exercises its contingent prepayment option, we will no longer be able to collect our remaining accrued effective interest as of such date.

Prestige is current on their contractual loan obligations through July 2025.

During the third quarter of 2025, the Prestige mortgage loan was modified to increase the current interest paid by Prestige from 8.5% to the full contractual interest rate of 11.14% and escalated annually.

The modification was effective July 1, 2025.

Additionally, the modification provides Prestige an option to prepay their mortgage loan at par and without penalty within a 12-month window beginning in July 2026.

Prestige is required to provide us with a 90-day notice of its intention to exercise the option and the ability for Prestige to exercise the pre-payment option is contingent on several factors including Prestige being current and in good standing on all its mortgage loans with LTC and obtaining replacement financing.

In conjunction with the loan amendment that provided the borrower with a penalty-free early payoff option, we wrote-off $41.5 million of interest receivable previously accrued related to this loan during the three months ended September 30, 2025.

Prestige is current on their contractual loan obligations through November 2025.

Other Operators

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The communities were leased under two separate leases with the same operator, who was the non-controlling member of the JV.

During the six months ended June 30, 2025, we acquired the operator’s $4.0 million non-controlling interest in the JV for $1.2 million and terminated the two existing leases.

In conjunction with the termination of these leases, we wrote-off $0.2 million straight-line rent receivable and $0.3 million lease incentive.

During 2025, we acquired the operator’s $4.0 million non-controlling interest in the JV for $1.2 million and terminated the two existing leases.

In connection with the termination of these leases, we wrote-off $0.2 million straight-line rent receivable and $0.3 million lease incentive.

Concurrently, we entered into a new combined master lease with the same operator.

The new master lease has a five-year term with one 1-year extension option and four 5-year extension options.

The new combined master lease has a five-year term with one 1-year extension option and four 5-year extension options.

Annual cash rent is $2.5 million for the first lease year, escalating by 2% annually thereafter.

Additionally, the master lease provides the operator with an earn-out of up to $4.0 million, contingent on achieving certain performance thresholds.

During the fourth quarter of 2025, we expect to convert these two assisted living communities under the new combined master lease from our triple-net portfolio into our SHOP segment.

Upon conversion, the new combined master lease will be terminated, and we will enter into a management agreement with an operator new to us.

In conjunction with the new master lease termination, we expect to write-off a $1.0 million working capital note during the fourth quarter of 2025.

Additionally, during the first quarter of 2025, we engaged a broker to sell seven skilled nursing centers under a master lease, following the operator’s election not to exercise the renewal option available under the master lease.

The master lease covers seven skilled nursing centers in California (1), Florida (2) and Virginia (4) with a gross book value of $71.7 million and matures in January 2026.

The master lease covered seven skilled nursing centers in California (1), Florida (2) and Virginia (4) with a gross book value of $71.7 million and was set to mature in January 2026.

Accordingly, these centers met the criteria under GAAP as held-for-sale and have been classified as held-for-sale.

The operator is obligated to pay rent on the portfolio through maturity and is current on rent obligations through July 2025.

All of the properties covered under this master lease are under contract, and we expect to complete all of the sales in the fourth quarter of 2025, generating net proceeds of approximately by $120.0 million.

We anticipate recording a gain on sale of approximately $80.0 million.

The operator is obligated to pay rent on the portfolio through maturity and is current on rent obligations through November 2025.

Subsequent to September 30, 2025, we sold two skilled nursing centers within this portfolio located in Florida with a total of 240 beds for $43.0 million.

We received $41.9 million of net proceeds and expect to record a gain on sale of approximately $26.0 million.

Additionally, we sold the remaining five skilled nursing centers in Virginia (4) and California (1) with a total of 656 beds for an aggregate sales price of $80.0 million.

We will use the total proceeds of $78.9 million in a 1031 exchange for the acquisitions within our SHOP segment and anticipate recording an aggregate gain on sale of approximately $52.0 million.

These seven properties, which were classified as held-for-sale at September 30, 2025, had an aggregate gross book value and net book value of $71.7 million and $42.5 million, respectively.

2025 Activities Overview

The following tables summarize our transactions during the six months ended June 30, 2025 (dollar amounts in thousands):

The following tables summarize our transactions during the nine months ended September 30, 2025 (dollar amounts in thousands):

During the second quarter of 2025, we r the Anthem and New Perspective Triple-Net master leases and converted the communities covered under the master leases into our new SHOP segment.

Additionally, during the third quarter of 2025, we acquired eight seniors housing communities within our SHOP segment.

Accordingly, as of September 30, 2025, our SHOP segment is comprised of 21 independent living, assisted living and memory care communities that are managed on behalf by five independent operators pursuant to separate management agreements.

The following table provides information regarding our SHOP segment as of September 30, 2025 ( dollar amounts in thousands ):

(1) Subsequent to September 30, 2025, we acquired within our SHOP segment an 88-unit SH in Georgia for $22,900.

In conjunction with the acquisition, we entered into a management agreement with an operator new to us.

Additionally, we expect to convert two SH from our triple-net portfolio into our SHOP segment during the fourth quarter of 2025.

The communities are located in Oregon with a total of 186 units, with an aggregate gross book value of $33,102 and a net book value of $26,535.

Upon conversion, the Triple-Net master lease with the existing operator will be terminated and we will enter into a new management agreement with an operator new to us.

The following table summarizes our acquisitions within our SHOP segment during the nine months ended September 30, 2025 ( dollar amounts in thousands ):

Type of Property

(1) Subsequent to September 30, 2025, we acquired an 88-unit seniors housing community within our SHOP segment in Georgia for $22,900.

In conjunction with the acquisition, we entered into a management agreement with an operator new to us.

Investment in Improvement projects

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Properties Held -for-Sale

(1) During 2025, we engaged a broker to sell seven SNFs under a master lease, following the operator’s election not to exercise the renewal option available under the master lease.

The master lease covers SNFs in California (1), Florida (2) and Virginia (4) and matures in January 2026.

Accordingly, these centers met the criteria under GAAP as held-for-sale.

The operator is obligated to pay rent on the portfolio through maturity and is current on rent obligations through July 2025.

All the properties are under contract, and we expect to complete all of the sales in the fourth quarter of 2025.

(1) These properties were sold subsequent to September 30, 2025.

See footnote (3) to the Properties Sold table below for additional information.

Properties Sold

(Loss) Gain (1)

(1) Calculation of net gain includes cost of sales and write-off of straight-line receivable and lease incentives, when applicable.

(1) Calculation of net (loss) gain includes cost of sales and write-off of straight-line receivable and lease incentives, when applicable.

(2) We sold a parcel of land adjacent to a memory care community within our portfolio.

During the second quarter of 2025, we terminated our Anthem and New Perspective Triple-Net master leases and converted the communities covered under the master leases into our new SHOP segment.

At June 30, 2025, our SHOP included operations of 13 communities managed on our behalf by two independent operators pursuant to separate management agreements.

The following table provides information regarding our SHOP segment ( dollar amounts in thousands ):

Type of Property

CA, CO, KS, IL, OH

(1) Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

The individual resident agreements typically vary in duration.

Resident fees and services are primarily service-based and are recognized in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , once performance obligations are satisfied.

(2) These communities were converted from NNN to SHOP during the second quarter of 2025.

Accordingly, revenues and expenses do not reflect a full quarter of operations.

(3) See Non-GAAP Financial Measures below for additional information and reconciliation.

Subsequent to June 30, 2025, we acquired a 67-unit assisted living and memory care community in California within our SHOP segment for $35.2 million.

In connection with the acquisition, we entered into a management agreement with an operator new to us.

(3) Subsequent to September 30, 2025, we sold two skilled nursing centers in Florida totaling 240 beds for $43,000.

We received $41,900 of net proceeds and expect to record a gain on sale of approximately $26,000.

Additionally, we sold five skilled nursing centers in Virginia (4) and California (1) with a total of 656 beds for an aggregate sales price of $79,950.

We will use the total proceeds of $78,900 in a 1031 exchange for the acquisitions within our SHOP segment and anticipate recording an aggregate gain on sale of approximately $52,000.

These seven properties, which were classified as held-for-sale at September 30, 2025, had an aggregate gross book value and net book value of $71,742 and $42,458, respectively .

Investment in Mortgage Loans Receivable

The following tables provide information regarding our investments in mortgage loans secured by first mortgages at September 30, 2025 (dollar amounts in thousands):

Interest Rate

Properties (3)

(1) Excludes the impact of the credit loss reserve.

(2) Some loans contain certain guarantees and provide for certain facility fees.

(3) Our mortgage loans are secured by properties located in five states with eight borrowers.

(4) During 2024, we committed to fund a $26,120 mortgage loan for the construction of a 116-unit ILF, ALF and MC located in Illinois.

The borrower contributed $12,300 of equity which initially funded the construction.

During the third quarter of 2025, we began funding the commitment.

The loan bears interest at a current rate of 9.0% and an IRR of 9.5%.

(5) During the three months ended September 30, 2025, we modified the mortgage loan to increase the current interest paid by Prestige, the borrower, from 8.5% to the full contractual interest rate of 11.14% escalated annually.

The modification was effective July 1, 2025.

Additionally, the modification provides Prestige an option to prepay their mortgage loan at par and without penalty within a 12-month window beginning in July 2026.

Prestige is required to provide us with a 90-day notice of its intention to exercise the option, and the ability for Prestige to exercise the pre-payment option is contingent on several factors including Prestige being current and in good standing on all its mortgage loans with LTC and obtaining replacement financing.

In conjunction with the loan modification that provided the borrower a penalty-free early payoff option, we wrote-off $41,455 of interest receivable previously accrued related to this loan during the three months ended September 30, 2025.

For more information related to the effective interest write-off see Note 3.

Real Estate Investments .

(6) Mortgage loans provide for 2.25% annual increases in the interest rate.

Originations and funding under mortgage loans receivable

Pay-offs received

Application of interest reserve

Scheduled principal payments received

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(1) Includes the following:

(a) $38,495 under our $42,300 mortgage loan commitment secured by a 250-unit ILF, ALF and MC in Florida.

(a) $55,350 under a $57,550 mortgage loan commitment secured by two SH with a total of 171 units in California.

The loan term is five years at a rate of 8.3%;

(b) $39,330 under a $42,300 mortgage loan commitment secured by a 250-unit ILF, ALF and MC in Florida.

The loan term is five years at a fixed rate of 8.5%;

(b) $3,040 under our $19,500 mortgage loan commitment for the construction of an 85-unit ALF and MC in Michigan.

The borrower contributed $12,100 of equity upon origination in July 2023, which was used to initially fund the construction.

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The interest-only loan term is approximately three years at a rate of 8.75%, and includes two one-year extensions, each of which is contingent on certain coverage thresholds;

(d) $1,177 under a $26,120 mortgage loan commitment for the construction of the construction of a 116-unit ILF, ALF and MC located in Illinois.

The borrower contributed $12,300 of equity which was used to initially fund the construction.

During the third quarter of 2025, we began funding this commitment.

Our remaining commitment is $24,943.

The loan bears interest at a current rate of 9.0% and an IRR of 9.5%.

Preferred Equity Investment in Unconsolidated Joint Ventures

During the six months ended June 30, 2025, we received $16.0 million, including a 13% exit IRR of $3.0 million, from the redemption of our preferred equity investment in a joint venture that owns a 267-unit independent and assisted living community in Washington.

During the nine months ended September 30, 2025, we received $16.0 million, which includes a 13% exit IRR of $3.0 million, from the redemption of our preferred equity investment in a joint venture that owns a 267-unit independent and assisted living community in Washington.

Investment in Notes Receivable

Advances under notes receivable

Principal payments received under notes receivable

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Net decrease in notes receivable

(1) Includes the following:

(a) $17,000 related to an early payoff of a mezzanine loan.

In conjunction with the mezzanine loan payoff, we received exit IRR income of $2,599 recognized as Interest and other income in our Consolidated Statements of Income .

The exit IRR income was partially offset by $1,624 of effective interest previously recognized over the term of the mezzanine loan through payoff;

(b) $639 related to the payoff of three working capital loans;

(2) Represents the write-off of Anthem working capital note in connection with the conversion of its Triple-Net leases to SHOP.

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Meanwhile, the Iowa federal court only vacated the 24/7 RN requirement and the minimum staffing hours requirement, while leaving the rest of the rule in place.

Department of Justice has appealed the Texas federal court’s decision striking down the entire rule to the U.S.

Court of Appeals for the Fifth Circuit.

To date, no appeal of the Iowa federal court’s decision has been noticed.

Regardless, however, the One Big Beautiful Bill Act (“OBBBA”), signed by President Trump on July 4, 2025, imposes a 10-year moratorium on the implementation and enforcement of the entire rule.

Department of Justice appealed the Texas federal court’s decision striking down the entire rule to the U.S.

Court of Appeals for the Fifth Circuit, but that appeal was dismiss at the government’s motion on September 19, 2025.

The Iowa federal court’s decision was also initially appealed to the U.S.

Court of Appeals for the Eighth Circuit, however that appeal was also voluntarily dismissed on a motion by the government on October 3, 2025.

Thus both federal district court rulings stand undisturbed.

Regardless, however, the 2025 budget reconciliation act (also known as the “One Big Beautiful Bill Act”), signed by President Trump on July 4, 2025, imposes a 10-year moratorium on the implementation and enforcement of the entire rule.

So even if a future administration seeks to re-challenge the court’s rulings at some point in the future, CMS is barred from implementing the rule until 2034 at the earliest.

On June 18, 2025, CMS issued a Quality, Safety and Oversight memorandum, QSO-25-NH, which outlines updates to how nursing home ratings are calculated and reported on the Nursing Home Care Compare website.

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CMS will also be removing COVID-19 vaccination information from the main profile page of each nursing home effective as of the same date.

CMS will also be revising the

methodology used to calculate Five Star Ratings.

CMS will also be revising the methodology used to calculate Five Star Ratings.

In addition, CMS also recently announced a third extension for SNFs to submit required Medicare revalidations.

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Investment mix measures the portion of our investments that relate to our various property classifications.

Operator mix measures the portion of our investments that relate to our top five operators.

Operator/credit mix measures the portion of our investments that relate to our top five operators.

Geographic mix measures the portion of our real estate investment that relate to our top five states.

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Under development

Operator mix:

Operator/credit mix:

ALG Senior Living

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Anthem Memory Care, LLC (2)

Carespring Health Care Management, LLC

Remaining operators (2)

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(1) Includes three parcels of land located adjacent to properties securing the Prestige Healthcare mortgage loan and are managed by Prestige.

(2) During the second quarter of 2025, we terminated our Anthem and New Perspective Triple-Net master leases and converted the communities covered under the master leases into our SHOP segment.

Accordingly, the communities managed by Anthem and New Perspective on our behalf are classified as “SHOP operators” during the three months ended June 30, 2025.

Our SHOP segment is not subject to operator concentration risk.

(2) During the second quarter of 2025, we terminated the Anthem and New Perspective Triple-Net master leases and converted the communities covered under the master leases into our SHOP segment.

Additionally, during the third quarter of 2025, we acquired eight SHs within our SHOP segment.

These communities within our SHOP segment operated by independent operators on our behalf are classified as “SHOP operators” during the second and third quarters of 2025.

Our SHOP segment is not subject to operator/credit concentration risk.

Credit Strength.

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Fixed charge coverage ratio (10)

(1) Increased due to increase in outstanding debt partially offset by increase in gross asset value.

(2) Increased due to increase in outstanding debt partially offset by increase in market capitalization resulting from the sale of common stock under our Equity distribution Agreement as well as increase in stock price.

(3) Decreased due to increase in interest expense and decrease in rental income partially offset by increase in revenue from resident fees and services and interest and other income.

(4) Increased due to increase in outstanding debt and decrease in market capitalization from lower stock price.

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(9) Increased due to decrease in interest expense and increase in rental income, partially offset by decrease in other income.

(7) Decreased due to decrease in outstanding debt and increase in market capitalization resulting from the sale of common stock under our Original Equity Distribution Agreements, as well as increase in stock price.

(8) Increase due to decrease in interest expense and increase in rental and other income.

(10) In calculating our interest coverage and fixed charge coverage ratios above, we use EBITDA re.

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Three Months Ended

September 30,

Rental income

7 unchanged sentences

Seniors housing operating expenses

Write-off of effective interest receivable

Provision for credit losses

Transaction costs

Property tax expense

Triple-net lease property tax expense

General and administrative expenses

Total expenses

Gain (loss) on sale of real estate, net

Loss (gain) on sale of real estate, net

Income from unconsolidated joint ventures

Income tax benefit

Income tax expense

Net (loss) income

Income allocated to non-controlling interests

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Net income available to common stockholders

(1) Decreased primarily due to the conversion of 13 communities from Triple-Net to our new SHOP segment, partially offset by rent increases from fair-market rent resets.

(1) Decreased primarily due to the conversion of 13 communities from Triple-Net to our new SHOP segment, write-off of a straight-line rent receivable balance due to an operator filing for bankruptcy and lower rent from property sales, partially offset by rent increases from fair-market rent resets, escalations and capital improvements.

(2) Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

Increased due to the conversion of 13 communities discussed above.

(3) Increased primarily due to the exchange of two mortgage loan receivables near the end of the second quarter of 2024 for controlling interests in two newly formed JVs that are accounted for as financing receivables.

(4) Decreased primarily due to explanation (3) above and payoffs partially offset by additional mortgage loan funding.

(5) Decreased primarily due to receipt of insurance proceeds in 2024.

(6) Decreased due to lower outstanding balance on our revolving line of credit, scheduled principal paydowns on our senior unsecured notes and lower interest rates.

(3) Decreased due to $41,455 of interest receivable previously accrued related to Prestige mortgage loan and mortgage loan payoffs partially offset by mortgage loan originations and additional funding.

(4) Decreased primarily due to aggregate one-time income of $4,052 received in 2024 from two former operators.

(5) Decreased due to lower average outstanding balance on our revolving line of credit, scheduled principal paydowns on our senior unsecured notes and lower interest rates.

(6) Represents operating expenses related to our new SHOP segment.

(8) Increased due to $5,971 lease termination fee paid to New Perspective upon conversion of the community covered under the Triple-Net lease into our SHOP segment and additional costs associated with the startup of new RIDEA platform.

(9) Increased primarily due to one-time expenses related to an employee’s retirement and increase in incentive compensation expenses.

Six Months Ended

(7) In conjunction with the Prestige mortgage loan modification that provided Prestige a penalty-free early payoff option, we wrote-off the interest receivable previously accrued related to this mortgage loan.

(8) Increased primarily due to increase in incentive compensation expenses and other corporate expenses.

(9) Represents the net loss on sale related to a closed facility in Texas.

(10) Represents a net gain on sale of an 80-unit SH in Texas.

Nine Months Ended

September 30,

Rental income

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Seniors housing operating expenses

Write-off of effective interest receivable

Provision for credit losses

Transaction costs

Property tax expense

Triple-net lease property tax expense

General and administrative expenses

Total expenses

Gain on sale of real estate, net

(Loss) gain on sale of real estate, net

Income from unconsolidated joint ventures

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Net income available to common stockholders

(1) Decreased primarily due to a one-time revenue received in 2024 related to the repayment of $2,377 in rent credits, conversion of 13 communities from Triple-Net to our new SHOP segment lower rent due to property sales and the write-off of a straight-line rent receivable and lease incentive balance in connection with the termination of two existing leases with the same operator, and combining them into a single master lease.

(1) Decreased primarily due to conversion of 13 communities from Triple-Net to our new SHOP segment, a one-time revenue received in 2024 related to the repayment of $2,377 in rent credits, write-off of a straight-line rent receivable balance due to an operator filing for bankruptcy, lower rent due to property sales and the write-off of a straight-line rent receivable and lease incentive balance in connection with the termination of two existing leases with the same operator, and combining them into a single master lease.

These decreases were partially offset by rent increases from fair-market rent resets, annual escalations and amendments.

(2) Resident fees and services include all amounts earned from residents, based on individual resident agreements, at our SHOP communities.

Increased due to the conversion of 13 communities discussed above.

(4) Decreased primarily due to explanation (3) above and payoffs partially offset by additional mortgage loan funding.

(5) Decreased primarily due to receipt of insurance proceeds in 2024.

(6) Decreased due to lower outstanding balance on our revolving line of credit, scheduled principal paydowns on our senior unsecured notes and lower interest rates.

(4) Decreased primarily due to explanation (3) above, write-off of Prestige interest receivable previously accrued and payoffs partially offset by additional mortgage loan funding.

(5) Decreased primarily due to aggregate one-time income of $4,052 received from two former operators and receipt of insurance proceeds in 2024.

(6) Decreased due to lower average outstanding balance on our revolving line of credit, scheduled principal paydowns on our senior unsecured notes and lower interest rates.

(7) Represents operating expenses related to our new SHOP segment.

(8) In conjunction with the Prestige mortgage loan modification that provided Prestige a penalty-free early payoff option, we wrote-off interest receivable previously accrued related to this mortgage loan.

(9) Increased due to the write-off of a working capital note and the related interest receivable in connection with the transition of Triple-Net leases covering 12 properties to RIDEA.

(9) Increased due to $5,971 lease termination fee paid to New Perspective upon conversion of the community covered under the Triple-Net lease into our SHOP segment and additional costs associated with the startup of new RIDEA platform.

(10) Increased primarily due to one-time expenses related to an employee’s retirement and increase in incentive compensation expenses.

(11) Represents the net gain on sale related to one SH and a parcel of land adjacent to a MC within our portfolio located in Ohio, partially offset by loss on sale related to one SH in Oklahoma.

(12) Represents the gain on sale of a 110-unit community in Wisconsin and two closed properties located in Texas, partially offset by the aggregate loss on sale of 6 SHs located in Texas (five) and Florida (one).

(10) Increased due to $5,971 lease termination fee paid to New Perspective upon conversion of the community covered under a Triple-Net lease into our SHOP segment and additional costs associated with the startup of new RIDEA platform.

(11) Increased primarily due to one-time expenses related to an employee’s retirement and increase in incentive compensation expenses and other corporate expenses.

(12) Represents the net loss on sale related to a closed facility in Texas and one SH in Oklahoma partially offset by a net gain on sale related to one SH and a parcel of land adjacent to an MC within our portfolio located in Ohio.

(13) Represents the gain on sale of a 80-unit SH in Texas, a 110-unit SH in Wisconsin and two closed properties located in Texas, partially offset by the aggregate loss on sale of 6 SHs located in Texas (five) and Florida (one).

(14) Increased due to the 13% exit IRR of $2,962 received in connection with the redemption of our preferred equity investment in a JV.

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Three Months Ended

Six Months Ended

GAAP net income available to common stockholders

Nine Months Ended

September 30,

GAAP net (loss) income available to common stockholders

Depreciation and amortization

(Gain)/Loss on sale of real estate, net

Loss/(Gain) on sale of real estate, net

NAREIT FFO attributable to common stockholders

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Net Operating Income

Net operating income or NOI is a non-GAAP financial measure that is calculated as net income (loss) (computed in accordance with GAAP) before (i) general and administrative expenses, (ii) transaction costs, (iii) provision for credit losses, (iv) impairment loss, (v) depreciation and amortization, (vi) interest expense, (vii) gain or loss on sale of real estate and (viii) income tax benefit or expense.

Net operating income or NOI is a non-GAAP financial measure that is calculated as net income (loss) (computed in accordance with GAAP) before (i) general and administrative expenses, (ii) transaction costs, (iii) write-off of effective interest, (iv) provision for credit losses, (v) impairment loss, (vi) depreciation and amortization, (vii) interest expense, (viii) gain or loss on sale of real estate and (ix) income tax benefit or expense.

We use NOI to reflect the operating performance of our portfolio because NOI excludes certain items that are not associated with the operations of our properties.

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Therefore, caution should be exercised when comparing our NOI to that of other REITs.

The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure to NOI for the periods presented below (in thousands):

The following is a reconciliation of net income or loss, which is the most directly comparable GAAP financial measure to NOI for the three and nine months ended September 30, 2025 and 2024 ( in thousands ):

Three Months Ended

Six Months Ended

Income tax benefit

(Gain) loss on sale of real estate, net

Nine Months Ended

September 30,

Net (loss) income

Income tax expense (benefit)

Loss (gain) on sale of real estate, net

General and administrative expense

Transaction costs

Write-off of effective interest

Provision for credit losses

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Three Months Ended

(Gain) loss on sale

Net income (loss)

(Loss) gain on sale

Income tax (benefit) expense

Impairment loss

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(1) See (2), (3) and (4) below for explanation.

(2) Includes $41,455 effective interest write-off related to a mortgage loan amendment that permits penalty-free early payoff window within an allowable window, $1,271 straight-line rent receivable write-off due to an operator’s bankruptcy filing, $554 provision for credit losses related to mortgage loan originations and $488 of one-time transaction costs in connection with the transition to RIDEA partially offset by the exit IRR of $975 received in connection with an early payoff of a mezzanine loan and recovery of credit losses of $375 related to loan payoffs.

(3) Includes $5,971termination fee paid to New Perspective, $1,136 one-time costs associated with an employee’s retirement, $520 of one-time RIDEA transaction costs and $384 provision for credit losses related to a mortgage loan origination.

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(5) Includes a one-time additional straight-line income of $3,158 related to restoring accrual basis accounting for two master leases, recovery of credit losses of $511 related to a mortgage loan receivable write-off, partially offset by $290 provision for credit losses related to the write-off of an uncollectible loan receivable.

(5) Includes an aggregate one-time income of $4,493 received from three former operators, the recovery of provisions for credit losses of $293 related to a mortgage loan receivable payoff, partially offset by the uncollectible effective interest write-off of $613 related to the partial paydown of a mortgage loan receivable.

(6) Includes $321 write-off of an uncollectible straight-line rent receivable, $1,635 provision for credit losses related to acquisitions totaling $163,460 accounted for as financing receivables, partially offset by $934 recovery of provision for credit losses related to the payoffs of mortgage loan receivables.

(6) Includes an aggregate one-time income of $4,493 received from three former operators, the recovery of provisions for credit losses of $293 related to a mortgage loan receivable payoff, partially offset by the uncollectible effective interest write-off of $613 of interest receivable related to the partial paydown of a mortgage loan receivable.

Liquidity and Capital Resources

Sources and Uses of Cash

As of June 30, 2025, we had $640.4 million in liquidity as follows (amounts in thousands, except per share amounts) :

At June 30, 2025

As of September 30, 2025, we had $400.0 million in liquidity as follows (amounts in thousands, except per share amounts) :

At September 30, 2025

Cash and cash equivalents

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Total Liquidity

(1) Subsequent to June 30, 2025, we entered into our New Credit Agreement increasing commitments from $425,000 to $600,000 and repaid our Term Loans using proceeds from our revolving line of credit under our New Credit Agreement.

Additionally, we borrowed $41,850 under our new revolving line of credit.

(1) Subsequent to September 30, 2025, we repaid $62,900 under our new revolving line of credit.

Accordingly, we have $485,550 outstanding and $114,450 available for borrowing under our unsecured revolving line of credit.

(2) Subsequent to June 30, 2025, we had $673,587 in liquidity.

See (1) above.

(2) Subsequent to September 30, 2025, we sold 281,400 shares of common stock under our Equity Distribution Agreement.

Accordingly, we had $319,881 available under the Equity Distribution Agreement.

(3) Subsequent to September 30, 2025, we had $452,264 in liquidity.

See (1) and (2) above.

We believe that our current cash balance, cash flow from operations available for distribution or reinvestment, our borrowing capacity and our potential ability to access the capital markets are sufficient to provide for payment of our current operating costs, meet debt obligations and pay common dividends at least sufficient to maintain our REIT status and repay borrowings at, or prior to, their maturity.

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Generally, our leases have agreed upon annual increases and our loans have predetermined increases in interest rates.

Inasmuch as we may initially fund some of our investments with variable interest rate debt, we would be at risk of net interest margin deterioration if medium and long-term rates were to increase.

as we may initially fund some of our investments with variable interest rate debt, we would be at risk of net interest margin deterioration if medium and long-term rates were to increase.

Our primary sources of cash include rent, resident fees and services, interest receipts, borrowings under our unsecured credit facility, public and private issuances of debt and equity securities, proceeds from investment dispositions and principal payments on loans receivable.

Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), real property investments (including acquisitions, capital expenditures and construction advances), loan advances and general and administrative expenses.

Our primary uses of cash include dividend distributions, debt service payments (including principal and interest), seniors housing operating expenses, property tax expenses, real property investments (including acquisitions, capital expenditures and construction advances), loan advances and general and administrative expenses.

These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows as summarized below ( in thousands ):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Financing activities

Decrease in cash and cash equivalents

Increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

3 unchanged sentences

We had an unsecured credit agreement (the “Credit Agreement”) that provided for an aggregate commitment of the lenders of up to $525.0 million comprised of a $425.0 million revolving credit facility (the “Revolving Line of Credit”) and two $50.0 million term loans (the “Term Loans”).

The Term Loans mature on November 19, 2025 and November 19, 2026.

The Term Loans had maturities of November 19, 2025 and November 19, 2026.

The Revolving Line of Credit has a maturity date of November 19, 2026.

The Credit Agreement permitted us to request increases to the Revolving Line of Credit and Term Loans commitments up to a total of $1.0 billion.

Based on our leverage at June 30, 2025, the facility provides for interest annually at Adjusted SOFR plus 110 basis points and a facility fee of 15 basis points and the Term Loans provide for interest annually at Adjusted SOFR plus 125 basis points.

Subsequent to June 30, 2025, we entered into a new four-year unsecured credit agreement (“New Credit Agreement”) maturing in July 2029, to replace our previous Credit Agreement.

During the third quarter of 2025, we entered into a new four-year unsecured credit agreement (“New Credit Agreement”) maturing in July 2029, to replace our previous Credit Agreement.

The New Credit Agreement increased the aggregate commitment on our revolving line of credit from $425.0 million to $600.0 million and provides for the opportunity to increase the total commitment to an aggregate of $1.2 billion.

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In connection with the New Credit Agreement, the Term Loans were rolled into the new revolving line of credit, keeping the interest rate swap agreements intact at an average 2.3% rate, based on current margins.

Based on our leverage at September 30, 2025, the facility provides for interest annually at SOFR plus 115 basis points and a facility fee of 20 basis points.

Interest Rate Swap Agreements.

In connection with entering into the Term Loans as described above, we entered into two receive variable/pay fixed interest rate swap agreements (the “Interest Rate Swaps”) with maturities of November 19, 2025 and November 19, 2026, respectively, that will effectively lock-in the forecasted interest payments on the Term Loans’ borrowings over their four and five year terms of the loans.

In connection with entering into the Term Loans as described above, we entered into two receive variable/pay fixed interest rate swap agreements (the “Interest Rate Swaps”) with maturities of November 19, 2025 and November 19, 2026, respectively, that effectively locked in the forecasted interest payments on the Term Loans’ borrowings over their four and five year terms of the loans.

The Interest Rate Swaps are considered cash flow hedges and are recorded on our Consolidated Balance Sheets at fair value, with changes in the fair value of these instruments recognized in Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets .

During the six months ended June 30, 2025, we recorded a decrease of $1.6 million in fair value of Interest Rate Swaps.

As discussed above, subsequent to June 30, 2025, the Term Loans were paid off using proceeds from our new revolving line of credit under our New Credit Agreement, keeping the interest rate swap agreements intact through November 2025 at 2.3% and November 2026 at 2.4%, based on current margins.

As of June 30, 2025, the terms of the Interest Rate Swaps are as follows ( dollar amounts in thousands ):

During the three and nine months ended September 30, 2025, we recorded a decrease of $0.7 million and $2.4 million in fair value of Interest Rate Swaps, respectively.

As discussed above, during the third quarter of 2025, Term Loans were paid off using proceeds from our new revolving line of credit under our New Credit

Agreement, keeping the Interest Rate Swaps intact through November 2025 at 2.3% and November 2026 at 2.4%, based on current margins.

As of September 30, 2025, the terms of the Interest Rate Swaps are as follows ( dollar amounts in thousands ):

Fair Value at

Maturity Date

June 30, 2025

September 30, 2025

November 2021

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The senior unsecured notes mature between 2026 and 2033.

The senior unsecured notes and the Credit Agreement, including the Revolving Line of Credit and the Term Loans, contain financial covenants, which are measured quarterly, that require us to maintain, among other things:

The senior unsecured notes and the Credit Agreement, contain financial covenants, which are measured quarterly, that require us to maintain, among other things:

● a ratio of total indebtedness to total asset value not greater than 0.6 to 1.0;

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● a ratio of EBITDA, as calculated in the debt obligation, to fixed charges not less than 1.50 to 1.0.

At June 30, 2025, we were in compliance with all applicable financial covenants.

At September 30, 2025, we were in compliance with all applicable financial covenants.

These debt obligations also contain additional customary covenants and events of default that are subject to a number of important and significant limitations, qualifications and exceptions.

The debt obligations by component as of June 30, 2025 are as follows (dollar amounts in thousands):

The debt obligations by component as of September 30, 2025 are as follows (dollar amounts in thousands):

Debt Obligations

Revolving line of credit (2)

Term loans, net of debt issue costs (2)

Senior unsecured notes, net of debt issue costs

(1) Represents weighted average of interest rate as of June 30, 2025.

(2) Subsequent to June 30, 2025, as noted above, we entered into our New Credit Agreement increasing commitments from $425,000 to $600,000 and repaid our Term Loans using proceeds from our revolving line of credit under our New Credit Agreement.

Additionally, we borrowed $41,850 under our new revolving line of credit.

(1) Represents weighted average interest rate as of September 30, 2025.

(2) Subsequent to September 30, 2025, we repaid $62,900 under our new revolving line of credit.

Accordingly, we have $485,550 outstanding and $114,450 available for borrowing under our unsecured revolving line of credit.

(3) Subsequent to June 30, 2025, we repaid $7,000 in scheduled principal paydown on our senior unsecured notes.

During the six months ended June 30, 2025, our debt borrowings and repayments were as follows (in thousands):

During the nine months ended September 30, 2025, our debt borrowings and repayments were as follows (in thousands):

Debt Obligations

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Senior unsecured notes

(1) Subsequent to June 30, 2025, as noted above, we entered into our New Credit Agreement increasing commitment from $425,000 to $600,000 and repaid our Term Loans using proceeds from our revolving line of credit under our New Credit Agreement.

Additionally, we borrowed $41,850 under our new revolving line of credit.

(1) Subsequent to September 30, 2025, we repaid $62,900 under our new revolving line of credit.

Accordingly, we have $485,550 outstanding and $114,450 available for borrowing under our unsecured revolving line of credit.

(2) Subsequent to June 30, 2025, we repaid $7,000 in scheduled principal paydown on our senior unsecured notes.

At June 30, 2025, we had 46,065,292 shares of common stock outstanding, total equity on our balance sheet $1.0 billion and our equity securities had a market value of $1.6 billion.

During the six months ended June 30, 2025, we declared and paid $53.6 million of cash dividends.

During the six months ended June 30, 2025, we acquired 151,018 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Subsequent to June 30, 2025, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of July, August and September 2025, payable on July 31, August 29, and September 30, 2025, respectively, to stockholders of record on July 23, August 21, and September 22, 2025, respectively.

At September 30, 2025, we had 47,332,792 shares of common stock outstanding, total equity on our balance sheet $1.0 billion and our equity securities had a market value of $1.7 billion.

During the nine months ended September 30, 2025, we declared and paid $80.0 million of cash dividends.

During the nine months ended September 30, 2025, we acquired 151,018 shares of common stock held by employees who tendered owned shares to satisfy tax withholding obligations.

Subsequent to September 30, 2025, we declared a monthly cash dividend of $0.19 per share on our common stock for the months of October, November and December 2025, payable on October 31, November 28, and December 31, 2025, respectively, to stockholders of record on October 23, November 20, and December 23, 2025, respectively.

At-The-Market Program.

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The Equity Distribution Agreement provides for sales of common shares to be made by means of ordinary brokers’ transactions, which may include block trades, or transactions that are deemed to be “at the market” offerings.

During the six months ended June 30, 2025, we sold 387,600 shares of common stock for $13.8 million in net proceeds under our Equity Distribution Agreement.

During the nine months ended September 30, 2025, we sold 1,655,100 shares of common stock for $59.3 million in net proceeds under our Equity Distribution Agreement.

In conjunction with the sale of common stock, we incurred $353,000 of costs associated with this agreement which have been recorded in additional paid in capital as a reduction of proceeds received.

At June 30, 2025, we had $376.4 million available under the Equity Distribution Agreement.

At September 30, 2025, we had $330.3 million available under the Equity Distribution Agreement.

Available Shelf Registrations.

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During the second quarter of 2021, we adopted and our shareholders approved the 2021 Equity Participation Plan (“the 2021 Plan”) which replaces the 2015 Equity Participation Plan (“the 2015 Plan”).

Under the 2021 Plan, 1,900,000 shares of common stock have been

authorized and reserved for awards, less one share for every one share that was subject to an award granted under the 2015 Plan after December 31, 2020 and prior to adoption.

In addition, any shares that are not issued under outstanding awards under the 2015 Plan because the shares were forfeited or cancelled after December 31, 2020 will be added to and again be available for awards under the 2021 Plan.

Under the 2021 Plan, 1,900,000 shares of common stock have been authorized and reserved for awards, less one share for every one share that was subject to an award granted under the 2015 Plan after December 31, 2020 and prior to adoption.

In addition, any shares that

are not issued under outstanding awards under the 2015 Plan because the shares were forfeited or cancelled after December 31, 2020 will be added to and again be available for awards under the 2021 Plan.

Under the 2021 Plan, the shares were authorized and reserved for awards to officers, employees, non-employee directors and consultants.

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Beginning in the first quarter of 2024, we entered into Performance Stock Unit Award Agreements, based upon absolute and relative total shareholder return, under the 2021 Plan.

During the six months ended June 30, 2025, 165,549 shares of restricted stock and 182,915 performance-based stock units vested.

During the six months ended June 30, 2025, we awarded restricted stock and performance-based stock units as follows:

During the nine months ended September 30, 2025, 165,549 shares of restricted stock and 182,915 performance-based stock units vested.

During the nine months ended September 30, 2025, we awarded restricted stock and performance-based stock units as follows:

Vesting Period

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in our market risk during the six months ended June 30, 2025.

There were no material changes in our market risk during the nine months ended September 30, 2025.

For additional information, refer to Item 7A as presented in our Annual Report on Form 10-K for the year ended December 31, 2024.

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