What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-12 · 522 added, 975 removed, 989 unchanged (60% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2025 December 31, 2024

3 unchanged sentences

Acquired intangible assets 256,440 284,447

Construction in progress

Total real estate investments, at cost 2,285,810 2,494,797

6 unchanged sentences

Operating lease right-of-use assets 6,879 7,480

Prepaid expenses and other assets (including $ 22 due from related parties as of September 30, 2024)

32,874 35,781

Prepaid expenses and other assets 23,721 26,316

Accounts receivable, net

Deferred costs, net 18,630 21,269

3 unchanged sentences

Credit facilities 360,774 362,216

363,659 361,026

Market lease intangible liabilities, net 5,691 6,125

Accounts payable and accrued expenses (including $ 30,293 and $ 295 due to related parties as of September 30, 2024 and December 31, 2023, respectively)

Accounts payable and accrued expenses (including $ 30,267 due to related parties as of December 31, 2024)

54,649 89,575

5 unchanged sentences

7.375 % Series A cumulative redeemable perpetual preferred stock, $ 0.01 par value, 4,740,000 authorized;

3,977,144 issued and outstanding as of September 30, 2024 and December 31, 2023

3,977,144 issued and outstanding as of March 31, 2025 and December 31, 2024

7.125 % Series B cumulative redeemable perpetual preferred stock, $ 0.01 par value, 3,680,000 authorized;

3,630,000 issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 28,296,439 shares and 27,886,255 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

3,630,000 issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock, $ 0.01 par value, 300,000,000 shares authorized, 28,296,439 shares issued and outstanding as of March 31, 2025 and December 31, 2024

Additional paid-in capital 2,533,737 2,533,706

5 unchanged sentences

Total liabilities and equity $ 1,831,885 $ 1,946,023

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(In thousands, except share and per share data)

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

2024 2023 2024 2023

Three Months Ended March 31,

Revenue from tenants $ 86,443 $ 88,299

3 unchanged sentences

Operating fees to related parties

6,391 6,397 19,181 19,153

Termination fees to related parties

8,409 — 106,650 —

Acquisition and transaction related 51 142

2 unchanged sentences

Total expenses 98,408 89,419

Operating (loss) income before gain (loss) on sale of real estate investments

Operating loss before gain on sale of real estate investments

( 11,965 ) ( 1,120 )

Gain (loss) on sale of real estate investments

Gain on sale of real estate investments

Operating income (loss)

13,024 ( 1,120 )

Operating (loss) income ( 20,926 ) ( 912 ) ( 122,486 ) 1,841

Other income (expense):

Other expense:

Interest expense ( 14,529 ) ( 16,383 )

Interest and other income 548 258 1,077 576

Interest and other (expense) income

(Loss) gain on non-designated derivatives

Total other expenses, net

( 14,545 ) ( 14,360 )

Total other expenses ( 19,843 ) ( 15,056 ) ( 50,616 ) ( 49,122 )

Loss before income taxes ( 1,521 ) ( 15,480 )

Income tax expense — ( 157 ) ( 135 ) ( 244 )

Net loss ( 40,769 ) ( 16,125 ) ( 173,237 ) ( 47,525 )

Income tax expense (benefit)

( 1,515 ) ( 15,550 )

Net loss attributable to non-controlling interests ( 54 ) —

1 unchanged sentence

Net loss attributable to common stockholders

Other comprehensive income (loss):

( 5,019 ) ( 19,000 )

Other comprehensive loss:

Unrealized (loss) gain on designated derivatives ( 4,994 ) 2,280

Comprehensive loss attributable to common stockholders

$ ( 10,013 ) $ ( 16,720 )

Weighted-average shares outstanding — Basic and Diluted (1)

3 unchanged sentences

(1) Retroactively adjusted for the effects of previous stock dividends (see Note 1 — Organization ).

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3 unchanged sentences

(In thousands, except share data)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Series A Preferred Stock Series B Preferred Stock Common Stock

3 unchanged sentences

Balance, December 31, 2024

Share-based compensation

3,977,144 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,706 $ 16,640 $ ( 1,866,994 ) $ 684,560 $ 5,565 $ 690,125

Distributions declared in common stock, $ 0.21 per share

— — — — 410,184 17 23,678 — ( 23,695 ) — — —

Distributions declared on Series A Preferred Stock, $ 0.46 per share

6 unchanged sentences

Rebalancing of ownership percentage — — — — — — 31 — — 31 ( 31 ) —

Balance, September 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,697 $ 14,301 $ ( 1,846,558 ) $ 702,648 $ 5,658 $ 708,306

Three Months Ended September 30, 2024

Balance, March 31, 2025

3,977,144 $ 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,737 $ 11,646 $ ( 1,872,012 ) $ 674,579 $ 5,541 $ 680,120

Three Months Ended March 31, 2024

Series A Preferred Stock Series B Preferred Stock Common Stock

2 unchanged sentences

Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive Income Distributions in excess of accumulated earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, June 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,309,545 $ 1,132 $ 2,533,484 $ 24,468 $ ( 1,802,415 ) $ 756,745 $ 5,842 $ 762,587

Share-based compensation

— — — — — — 153 — — 153 — 153

Distributions declared in common stock, $ 0.21 per share

— — — — ( 13,106 ) — — — — — — —

Distributions declared on Series A Preferred Stock, $ 0.46 per share

— — — — — — — — ( 1,833 ) ( 1,833 ) — ( 1,833 )

Distributions declared on Series B Preferred Stock, $ 0.45 per share

— — — — — — — — ( 1,617 ) ( 1,617 ) — ( 1,617 )

Distributions to non-controlling interest holders — — — — — — — — — — ( 47 ) ( 47 )

Net loss — — — — — — — — ( 40,693 ) ( 40,693 ) ( 77 ) ( 40,769 )

Unrealized loss on designated derivatives

— — — — — — — ( 10,167 ) — ( 10,167 ) — ( 10,167 )

Rebalancing of ownership percentage — — — — — — 60 — — 60 ( 60 ) —

Balance, September 30, 2024 3,977,144 $ 40 3,630,000 $ 36 28,296,439 $ 1,132 $ 2,533,697 $ 14,301 $ ( 1,846,558 ) $ 702,648 $ 5,658 $ 708,306

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Nine Months Ended September 30, 2023

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Distributions in Excess of Accumulated Earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, December 31, 2023

3,977,144 $ 40 3,630,000 $ 36 27,886,255 $ 1,115 $ 2,509,303 $ 23,464 $ ( 1,639,804 ) $ 894,154 $ 6,429 $ 900,583

Share-based compensation

10 unchanged sentences

— — — — — — — 2,280 — 2,280 — 2,280

Contributions from minority interests — — — — — — — — — — 284 284

Rebalancing of ownership percentage — — — — — — 21 — — 21 ( 21 ) —

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 27,469,303 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

Three Months Ended September 30, 2023

Series A Preferred Stock Series B Preferred Stock Common Stock

Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive Income Distributions in Excess of Accumulated Earnings Total Stockholders Equity Non-controlling Interests Total Equity

Balance, June 30, 2023 3,977,144 $ 40 3,630,000 $ 36 27,071,109 $ 1,082 $ 2,462,523 $ 34,945 $ ( 1,545,708 ) $ 952,918 $ 6,660 $ 959,578

Share-based compensation

— — — — — — 229 — — 229 — 229

Distributions declared in common stock, $ 0.84 per share

— — — — 398,195 16 22,976 — ( 22,992 ) — — —

Distributions declared on Series A Preferred Stock, $ 0.46 per share

— — — — — — — — ( 1,834 ) ( 1,834 ) — ( 1,834 )

Distributions declared on Series B Preferred Stock, $ 0.45 per share

Balance, March 31, 2024

3,977,144 $ 40 3,630,000 $ 36 28,309,546 $ 1,132 $ 2,533,232 $ 25,744 $ ( 1,682,499 ) $ 877,685 $ 6,362 $ 884,046

Distributions to non-controlling interest holders — — — — — — — — — — ( 46 ) ( 46 )

Net loss — — — — — — — — ( 16,111 ) ( 16,111 ) ( 14 ) ( 16,125 )

Unrealized gain on designated derivatives — — — — — — — 395 — 395 — 395

Rebalancing of ownership percentage — — — — — — 17 — — 17 ( 17 ) —

Balance, September 30, 2023 3,977,144 $ 40 3,630,000 $ 36 27,469,303 $ 1,098 $ 2,485,745 $ 35,340 $ ( 1,588,261 ) $ 933,998 $ 6,583 $ 940,581

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

5 unchanged sentences

Amortization of mortgage premiums and discounts, net 22 23

Accretion of market lease and other intangibles, net ( 822 ) ( 675 )

Amortization (accretion) of market lease and other intangibles, net

2,331 ( 460 )

Bad debt expense 190 238

Equity-based compensation — 230

(Gain) loss on sale of real estate investments

( 1,354 ) 364

Gain on sale of real estate investments

Cash received from non-designated derivative instruments 930 1,773

Gain on non-designated derivative instruments ( 449 ) ( 510 )

Gain (loss) on non-designated derivative instruments

Impairment charges 11,899 260

Deferred tax valuation allowance

Changes in assets and liabilities:

1 unchanged sentence

Prepaid expenses and other assets 461 ( 5,734 )

Deferred tax allowance

Accounts receivable, net

Accounts payable, accrued expenses and other liabilities ( 37,981 ) ( 28 )

11 unchanged sentences

Payments on credit facilities ( 1,442 ) ( 1,442 )

Proceeds from credit facilities 6,960 20,000

Proceeds from mortgage notes payable — ( 291 )

1 unchanged sentence

Proceeds from termination of derivative instruments 648 —

Payments of deferred financing costs ( 199 ) ( 7,774 )

Proceeds from promissory note

Contributions from non-controlling interests — 284

Distributions paid on Series A Preferred Stock

3 unchanged sentences

Distributions to non-controlling interest holders ( 47 ) ( 46 )

Net cash provided by financing activities

Net cash used in financing activities

( 4,501 ) ( 5,229 )

6 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash and cash equivalents, end of period $ 71,383 $ 28,670

7 unchanged sentences

Mortgages issued with acquisition of real estate investments $ — $ 7,500

Proceeds from real estate sales used to repay mortgage notes payable $ — $ 2,663

Mortgage notes payable repaid with proceeds from real estate sales $ ( 68,394 ) $ —

Proceeds from real estate sales used to repay amounts outstanding under the prior credit facility

Amounts outstanding under the prior credit facility repaid with proceeds from real estate sales

$ — $ ( 5,167 )

Share and per share data have been adjusted for all periods presented to reflect an one-for-four reverse stock split effective September 30, 2024.

Net change in accrued capital expenditures for the period $ — $ ( 632 )

Share and per share data have been adjusted for all periods presented to reflect a one-for-four reverse stock split effective September 30, 2024.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Note 1 — Organization

National Healthcare Properties, Inc.

(formerly known as Healthcare Trust, Inc.) (including, as required by context, National Healthcare Properties Operating Partnership, L.P.

(including, as required by context, National Healthcare Properties Operating Partnership, L.P.

(the “OP”) and its subsidiaries, the “Company”) is a real estate investment trust (“REIT”) for U.S.

1 unchanged sentence

The Company acquires, owns and manages a diversified portfolio of healthcare-related real estate, focused on outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”).

As of September 30, 2024, the Company owned 198 properties located in 32 states and comprised of 8.6 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries including taxable REIT subsidiaries.

As of March 31, 2025, the Company owned 181 properties (including one land parcel) located in 30 states and comprised of 7.6 million rentable square feet.

Substantially all of the Company’s business is conducted through the OP and its wholly-owned subsidiaries, including taxable REIT subsidiaries (“TRSs”).

Prior to the consummation of the Internalization (as defined below) on September 27, 2024, the Company’s former advisor, Healthcare Trust Advisors, LLC (the “Advisor”), managed its day-to-day business with the assistance of its property manager, Healthcare Trust Properties, LLC (the “Property Manager”);

Prior to the consummation of the Internalization, the Advisor and Property Manager were under common control with AR Global Investments, LLC (“AR Global” or the “Advisor Parent”), and these related parties received compensation and fees for providing services to the Company.

See the “ Internalization ” section in this Note for additional information regarding the Internalization.

The Company also reimbursed, and in the case of the Property Manager, continues to reimburse, these entities for certain expenses they incur in providing these services to the Company.

Healthcare Trust Special Limited Partnership, LLC (the “Special Limited Partner”), which is also under common control with AR Global, also has an interest in the Company through ownership of interests in the OP.

As of September 30, 2024, the Company owned 44 SHOPs using the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure in its SHOP segment.

Under RIDEA, a REIT may lease qualified healthcare properties on an arm’s length basis to a taxable REIT subsidiary (“TRS”) if the property is operated on behalf of such subsidiary by a person who qualifies as an eligible independent contractor.

The Company operates in two reportable business segments for management and internal financial reporting purposes:

OMFs and SHOPs.

the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”), and these related parties received compensation and fees for providing services to the Company.

See the “ Internalization ” section in this Note for additional information.

As of March 31, 2025, the Company owned 44 SHOPs using the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure in its SHOP segment.

Under RIDEA, a REIT may lease “qualified healthcare properties” on an arm’s length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor”.

As of March 31, 2025, the Company had four eligible independent contractors operating 44 SHOPs.

The Company has two operating and reportable business segments:

outpatient medical facilities (OMFs) and senior housing operating properties (SHOPs).

All of the Company’s properties across both business segments are located throughout the United States.

2 unchanged sentences

In its SHOP segment, the Company invests in seniors housing properties through the RIDEA structure.

As of September 30, 2024, the Company had four eligible independent contractors operating 44 SHOPs.

The Company declared quarterly dividends entirely in shares of its common stock from October 2020 through January 2024.

From October 2020 through January 2024, the Company issued an aggregate of approximately 5.2 million shares of common stock as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)).

Dividends payable entirely in shares of common stock are treated in a fashion similar to a stock split for accounting purposes specifically related to per-share calculations for the current and prior periods.

Since October 2020, the Company has issued an aggregate of approximately 5.2 million shares as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)).

No other additional shares of common stock have been issued since October 2020.

3 unchanged sentences

The Estimated Per-Share NAV published on March 26, 2025 has not been adjusted since publication and will not be adjusted until the Company’s board of directors (the “Board”) determines a new Estimated Per-Share NAV.

Issuing dividends in additional shares of common stock will, all things equal, cause the value of each share to decline because the number of shares outstanding increases when shares of common stock are issued in respect of a stock dividend;

however, because each stockholder will receive the same number of new shares, the total value of a common stockholder’s investment, all things equal, will not change assuming no sales or other transfers.

The Company intends to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless the Company lists its common stock.

Internalization

On September 27, 2024 (the “Closing Date”), the Company consummated (the “Closing”) the transactions (the “Internalization”) contemplated by that certain merger agreement dated August 6, 2024 (the “Internalization Agreement”) by and among the Company, HTI Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Merger Sub”), the Advisor and the Advisor Parent.

Consummation of the Internalization resulted in the internalization of the Company’s management through the merger of the Advisor with and into Merger Sub, with the Advisor being the surviving entity (under the name “Healthcare Trust Advisors, LLC”) and the termination of the Company’s prior arrangement for advisory management services provided by the Advisor.

All assets, contracts and employees necessary for the Company to conduct its business were contributed by the Advisor Parent to the Advisor prior to the Closing Date, including all of the equity interests in the Property Manager, which became a wholly-owned subsidiary of the Company following the Internalization.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Internalization

All assets, contracts and employees necessary for the Company to conduct its business were contributed by the Advisor Parent (and/or its affiliates) to the Advisor prior to the Closing Date, including all of the equity interests in the Property Manager, which became a wholly-owned subsidiary of the Company following the Internalization.

Pursuant to the Internalization Agreement, on the Closing Date, (i) the outstanding membership interests of the Advisor were converted into the right to receive from the Company an internalization fee of $ 98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $ 5.5 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that the Company would have been required to pay to the Advisor during the remaining three month notice period required to terminate the Advisory Agreement, and (y) a property management fee of $ 2.9 million, representing the aggregate Management Fees (as defined in the Property Management Agreement) that the Company would have been required to pay to the Property Manager through the current term of the Property Management Agreement, in each case, as adjusted to the extent the amount of such asset management and property management fees exceed or are less than the amount required to be paid by the Advisor Parent to employees placed with the Company pursuant to the Internalization prior to the Closing and the amounts due under contracts acquired by the Company in the Internalization relating to the pre-Closing period (collectively, the “Closing Payments” in an aggregate amount of $ 106.6 million).

The Advisor Parent also delivered cash to the Company at Closing in order for the Company to pay any unpaid employee bonuses for calendar year 2023 and any accrued bonuses for calendar year 2024 to the extent that the Company has previously reimbursed the Advisor Parent for, but the Advisor Parent has not paid, such bonuses.

Pursuant to the Internalization Agreement, because the Closing Payments exceeded the Company’s Available Cash (as defined in the Internalization Agreement), the Company paid the Advisor Parent an aggregate cash consideration of $ 75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) (as further defined in Note 9 — Related Party Transactions and Arrangements ) in a principal amount of $ 30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments .

March 31, 2025

Pursuant to the Internalization Agreement, because the Closing Payments exceeded the Company’s Available Cash (as defined in the Internalization Agreement), the Company paid the Advisor Parent an aggregate cash consideration of $ 75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) in a principal amount of $ 30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments , which Promissory Note was repaid in full in January 2025.

Reverse Stock Split

On September 26, 2024, following approval by the Board and in accordance with Maryland General Corporate Law, the Company filed Articles of Amendment to the Company’s articles of amendment and restatement (as amended to date, the “Charter”) with the State Department of Assessments and Taxation of Maryland (“SDAT”) to effect a reverse stock split of the Company’s common stock, par value $ 0.01 per share (the “common stock”), at a ratio of one-for-four, which became effective on September 30, 2024 (the “Reverse Stock Split”).

On September 26, 2024, following approval by the Board and in accordance with Maryland General Corporate Law, the Company filed Articles of Amendment to the Company’s articles of amendment and restatement (as amended to date, the “Charter”) with the State Department of Assessments and Taxation of Maryland (“SDAT”) to effect a reverse stock split of the Company’s common stock at a ratio of one-for-four, which became effective on September 30, 2024 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, the par value of the common stock adjusted to $ 0.04 per share.

2 unchanged sentences

Name Change and Common Stock Par Value Adjustment

On September 26, 2024, following approval by the Board, the Company filed Articles of Amendment (the “Second Charter Amendment”) to the Company’s Charter with the SDAT to (i) change the Company’s name to “National Healthcare Properties, Inc.” from “Healthcare Trust, Inc.” and (ii) adjust the par value of the Company’s common stock back to $ 0.01 per share following the Reverse Stock Split, both of which became effective on September 30, 2024.

On September 26, 2024, following approval by the Board, the Company filed another Articles of Amendment to the Company’s Charter with the SDAT to (i) change the Company’s name to “National Healthcare Properties, Inc.” from “Healthcare Trust, Inc.” and (ii) adjust the par value of the Company’s common stock back to $ 0.01 per share following the Reverse Stock Split, both of which became effective on September 30, 2024.

In connection with its name change, the Company, as the general partner of the OP, caused the name of the OP to be changed to “National Healthcare Properties Operating Partnership, L.P.” from “Healthcare Trust Operating Partnership, L.P.”

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Note 2 — Summary of Significant Accounting Policies

2 unchanged sentences

The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods.

The results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 15, 2024.

Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2024.

The results of operations for the three months ended March 31, 2025 and 2024 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on February 27, 2025.

Principles of Consolidation and Basis of Presentation

4 unchanged sentences

Substantially all of the Company’s assets and liabilities are held by the OP.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Use of Estimates

4 unchanged sentences

The Company’s revenues, which are derived primarily from lease contracts, include rent received from tenants in its OMF segment.

As of September 30, 2024, these leases had a weighted average remaining lease term of 4.3 years.

Rent from tenants in the Company’s OMF segment (as discussed below) is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease.

As of March 31, 2025, these leases had a weighted average remaining lease term of 5.8 years.

Rent from tenants in the Company’s OMF segment is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease.

Because many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and include in revenue from tenants on a straight-line basis, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.

3 unchanged sentences

The Company defers the revenue related to lease payments received from tenants in advance of their due dates.

Tenant revenue also includes operating expense reimbursements which generally increase with any increase in property operating and maintenance expenses in our OMF segment.

Tenant revenue also includes operating expense reimbursements which generally increase with any increase in property operating and maintenance expenses in the Company’s OMF segment.

In addition to base rent, dependent on the specific lease, tenants are generally required to pay either (i) their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, or (ii) their share of increases in property operating and maintenance expenses to the extent they exceed the properties’ expenses for the base year of the respective leases.

Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “ Revenue from tenants .” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The Company’s revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in the Company’s SHOP segment, held using a structure permitted under RIDEA.

4 unchanged sentences

Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating and maintenance expenses related to non-SHOP assets (recorded in revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating and maintenance costs of the respective properties.

The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of September 30, 2024.

The following table presents future base rent payments on a cash basis due to the Company over the next five years and thereafter as of March 31, 2025.

These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes, among other items.

5 unchanged sentences

Total $ 688,831

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

The Company continually reviews receivables related to rent and unbilled rent and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located.

3 unchanged sentences

Cost recoveries from tenants are included in operating revenue from tenants, in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.

The Company recorded reductions in revenue of $ 0.1 million and $ 0.9 million for uncollectable amounts during the three and nine months ended September 30, 2024, respectively, and $ 0.2 million and $ 0.9 million for uncollectable amounts during the three and nine months ended September 30, 2023, respectively.

The Company recorded reductions in revenue of $ 0.2 million for uncollectable amounts during both the three months ended March 31, 2025 and 2024.

Investments in Real Estate

6 unchanged sentences

See the “ Purchase Price Allocation” section in this Note for a discussion of the initial accounting for investments in real estate.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company’s operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations.

No properties were presented as discontinued operations during the nine months ended September 30, 2024 and 2023.

No properties were presented as discontinued operations during the three months ended March 31, 2025 and 2024.

Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year.

1 unchanged sentence

Properties are no longer depreciated when they are classified as held for sale.

There were no real estate investments held for sale as of September 30, 2024 or December 31, 2023.

There were no real estate investments held for sale as of March 31, 2025 or December 31, 2024.

Purchase Price Allocation

7 unchanged sentences

In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets.

All acquisitions during the nine months ended September 30, 2024 were asset acquisitions.

The Company acquired four properties during the nine months ended September 30, 2024.

During the three months ended March 31, 2024, the Company acquired four properties.

During the three months ended March 31, 2025, the Company did no t acquire any properties.

All acquisitions during the three months ended March 31, 2024 were asset acquisitions.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed, based on their respective fair values.

1 unchanged sentence

The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis.

The Company utilizes various estimates, processes and information to determine the as-if vacant property value.

The Company estimates the fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods.

Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates and land values per square foot.

Fair value estimates are also made using significant assumptions such as capitalization rates, market rental rates, discount rates and land values per square foot.

Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases.

2 unchanged sentences

The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of market rental rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

The aggregate value of intangible assets related to customer relationships, as applicable, is measured based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the tenant.

Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.

The Company did not record any intangible asset amounts related to customer relationships during the three and nine months ended September 30, 2024 or 2023.

The Company did not record any intangible asset amounts related to customer relationships during the three months ended March 31, 2025 or 2024.

Accounting for Leases

5 unchanged sentences

Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor.

As of September 30, 2024 and December 31, 2023, the Company had no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating and maintenance expenses) as a single lease component as an operating lease because (i) the non-lease components have the same timing and pattern of transfer as the associated lease component;

2 unchanged sentences

Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Lessee Accounting

13 unchanged sentences

Reportable Segments

The Company has determined that it has two reportable segments, with activities related to investing in OMFs and SHOPs.

Management evaluates the operating performance of the Company’s investments in OMFs and SHOPs on an individual property level.

The Company’s reportable segments, based on how it evaluates its business and allocates resources, are as follows:

(i) OMFs and (ii) SHOPs.

For additional information, see Note 15 — Segment Reporting .

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Depreciation and Amortization

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, seven to 10 years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings and building improvements, 15 years for land improvements and fixtures, and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

Construction in progress is not depreciated until the project has reached substantial completion.

8 unchanged sentences

REITs are subject to a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S.

federal, state and local income taxes at regular corporate rates beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years.

The Company distributed to its stockholders 100% of its REIT taxable income for each of the years ended December 31, 2023, 2022 and 2021.

The Company had no REIT taxable income requiring distribution to its stockholders for each of the years ended December 31, 2024, 2023 and 2022.

Accordingly, no provision for U.S.

6 unchanged sentences

Accordingly, the Company has formed a TRS that is wholly-owned by the OP to lease its SHOPs and the TRS has entered into management contracts with unaffiliated third-party operators to operate the facilities on its behalf.

As of September 30, 2024, the Company owned 44 seniors housing properties which are leased and operated through its TRS.

As of March 31, 2025, the Company owned 44 seniors housing properties which are leased and operated through its TRS.

The TRS is a wholly-owned subsidiary of the OP.

5 unchanged sentences

Deferred income taxes result from temporary differences between the carrying amounts of the TRS’s assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss carryforwards.

Significant components of the deferred tax assets and liabilities as of September 30, 2024 and December 31, 2023 consisted of deferred rent and net operating loss carryforwards.

During the year ended December 31, 2023, the Company modified 26 intercompany leases with the TRS which reduced intercompany rent.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Significant components of the deferred tax assets and liabilities as of March 31, 2025 and December 31, 2024 consisted of deferred rent and net operating loss carryforwards.

Because of the TRS’s historical operating losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of the Company’s SHOP assets, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets;

thus the Company has provided a 100 % valuation allowance of $ 10.2 million as of September 30, 2024.

thus the Company has provided a 100 % valuation allowance of $ 11.1 million as of March 31, 2025.

If and when the Company believes it is more likely than not that it will recover its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in its consolidated statements of comprehensive loss.

1 unchanged sentence

Recently Issued Accounting Pronouncements

Adopted as Required Through December 31, 2023:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through June 30, 2023 as reference rate reform activities occur.

During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserved the presentation of the Company’s derivatives, which were consistent with the Company’s past presentation.

As of September 30, 2024, the Company had no remaining contracts or hedging relationships that referenced LIBOR.

Not yet Fully Adopted as of September 30, 2024:

In November 2023, the FASB issued ASU 2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures (Topic 280).

The new standard requires a public entity to disclose significant segment expense categories and amounts for each reportable segment.

A significant expense is an expense that (i) is significant to the segment, (ii) regularly provided or easily computed from information regularly provided to management and (iii) included in the reported measure of profit or loss.

The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07 , Segment Reporting — Improvements to Reportable Segment Disclosures, which requires incremental disclosures related to a public entity’s reportable segments.

Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the Company’s CODM, and an explanation of how the Company’s CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The standard also permits disclosure of more than one measure of segment profit.

The ASU should be adopted retrospectively unless it is impracticable to do so.

The Company has not adopted this ASU as of September 30, 2024, but is currently evaluating the impact on its segment disclosures and intends to adopt ASU 2023-07 during the year ending December 31, 2024.

Note 3 — Real Estate Investments, Net

Property Acquisitions

The Company invests in healthcare-related facilities, primarily OMFs and SHOPs.

which expand and diversify its portfolio and revenue base.

The Company owned 198 properties as of September 30, 2024.

During the nine months ended September 30, 2024 and 2023, the Company acquired four and seven properties, respectively.

All acquisitions in the nine months ended September 30, 2024 and 2023 were considered asset acquisitions for accounting purposes.

The Company has adopted both the annual and interim requirements under ASU 2023-07.

The Company has included financial statement disclosures in accordance with ASU 2023-07 within Note 1 5 — Segment Reporting in this report .

Not yet adopted:

In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”) , which requires public entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

ASU 2023-09 is effective for fiscal years beginning after December 15, 2025.

The Company is evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table presents the allocation of real estate assets acquired and liabilities assumed during the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(In thousands) 2024 2023

March 31, 2025

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

ASU 2024-03 requires public business entities (PBEs) to provide disaggregated disclosure in tabular format in the notes to financial statements of specific expenses, including but not limited to:

(i) employee compensation, (ii) depreciation, and (iii) intangible asset amortization.

In January 2025, the FASB issued ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) :

Clarifying the Effective Date , to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The Company is evaluating the impact of the adoption of these ASUs on its consolidated financial statements.

Reclassifications

To conform to the current year presentation, amounts related to “construction in progress” and “accounts receivable, net” for the comparative periods have been reclassified from “prepaid expenses and other assets” and presented separately on the Company’s consolidated balance sheets.

Note 3 — Real Estate Investments, Net

Property Acquisitions

The Company invests in healthcare-related facilities, primarily OMFs and SHOPs, which expand and diversify its portfolio and revenue base.

The Company owned 181 properties (including one land parcel) as of March 31, 2025.

No properties were acquired during the three months ended March 31, 2025.

During the three months ended March 31, 2024, the Company acquired four properties.

All acquisitions in the three months ended March 31, 2024 were considered asset acquisitions for accounting purposes.

The following table presents the allocation of real estate assets acquired and liabilities assumed as of March 31, 2025 and December 31, 2024:

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

Real estate investments, at cost:

10 unchanged sentences

Number of properties purchased — 4

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Significant Concentrations

As of September 30, 2024 and 2023, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

The following table lists the states where the Company had concentrations of properties where annualized rental income on a straight-line basis represented 10% or more of consolidated annualized rental income on a straight-line basis for all properties as of September 30, 2024 and 2023:

September 30,

As of March 31, 2025 and 2024, the Company did not have any tenants (including for this purpose, all affiliates of such tenants) whose annualized rental income on a straight-line basis represented 10% or greater of total annualized rental income for the portfolio on a straight-line basis.

State 2025 2024

Florida 22.1 % 20.0 %

Pennsylvania 10.3 % 10.6 %

Georgia 11.1 % *

Pennsylvania 10.7 % 10.5 %

* Not greater than 10%.

Intangible Assets and Liabilities

The following table discloses amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangible assets, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases, net, for the periods presented:

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

Three Months Ended March 31,

(In thousands) 2025 2024

4 unchanged sentences

Amortization of above- and below-market ground leases, net (3)

$ 40 $ 40 $ 136 $ 120

(1) Reflected within depreciation and amortization expense.

1 unchanged sentence

(3) Reflected within property operating and maintenance expense.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table provides the projected amortization expense and adjustments to revenues for the next five years:

7 unchanged sentences

$ 565 $ 664 $ 476 $ 450 $ 474

Three and Nine Months Ended September 30, 2024

The Company disposed of seven held-for-use OMFs, one held-for-use SHOP and one land parcel during the three months ended September 30, 2024 for an aggregate contract sales price of $ 79.3 million.

These dispositions resulted in an aggregate gain on sale of $ 1.6 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the three months ended September 30, 2024.

The seven held-for-use OMFs were previously impaired by $ 10.6 million in the year ended December 31, 2022.

The Company disposed of seven held-for-use OMFs, two held-for-use SHOPs and one land parcel during the nine months ended September 30, 2024 for an aggregate contract sales price of $ 82.6 million.

These dispositions resulted in an aggregate gain on sale of $ 1.4 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2024.

One held-for-use SHOP was impaired during the nine months ended September 30, 2024 by $ 0.3 million, and had been previously impaired by a cumulative total of $ 2.3 million in the years ended December 31, 2023 and 2022.

The seven held-for-use OMFs had been previously impaired by $ 10.6 million in the year ended December 31, 2022.

Three and Nine Months Ended September 30, 2023

During the three months ended September 30, 2023, the Company did no t dispose of any properties.

During the nine months ended September 30, 2023, the Company disposed of four SHOPs and one OMF for an aggregate contract sales price of $ 13.8 million.

Two of the four disposed SHOPs were previously impaired by $ 15.1 million in the year ended December 31, 2022.

These dispositions resulted in an aggregate loss on sale of $ 0.4 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2023.

Three Months Ended March 31, 2025

The Company disposed of 12 held-for-use OMFs during the three months ended March 31, 2025 for an aggregate contract sales price of $ 168.4 million.

These dispositions resulted in an aggregate gain on sale of $ 25.0 million, which is presented in the Company’s consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

The 12 held-for-use OMFs were previously impaired by $ 8.8 million in the year ended December 31, 2024 .

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Three Months Ended March 31, 2024

During the three months ended March 31, 2024, the Company did no t dispose of any properties.

Assets Held for Sale

2 unchanged sentences

For held-for-sale properties, the Company predominately uses the contract sales price as fair market value.

There were no assets held for sale as of September 30, 2024 and December 31, 2023.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

There were no assets held for sale as of March 31, 2025 and December 31, 2024.

Assets Held for Use

6 unchanged sentences

If the undiscounted cash flows over the expected hold period are less than the carrying value, the Company reflects an impairment charge to write the asset down to its fair value.

Property Damage and Insurance Recoveries

During the nine months ended September 30, 2024 , one OMF property sustained fire damages estimated at $ 2.9 million, which the Company anticipates will be completely recoverable through its property insurance policy during the remainder of 2024.

Accordingly, the Company reduced the carrying value of the damaged property by $ 2.9 million and recorded a receivable of that amount due from the insurance carrier as of September 30, 2024 .

During the nine months ended September 30, 2024, one SHOP property sustained hurricane damage estimated at $ 0.4 million, which the Company anticipates will not be recoverable through its property insurance policy due to its policy’s high deductible.

Accordingly, the Company reduced the carrying value of the damaged property by $ 0.4 million during the nine months ended September 30, 2024 .

Impairment Charges

There were no impairment charges recorded in the three or nine months ended September 30, 2023.

The following table presents impairment charges by segment recorded during the three and nine months ended September 30, 2024:

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

The following table presents impairment charges by segment recorded during the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands) 2025 2024

Acuity Specialty Hospital Mesa (2)

Total OMF impairment charges 8,829 11,238

SHOP Segment:

Copper Springs (3)

Total SHOP impairment charges — 260

Total impairment charges (1)

(1) This property was impaired to reduce its carrying value to its estimated fair value as determined by the Assets Held for Use approach described above.

This property has been actively marketed for sale since September 2021.

This property has been previously impaired by a cumulative total of $ 8.6 million in the years ended December 31, 2023 and 2021.

(2) This property was impaired to reduce its carrying value to its contractual sales price of $ 6.0 million as determined by a purchase and sale agreement executed in the nine months ended September 30, 2024.

(3) This property was impaired to its contractual sales price of $ 3.3 million as determined by a purchase and sale agreement executed in the nine months ended September 30, 2024.

This property was previously impaired by a cumulative total of $ 2.3 million in the years ended December 31, 2023 and 2022.

The property was sold during the nine months ended September 30, 2024.

$ 11,899 $ 260

(1) Amounts presented for the three months ended March 31, 2025 primarily relate to two held-for-use SHOPs and one held-for-use OMF.

These properties were impaired to their contractual sales price as determined by their purchase and sale agreements and were subsequently sold in April 2025 or expected to be sold.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Note 4 — Mortgage Notes Payable, Net

The following table reflects the Company’s mortgage notes payable as of September 30, 2024 and December 31, 2023:

The following table reflects the Company’s mortgage notes payable as of March 31, 2025 and December 31, 2024:

Outstanding Loan Amount as of Effective Interest Rate (1) as of

Portfolio Encumbered Properties September 30,

2024 December 31, 2023 September 30,

Portfolio Encumbered Properties March 31,

2025 December 31, 2024 March 31,

2025 December 31, 2024 Interest Rate Maturity

5 unchanged sentences

38 330,248 363,957 3.71 % 3.58 % Fixed

Multi-Property CMBS Loan 20 116,037 116,037 4.60 % 4.60 % Fixed May 2028

Shiloh - Illinois

1 12,492 12,745 4.34 % 4.34 % Fixed Jan.

Multi-Property CMBS Loan (4)

17 96,026 116,037 4.60 % 4.60 % Fixed May 2028

BMO CMBS Loan 8 37,472 37,472 2.89 % 2.89 % Fixed Dec.

Barclays OMF Loan 56 219,500 234,173 6.45 % 6.45 % Fixed June 2033

BMO CPC Mortgage 4 7,500 — 6.84 % — % Fixed Feb.

BMO CPC Mortgage 4 7,500 7,500 6.84 % 6.84 % Fixed March 2034

Gross mortgage notes payable 126 721,040 789,647 4.63 % 4.56 %

4 unchanged sentences

_____________

(1) Calculated on a weighted average basis for all mortgages outstanding as of September 30, 2024 and December 31, 2023.

(2) Variable rate loan, based on daily SOFR (as defined below) as of September 30, 2024 and December 31, 2023, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements.

The Company allocated $ 378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of September 30, 2024 and December 31, 2023.

(1) Calculated on a weighted average basis for all mortgages outstanding as of March 31, 2025 and December 31, 2024.

(2) Variable rate loan, based on daily SOFR (as defined below) as of March 31, 2025 and December 31, 2024, which is fixed as a result of entering into “pay-fixed” interest rate swap agreements.

The Company allocated $ 330.2 million and $ 378.5 million of its “pay-fixed” interest rate swaps to this mortgage consistently as of March 31, 2025 and December 31, 2024, respectively.

In December 2024, the Company proactively executed an amendment to the hedged notional amount to match the expected prospective loan balance of $ 364.0 million.

This amendment became effective in January 2025.

(3) Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing.

2 unchanged sentences

Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close or result in a definitive agreement.

As of September 30, 2024, the Company had pledged $ 1.3 billion in total real estate investments, at cost, as collateral for its $ 828.0 million of gross mortgage notes payable.

(4) 2025 amounts include debt paydowns related to dispositions of $ 33.7 million on the Capital One OMF Loan, $ 20.0 million on the Multi-Property CMBS Loan and $ 14.7 million on the Barclays OMF Loan.

As of March 31, 2025, the Company had pledged $ 1.2 billion in total real estate investments, at cost, as collateral for its $ 721.0 million of gross mortgage notes payable.

This real estate is not available to satisfy other debts and obligations unless first satisfying the mor tgage notes payable secured by these properties.

2 unchanged sentences

Notably, the Barclays OMF Loan Agreement requires the OP to comply with certain covenants, including, maintaining combined cash and cash equivalents totaling at least $ 12.5 million at all times.

As of September 30, 2024, the Company was in compliance with these financial covenants.

As of March 31, 2025, the Company was in compliance with these financial covenants.

See Note 5 — Credit Facilities -Future Principal Payments for a schedule of principal payment requirements of the Company’s mortgage notes and credit facilities.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Note 5 — Credit Facilities

The Company had the following credit facilities outstanding as of September 30, 2024 and December 31, 2023:

The Company had the following credit facilities outstanding as of March 31, 2025 and December 31, 2024:

Outstanding Facility

1 unchanged sentence

Credit Facilities Encumbered Properties (1)

September 30,

2024 December 31, 2023 September 30,

2025 December 31, 2024 March 31,

2025 December 31, 2024 Interest Rate Maturity

6 unchanged sentences

Total Credit Facilities 28 $ 360,774 $ 362,216 6.93 % 7.23 %

(1) Encumbered properties are as of September 30, 2024.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of September 30, 2024 with an aggregate carrying value, at cost of $ 353.6 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of September 30, 2024 with an aggregate carrying value, at cost of $ 264.2 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of September 30, 2024 and December 31, 2023, respectively.

(1) Encumbered properties are as of March 31, 2025.

(2) Secured by first-priority mortgages on 11 of the Company’s seniors housing properties as of March 31, 2025 with an aggregate carrying value, at cost of $ 356.3 million.

(3) Secured by first-priority mortgages on ten of the Company’s seniors housing properties as of March 31, 2025 with an aggregate carrying value, at cost of $ 265.6 million.

(4) Calculated on a weighted average basis for all credit facilities outstanding as of March 31, 2025 and December 31, 2024, respectively.

(5) The Company has eight active non-designated interest rate cap agreements with an aggregate notional amount of $ 369.2 million which limited one-month SOFR to 3.50 %.

The Company did not designate these derivatives as hedges and, accordingly, the changes in value and any cash received from these derivatives are presented within gain (loss) on derivative instruments on the consolidated statements of operations and comprehensive loss ( see Note 7 — Derivatives and Hedging Activities for additional details).

Inclusive of the impact of these non-designated derivatives, the economic interest rates on the Capital One Fannie Mae Facility, KeyBank Fannie Mae Facility and OMF Warehouse Facility were 5.88 %, 5.93 % and 6.50 %, respectively, as of September 30, 2024 and 5.89 %, 5.95 % and 6.50 %, respectively, as of December 31, 2023.

As of September 30, 2024, the carrying value of the Company’s real estate investments, at cost was $ 2.5 billion, with $ 1.3 billion secured as collateral for mortgage notes payable and $ 650.4 million secured under the credit facilities.

All of the real estate assets pledged to secure mortgages or to secure borrowings under our credit facilities are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the pledged collateral.

Unencumbered real estate investments, at cost as of September 30, 2024 were $ 523.4 million, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these une ncumbered assets as collateral for future mortgage loans, future advances under the credit facilities or other future financings.

Prior Credit Facility

The Company’s prior credit facility (the “Prior Credit Facility”) consisted of two components, a revolving credit facility and a term loan, which were interest-only and would have matured on March 13, 2024.

The Prior Credit Facility was fully repaid in May 2023 with net proceeds provided by the Barclays OMF Loan (see Note 4 — Mortgage Notes Payable, Net for details) and the Prior Credit Facility was terminated.

At termination, the Company wrote off the remaining deferred financing costs associated with the Prior Credit Facility of $ 2.6 million, which is included in interest expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

Inclusive of the impact of these non-designated derivatives, the economic interest rates on the Capital One Fannie Mae Facility, KeyBank Fannie Mae Facility and OMF Warehouse Facility were 5.89 %, 5.94 % and 6.50 %, respectively, as of March 31, 2025 and 5.89 %, 5.93 % and 6.50 %, respectively, as of December 31, 2024.

(6) Secured by seven OMF properties as of March 31, 2025 with an aggregate carrying value, at cost of $ 33.2 million.

The Company repaid in full and terminated the OMF Warehouse Facility in April 2025.

As of March 31, 2025, the Company had pledged $ 655.1 million in total real estate investments, at cost as collateral under its credit facilities.

All of the real estate assets pledged to secure borrowings under the Company’s credit facilities are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, unless, as applicable, the existing indebtedness associated with the property is satisfied or the property is removed from the pledged collateral.

Unencumbered real estate investments, at cost as of March 31, 2025 were $ 427.0 million, although there can be no assurance as to the amount of liquidity the Company would be able to generate from using these une ncumbered assets as collateral for future mortgage loans, future advances under the credit facilities or other future financings.

Fannie Mae Master Credit Facilities

1 unchanged sentence

Advances made under these agreements were assigned by Capital One and KeyBank to Fannie Mae at closing for inclusion in Fannie Mae’s Multifamily MBS program.

As of March 31, 2025, $ 339.1 million was outstanding under the Fannie Mae Master Credit Facilities.

The Company may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minim um debt service coverage and maximum loan-to-value tests.

Borrowings under the Fannie Mae Master Credit Facilities bore monthly interest equal to the sum of the current SOFR for one-month denominated deposits and a spread of 2.41 % and 2.46 % for the Capital One Facility and the KeyBank Facility, respectively.

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

As of September 30, 2024, $ 342.0 million was outstanding under the Fannie Mae Master Credit Facilities.

Until June 30, 2023, borrowings under the Fannie Mae Master Credit Facilities bore annual interest at a rate that varied on a monthly basis and was equal to the sum of the current LIBOR for one month U.S.

dollar-denominated deposits and a spread ( 2.41 % and 2.46 % for the Capital One Facility and the KeyBank Facility, respectively).

Effective July 1, 2023, the Fannie Mae Master Credit Facilities automatically transitioned to SOFR-based borrowings with monthly interest equal to the sum of the current SOFR for one-month denominated deposits and a spread of ( 2.41 % and 2.46 % for the Capital One Facility and the KeyBank Facility, respectively).

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

In the year ended December 31, 2023, the Company provided cash deposits totaling $ 11.8 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements.

The Company provided an additional deposit of $ 0.3 million during the three months ended March 31, 2024, bringing the total deposits to $ 12.1 million as of March 31, 2024.

March 31, 2025

Through March 31, 2025, the Company had provided cash deposits totaling $ 12.1 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements.

These deposits are recorded as restricted cash on the Company’s consolidated balance sheets and are pledged as additional collateral for the Fannie Mae Master Credit Facilities.

1 unchanged sentence

OMF Warehouse Facility

On December 22, 2023, the Company, through wholly-owned subsidiaries of the OP, entered into a loan agreement with Capital One (the “OMF Warehouse Facility”) to provide up to $ 50.0 million of variable-rate financing.

As of September 30, 2024, $ 21.7 million was outstanding under the OMF Warehouse Facility.

The Company may request future advances under the OMF Warehouse Facility by adding eligible OMFs to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

Borrowings under the OMF Warehouse Facility bear interest at a monthly rate equal to the sum of the current SOFR for one-month denominated deposits and a spread of 3.0 %.

Interest payments are due monthly, with no principal payments due until maturity in December 2026.

On December 22, 2023, the Company, through wholly-owned subsidiaries of the OP, entered into a loan agreement with Capital One to provide up to $ 50.0 million of variable-rate financing.

As of March 31, 2025, $ 21.7 million was outstanding under the facility.

In April 2025, the Company repaid in full and terminated the facility .

Non-Designated Interest Rate Caps

As of September 30, 2024 the Company had eight non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 369.2 million which caps SOFR at 3.50 % with terms through January 2027.

As of March 31, 2025 the Company had eight non-designated interest rate cap agreements with an aggregate current effective notional amount of $ 369.2 million which caps SOFR at 3.50 % with terms through January 2027.

The Company does not apply hedge accounting to these non-designated interest cap agreements, and changes in value as well as any cash received are presented within (loss) gain on non-designated derivatives in the Company’s consolidated statements of comprehensive loss.

1 unchanged sentence

In connection with the Fannie Mae Master Credit Facilities, the Company was required to enter into interest rate cap agreements which the Company periodically renews upon their expiration.

During the nine months ended September 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap and to execute a new cap.

In April 2025, the Company terminated two interest rate caps with a notional of $ 21.7 million related to the OMF Warehouse Facility upon the facility’s full repayment.

Future Principal Payments

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to September 30, 2024 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:

The following table summarizes the scheduled aggregate principal payments for the five years subsequent to March 31, 2025 and thereafter, on all of the Company’s outstanding mortgage notes payable and credit facilities:

Future Principal Payments

7 unchanged sentences

Total $ 721,040 $ 360,774 $ 1,081,814

The Company’s existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of its operating and administrative expenses, debt service obligations (including principal repayment) and distributions to holders of its Series A Preferred Stock and Series B Preferred Stock.

The Company closely monitors its current and anticipated liquidity position relative to its current and anticipated demands for cash and believes that it has sufficient current liquidity to meet its financial obligations for at least the next twelve months.

The Company expects to fund its future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by its operating activities, potential future advances under its Fannie Mae Master Credit Facilities, net cash provided by its property dispositions and potential new financings utilizing certain of its currently unencumbered properties.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The Company’s existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of its operating and administrative expenses, debt service obligations (including principal repayment), the repayment of the Promissory Note and distributions to holders of its Series A Preferred Stock and Series B Preferred Stock.

The Company expects to fund its future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by its operating activities, potential future advances under its Fannie Mae Master Credit Facilities and OMF Warehouse Facility, net cash provided by its property dispositions and potential new financings utilizing certain of its currently unencumbered properties.

March 31, 2025

Note 6 — Fair Value of Financial Instruments

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Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

However, as of September 30, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

However, as of March 31, 2025, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table presents information about the Company’s assets and liabilities measured at fair value as of September 30, 2024 and December 31, 2023, aggregated by the level in the fair value hierarchy within which those instruments fall.

March 31, 2025

The following table presents information about the Company’s assets and liabilities measured at fair value as of March 31, 2025 and December 31, 2024, aggregated by the level in the fair value hierarchy within which those instruments fall.

(In thousands) Quoted Prices in Active Markets

3 unchanged sentences

Level 3 Total

September 30, 2024

March 31, 2025

Derivative assets, at fair value (non-designated) $ — $ 1,623 $ — $ 1,623

7 unchanged sentences

Changes in the type of inputs may result in a reclassification for certain assets.

There has been no transfer into or out of Level 3 financial instruments during the periods presented.

Real Estate Investments Measured at Fair Value on a Non-Recurring Basis

Real Estate Investments - Held for Use

The Company has impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of September 30, 2024 and December 31, 2023.

As of September 30, 2024, the Company owned 20 held-for-use properties ( 20 OMFs) for which the Company had reconsidered their expected holding periods, all of which are being marketed for sale.

As a result, the Company evaluated the impact on its ability to recover the carrying values of the respective properties and has previously recorded impairment charges on one property to reduce the carrying value to its estimated fair value.

The Company has impaired real estate investments held for use, which were carried at fair value on a non-recurring basis on the consolidated balance sheets as of March 31, 2025 and December 31, 2024.

As of March 31, 2025, the Company owned seven held-for-use properties ( three OMFs and four SHOPs) for which the Company had reconsidered their expected holding periods, all of which are being marketed for sale.

As a result, the Company evaluated the impact on its ability to recover the carrying values of the respective properties and has recorded impairment charges on three properties to reduce the carrying value to its contractual sales price as determined by purchase and sale agreements.

See Note 3 — Real Estate Investments, Net - Assets Held for Use and Impairment Charges for additional details.

1 unchanged sentence

Real estate investments held for sale are carried at net realizable value on a non-recurring basis and are generally classified in Level 3 of the fair value hierarchy .

The Company did not have any real estate investments classified as held for sale as of September 30, 2024 and December 31, 2023.

The Company did not have any real estate investments classified as held for sale as of March 31, 2025 and December 31, 2024.

Financial Instruments Not Measured at Fair Va lue

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the consolidated balance sheets are reported below:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value

13 unchanged sentences

The Company does not anticipate that any of its counterparties will fail to meet their obligations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2024 and December 31, 2023:

(In thousands) Balance Sheet Location September 30,

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2025 and December 31, 2024:

(In thousands) Balance Sheet Location March 31,

2025 December 31, 2024

4 unchanged sentences

Cash Flow Hedges of Interest Rate Risk

As of September 30, 2024 and December 31, 2023, the Company had one derivative with a notional value of $ 378.5 million designated as a cash flow hedges of interest rate risk.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of March 31, 2025 and December 31, 2024, the Company had one derivative with a notional value of $ 330.2 million and $ 378.5 million, respectively, designated as a cash flow hedges of interest rate risk.

In December 2024, the Company proactively executed an amendment to the hedged notional amount to match the expected prospective loan balance of $ 364.0 million.

The Company uses its interest rate swap as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments by the Company over the life of the agreement without exchange of the underlying notional amount.

During the nine months ended September 30, 2024 and the year ended December 31, 2023, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

During the three months ended March 31, 2025 and the year ended December 31, 2024, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

The remaining interest rate “pay-fixed” swap has a base interest rate of 1.61 % and matures December 2026.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

During the three months ended March 31, 2025, the Company received $ 1.5 million in connection with the partial unwind of a derivative.

In conjunction with the partial unwind, the Company accelerated the reclassification of gains of $ 1.5 million from other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur.

This gain was recorded as a reduction in interest expense on its consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

The table below details the location in the financial statements of the gain (loss) recognized on interest rate derivatives designated as cash flow hedges for the periods presented:

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

Three Months Ended March 31,

(In thousands) 2025 2024

3 unchanged sentences

Total amount of interest expense presented in the consolidated statements of operations and comprehensive loss $ ( 14,529 ) $ ( 16,383 )

Prior Credit Facility Swap Terminations

During the year ended December 31, 2023, the Company terminated two LIBOR-based interest rate swap agreements with an aggregate notional amount of $ 50.0 million and six SOFR-based interest rate swap agreements with an aggregate notional amount of $ 150.0 million.

The swaps were terminated in asset positions and the Company received $ 1.9 million in cash from the LIBOR-based swap terminations and $ 3.5 million in cash from the SOFR-based swap terminations.

These amounts were included in AOCI and will be amortized into earnings as a reduction to interest expense from the termination dates of the swaps through March 2024 (the original term of the swap and the Prior Credit Facility).

For the nine months ended September 30, 2024 and 2023, the Company reclassifie d $ 1.2 million and $ 2.7 million, respectively, from AOCI as decreases to interest expense, and no amounts remained in AOCI as of September 30, 2024.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

During the next 12 months, from October 1, 2024 through September 30, 2025, the Company estimates that $ 8.3 million will be reclassified from AOCI as a decrease to interest expense or other comprehensive income relating to the “pay-fixed” swaps designated as derivatives.

During the next 12 months, from April 1, 2025 through March 31, 2026, the Company estimates that $ 7.5 million will be reclassified from AOCI as a decrease to interest expense or other comprehensive income relating to the “pay-fixed” swaps designated as derivatives.

Non-Designated Derivatives

The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Interest Rate Derivatives Number of Instruments Notional Amount (1)

5 unchanged sentences

(2) All of the Company’s interest rate cap agreements limited one-month SOFR to 3.50 % with terms through January 2027.

The actual one-month SOFR rates during the nine months ended September 30, 2024 exceeded the strike price rate of 3.50 % and the Company received payments under these agreements.

The actual one-month SOFR rates during the three months ended March 31, 2025 exceeded the strike price rate of 3.50 % and the Company received payments under these agreements.

Changes in the fair market value of these non-designated derivatives, as well as any cash received, are presented within gain (loss) on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

These derivatives are used to limit the Company’s exposure to interest rate movements for economic purposes, however, the Company has not elected to apply hedge accounting.

As of September 30, 2024 and December 31, 2023, the Company had entered into eight and seven SOFR-based interest rate caps, respectively, with notional amounts of $ 369.2 million and $ 364.2 million, respectively, which limited one-month SOFR borrowings to 3.50 % and have varying maturities through January 2027.

In the nine months ended September 30, 2024, the Company paid total premiums of $ 1.7 million to renew one cap with an aggregate notional amount of $ 58.1 million and to execute a new cap of $ 7.0 million which matures in January 2027.

Five interest rate caps with an aggregate notional amount of $ 289.4 million matures in 2025, which represents the next interest rate cap maturity.

Five interest rate caps with an aggregate notional amount of $ 289.4 million mature in 2025, which represents the next interest rate cap maturity.

Beginning in the year ended December 31, 2022, SOFR exceeded 3.50 % and the Company began receiving payments under these interest rate caps.

While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Capital One Facility, KeyBank Facility and OMF Warehouse Facility.

Changes in the fair value of, and any cash received from, derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and are presented within gain (loss) on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.

The loss on non-de signated derivatives was nominal for the three months ended March 31, 2025.

The gain on non-designated derivatives was $ 2.0 million for the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, the Company received aggregate payments of $ 0.9 million and $ 1.8 million, respectively, related to its effective interest rate caps as SOFR exceeded the effective rates of the capped debt.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Beginning in the year ended December 31, 2022, LIBOR exceeded 3.50 % and the Company began receiving payments under these interest rate caps.

While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Capital One Facility and KeyBank Facility.

The loss on non-de signated derivatives was $ 2.4 million for the three months ended September 30, 2024 and gain on non-designated derivatives was $ 0.4 million for the nine months ended September 30, 2024.

The gains on non-designated derivatives were $ 0.4 million and $ 0.5 million for the three and nine months ended September 30, 2023, respectively.

During the nine months ended September 30, 2024 and 2023, the Company received aggregate payments of $ 5.4 million and $ 3.9 million, respectively, related to its effective interest rate caps as LIBOR/SOFR exceeded the effective rates of the capped debt.

March 31, 2025

Offsetting Derivatives

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of September 30, 2024 and December 31, 2023.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of March 31, 2025 and December 31, 2024.

The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value.

2 unchanged sentences

(In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets presented in the Consolidated Balance Sheet Financial Instruments Cash Collateral Received Net Amount

September 30, 2024 $ 17,177 $ — $ — $ 17,177 $ — $ — $ 17,177

March 31, 2025 $ 13,281 $ — $ — $ 13,281 $ — $ — $ 13,281

December 31, 2024 $ 19,206 $ — $ — $ 19,206 $ — $ — $ 19,206

1 unchanged sentence

The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

As of September 30, 2024, there were no derivatives in a net liability position.

As of March 31, 2025, there were no derivatives in a net liability position.

The Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.

Note 8 — Stockholders’ Equity

As of September 30, 2024 and December 31, 2023, the Company had 28,296,439 and 27,886,255 shares of common stock outstanding, respectively, including unvested restricted shares, shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases, and shares issued as stock dividends since October 2020, as adjusted to reflect the Reverse Stock Split.

Since October 2020, the Company has issued an aggregate of approximately 5.2 million shares (as adjusted to reflect the Reverse Stock Split) in respect to the stock dividends.

Except for shares issued as dividends, no additional shares of common stock were issued during the nine months ended September 30, 2024 or the year ended December 31, 2023.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive loss have been retroactively adjusted to reflect the cumulative increase in shares outstanding due to the stock dividends and are noted as such throughout the accompanying financial statements and notes.

As of both March 31, 2025 and December 31, 2024, the Company had 28,296,439 shares of common stock outstanding, including unvested restricted shares, shares issued pursuant to the Company’s distribution reinvestment plan (“DRIP”), net of share repurchases and shares issued as stock dividends from October 2020 and through January 2024.

From October 2020 and through January 2024, the Company issued an aggregate of 5.2 million shares (as adjusted to reflect the Reverse Stock Split) in respect to the stock dividends.

Except for shares issued as dividends, no other additional shares of common stock were issued during the three months ended March 31, 2025 or the year ended December 31, 2024.

References made to weighted-average shares and per-share amounts in the consolidated statements of operations and comprehensive income or loss have been retroactively adjusted to reflect the cumulative increase in shares outstanding due to the stock dividends and are noted as such throughout the accompanying financial statements and notes.

In addition, on March 26, 2025, the Company published a new Estimated Per-Share NAV as of December 31, 2024, which was approved by the Board on March 26, 2025.

See Note 1 — Organization for additional information.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Share Repurchase Program

8 unchanged sentences

Shares issued under the DRIP are recorded as equity in the accompanying consolidated balance sheets in the period distributions are declared.

During the nine months ended September 30, 2024 and the year ended December 31, 2023, the Company did no t issue any shares of common stock pursuant to the DRIP as the Company did not declare any cash distributions during those periods.

During the three months ended March 31, 2025 and the year ended December 31, 2024, the Company did no t issue any shares of common stock pursuant to the DRIP.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Stockholder Rights Plan

8 unchanged sentences

Also, in connection with an underwritten offering in October 2021, the Company classified and designated 3,680,000 shares of its authorized preferred stock in October 2021 as authorized shares of its Series B Preferred Stock.

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of September 30, 2024 and December 31, 2023.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of September 30, 2024 and December 31, 2023.

The Company also had 100,000 Series A Preferred Units outstanding as of September 30, 2024 and December 31, 2023, which were accounted for as a component of non-controlling interests.

The Company had 3,977,144 shares of Series A Preferred Stock issued and outstanding as of March 31, 2025 and December 31, 2024.

The Company had 3,630,000 shares of Series B Preferred Stock issued and outstanding as of March 31, 2025 and December 31, 2024.

The Company also had 100,000 Series A Preferred Units outstanding as of March 31, 2025 and December 31, 2024, which were accounted for as a component of non-controlling interests.

See Note 13 — Non-controlling Interests for additional information.

3 unchanged sentences

Under the policy, distributions authorized by the Board on the Company’s shares of common stock were issued on a quarterly basis in arrears in shares of the Company’s common stock valued at the Company’s Estimated Per Share NAV of common stock in effect on the applicable date.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Stock Dividend Declaration Date Stock Dividend Issue Date Quarterly Stock Dividend Rate (per share)

October 1, 2020 October 15, 2020 0.013492

January 4, 2021 January 15, 2021 0.013492

April 2, 2021 April 15, 2021 0.014655

July 1, 2021 July 15, 2021 0.014655

October 1, 2021 October 15, 2021 0.014655

January 3, 2022 January 15, 2022 0.014655

April 1, 2022 April 18, 2022 0.014167

July 1, 2022 July 15, 2022 0.014167

October 3, 2022 October 17, 2022 0.014167

January 3, 2023 January 18, 2023 0.014167

April 3, 2023 April 17, 2023 0.015179

July 3, 2023 July 17, 2023 0.015179

October 2, 2023 October 16, 2023 0.015179

January 3, 2024 January 16, 2024 0.015179

The Company did not declare a quarterly stock dividend in April 2024, and does not intend to declare any further stock dividends in the future.

The Company has not declared a quarterly stock dividend since January 2024, and does not intend to declare any further stock dividends in the future.

Note 9 — Related Party Transactions and Arrangements

As of September 30, 2024 and December 31, 2023, the Special Limited Partner owned 2,678 shares of the Company’s outstanding common stock.

As of December 31, 2023, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

In connection with the Internalization, immediately prior to Closing, the Advisor transferred the 90 Common OP Units to the Advisor Parent.

As of September 30, 2024, the Advisor Parent held 90 Common OP Units.

Fees Incurred in Connection with the Operations of the Company

The Second Amended and Restated Advisory Agreement by and among the Company, the OP and the Advisor (as amended, the “Advisory Agreement”) took effect on February 17, 2017.

On July 25, 2019, the Company entered into Amendment No.

1 to the Advisory Agreement (the “Advisory Agreement Amendment”), which was unanimously approved by the Company’s independent directors.

Additional information on the Advisory Agreement Amendment is included later in this Note under “ Professional Fees and Other Reimbursements .”

Immediately following the Closing of the Internalization, the Company and Advisor (now a wholly owned subsidiary of the Company following the Internalization) terminated the Advisory Agreement by mutual agreement.

Certain expenses have been incurred as a result of the Company’s decision to terminate the Advisory Agreement, which are discussed below in the section “Internalization — Termination Fees”.

The following describes certain expenses and fees that the Company was obligated to pay under the Advisory Agreement prior to its termination in connection with the Internalization.

Fees Incurred in Connection with the Operations of the Company Prior to the Internalization

Prior to September 2024, the former Advisor managed the Company’s day-to-day business and received compensation and fees for providing services to the Company pursuant to the Second Amended and Restated Advisory Agreement by and among the Company, the OP and the Advisor (as amended, the “Advisory Agreement”) that took effect in February 2017.

Immediately following the Internalization, the Company and the Advisor (now a wholly owned subsidiary of the Company following the Internalization) terminated the Advisory Agreement by mutual agreement.

The following describes certain expenses and fees that the Company was obligated to pay under the Advisory Agreement prior to its termination.

Acquisition Expense Reimbursements

1 unchanged sentence

The amount reimbursed for insourced expenses was not permitted to exceed 0.5 % of the contract purchase price of each acquired property or 0.5 % of the amount advanced for a loan or other investment.

Additionally, the Company reimbursed the Advisor for third-party acquisition expenses.

Under the Advisory Agreement, total acquisition expenses were not permitted to exceed 4.5 % of the contract purchase price of the Company’s portfolio or 4.5 % of the amount advanced for all loans or other investments.

This threshold was not exceeded through September 27, 2024, the date the Advisory Agreement was terminated.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Asset Management Fees

9 unchanged sentences

or (b) the advisory agreement is terminated by an affirmative vote of a majority of the Company’s independent directors without cause before the Economic Hurdle has been met.

Subject to approval by the Board, the Class B Units were issued to the Advisor quarterly in arrears pursuant to the terms of the LPA.

The number of Class B Units issued in any quarter was equal to:

(i) the excess of (A) the product of (y) the cost of assets multiplied by (z) 0.1875 % over (B) any amounts payable as an oversight fee (as described below) for such calendar quarter;

divided by (ii) the value of one share of common stock as of the last day of such calendar quarter, which was initially equal to $ 22.50 (the price in the Company’s initial public offering of common stock minus the selling commissions and dealer manager fees).

The Board previously approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement.

The value of issued Class B Units will be determined and expensed when the Company deems the achievement of the Performance Condition to be probable.

As of September 30, 2024, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

The Advisor received cash distributions on each issued Class B Unit equivalent to the cash distribution paid, if any, on the Company’s common stock.

These cash distributions on Class B Units will be included in general and administrative expenses in the consolidated statements of operations and comprehensive loss if the Performance Condition is considered probable to occur.

The Board has previously approved the issuance of 359,250 Class B Units to the Advisor in connection with this arrangement.

As of March 31, 2025, the Company determined that achieving the Performance Condition was not yet considered probable for accounting purposes.

The Board determined in February 2018 that the Economic Hurdle had been satisfied, however, none of the events have occurred, including a listing of the Company’s common stock on a national securities exchange, which would have satisfied the other vesting requirement of the Class B Units.

Therefore, no expense has ever been recognized in connection with the Class B Units.

On May 12, 2015, the Company, the OP and the Advisor entered into an amendment to the then-current advisory agreement, which, among other things, provided that the Company would cease causing the OP to issue Class B Units to the Advisor with respect to any period ending after March 31, 2015.

In connection with the Internalization, immediately prior to Closing, the Advisor transferred 359,250 Class B Units to the Advisor Parent.

Effective February 17, 2017, the Advisory Agreement required the Company to pay the Advisor a base management fee, which was payable on the first business day of each month.

The fixed portion of the base management fee was equal to $ 1.625 million per month, while the variable portion of the base management fee was equal to one-twelfth of 1.25 % of the cumulative net proceeds of any equity (including convertible equity and certain convertible debt but excluding proceeds from the DRIP) issued by the Company and its subsidiaries subsequent to February 17, 2017 per month.

There were no variable management fees earned from the issuance of common stock dividends.

Upon termination of the Advisory Agreement, the Company is no longer obligated to pay the base management fee.

In addition, the Advisory Agreement required the Company to pay the Advisor a variable management/incentive fee quarterly in arrears equal to (1) the product of fully diluted shares of common stock outstanding multiplied by (2) (x) 15.0 % of the applicable prior quarter’s Core Earnings (as defined in the Advisory Agreement) per share in excess of $ 0.375 per share plus (y) 10.0 % of the applicable prior quarter’s Core Earnings per share in excess of $ 0.47 per share.

No incentive fee was incurred for the nine months ended September 30, 2024 or 2023.

Upon termination of the Advisory Agreement, the Company is no longer obligated to pay a variable management/incentive fee.

In connection with the Internalization, on the Closing Date, the Advisor Parent received an asset management fee of $ 10.9 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Advisory Agreement, which began on June 25, 2024 when the Company delivered notice to the Advisor of its intention to effect the Internalization, inclusive of $ 5.5 million of Base Management Fees that the Company would have been required to pay to the Advisor during the remaining three month notice period following the Closing Date.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The Advisory Agreement also required the Company to pay the Advisor a base management fee, which was payable on the first business day of each month.

The fixed portion of the base management fee was equal to $ 1.625 million per month, while the variable portion of the base management fee was equal to one-twelfth of 1.25 % of the cumulative net proceeds of any equity issued by the Company and its subsidiaries subsequent to February 17, 2017 per month.

In addition, the Advisory Agreement required the Company to pay the Advisor certain variable management/incentive fee quarterly in arrears.

No incentive fee was incurred for the three months ended March 31, 2024 .

Upon termination of the Advisory Agreement, the Company is no longer obligated to pay the base management fee or the variable management/incentive fee.

In connection with the Internalization, on the Closing Date, the Advisor Parent received an asset management fee of $ 10.9 million, representing the aggregate base management fee that the Company would have been required to pay to the Advisor during the six month notice period required to terminate the Advisory Agreement, inclusive of $ 5.5 million of base management fees that the Company would have been required to pay to the Advisor during the remaining three month notice period following the Closing Date.

Professional Fees and Other Reimbursements

The Company reimbursed the Advisor’s costs of providing administrative services including personnel costs, except for costs to the extent that the employees perform services for which the Advisor received a separate fee.

This reimbursement included reasonable overhead expenses for employees of the Advisor or its affiliates directly involved in the performance of services on behalf of the Company, including the reimbursement of rent expense at certain properties that were both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor.

During the three months ended September 30, 2024 and 2023, t he Company incurred $ 2.7 million and $ 2.5 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

During the nine months ended September 30, 2024 and 2023, the Company incurred $ 9.1 million and $ 6.4 million, respectively, of reimbursement expenses from the Advisor for providing administrative services.

These reimbursement expenses are included in general and administrative expense on the consolidated statements of operations and comprehensive loss.

Reimbursements for the cash portion of 2023 bonuses paid by the Advisor to its employees, or employees of its affiliates, were expensed and reimbursed on a monthly basis during the year ended December 31, 2023 in accordance with estimates provided by the Advisor.

These amounts were awarded in May 2024 and were scheduled to be paid by the Advisor to its employees from September 2024 to March 2 025.

Following the Internalization, pursuant to the Internalization Agreement, the Advisor Parent remitted the unpaid portion of these amounts to the Company, which subsequently paid out such amounts in October 2024 to the employees who joined the Company from the Advisor as part of the Internalization.

For the cash portion of 2024 accrued bonuses for the Advisor’s employees, or employees of its affiliates, the Company previously reimbursed the Advisor for such amounts in accordance with estimates provided by the Advisor.

Following the Internalization, pursuant to the Internalization Agreement, the Advisor Parent remitted such amounts to the Company for subsequent payment to the employees who joined the Company from the Advisor as part of the Internalization.

Prior to the termination of the Advisory Agreement, the Company reimbursed the Advisor’s costs of providing administrative services including personnel costs, except for costs to the extent that the employees perform services for which the Advisor received a separate fee.

During the three months ended March 31, 2024 , t he Company incurred $ 2.5 million of reimbursement expenses from the Advisor for providing administrative services.

These reimbursement expenses were included in general and administrative expense on the consolidated statements of operations and comprehensive loss.

Property Management Fees

Unless the Company contracts with a third party, the Company pays the Property Manager a property management fee on a monthly basis, equal to 1.5 % of gross revenues from the Company’s stand-alone single-tenant net leased properties managed and 2.5 % of gross revenues from all other types of properties managed, plus market-based leasing commissions applicable to the geographic location of the property.

The Company also reimburses the Property Manager for property level expenses incurred by the Property Manager.

The Property Manager may charge a separate fee for the one-time initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s length transactions by others rendering similar services in the same geographic area for similar properties, and the Property Manager is allowed to receive a higher property management fee in certain cases if approved by the Company’s Board (including a majority of the independent directors).

On February 17, 2017, the Company entered into the Amended and Restated Property Management and Leasing Agreement (the “Property Management Agreement”) with the OP and the Property Manager.

The Property Management Agreement automatically renews for successive one-year terms unless any party provides written notice of its intention to terminate the Property Management Agreement.

The Company provided the Property Manager with notice of its intent to self-manage in June 2024, and, in connection with the Internalization, the Advisor Parent contributed all its equity interests in the Property Manager to the Company.

Following the Closing of the Internalization, the Property Management Agreement remains in place as an intercompany agreement.

Until the Property Manager became the Company’s wholly-owned subsidiary as part of the Internalization, the Company paid the Property Manager a property management fee on a monthly basis, equal to 1.5 % of gross revenues from the Company’s stand-alone single-tenant net leased properties managed and 2.5 % of gross revenues from all other types of properties managed, plus market-based leasing commissions applicable to the geographic location of the property.

The Company also reimbursed the Property Manager for property level expenses incurred by the Property Manager.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Promissory Note

In connection with the consideration payable to the Advisor Parent under the Internalization Agreement, the Company issued the Promissory Note in a principal amount of $ 30.3 million to the Advisor Parent on the Closing Date.

The Promissory Note is a senior unsecured obligation of the Company and ranks equal in right of payment with all of the Company’s existing and future indebtedness.

The Promissory Note bears interest per annum of Term SOFR (as defined in the Promissory Note) plus 1.25 % until January 1, 2025 and Term SOFR plus 3.25 % on and after January 1, 2025, with such interest payable monthly.

Beginning on January 2, 2025, the Company will be required to make monthly payments of principal to the extent of its available cash existing on the applicable payment date.

The Promissory Note matures on June 28, 2025 and may be prepaid, in whole or in part, prior to the maturity date without any pre-payment penalties.

The Promissory Note is subject to customary events of default, the occurrence of which shall allow the Advisor Parent to declare all amounts outstanding under the Promissory Note immediately due and payable.

The Promissory Note is included in accounts payable and accrued expenses on the balance sheet as of September 30, 2024,

March 31, 2025

Summary of Related Party Expenses and Payables

The following table details amounts incurred and payable in connection with the Company’s operations-related services described above as of and for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30, Payable (Prepayments) as of

2024 2023 2024 2023

(In thousands) Incurred Incurred Incurred

Incurred September 30,

Three Months Ended March 31, Payable (Prepayments) as of

(In thousands) Incurred Incurred March 31,

2025 December 31, 2024

1 unchanged sentence

Acquisition cost reimbursements $ — $ 20 $ — $ —

Termination fees (1)

Ongoing fees and reimbursements:

1 unchanged sentence

Professional fees and other reimbursements (2)

2,981 2,824 9,960 7,584

Property management fees (3)

1,069 1,155 3,561 3,132 ( 22 ) 97

Termination fees (including the Promissory Note) (3)

8,409 — 106,650 — 30,267 —

Total related party operation fees and reimbursements $ — $ 10,906 $ — $ 30,267

(1) Reflects the Promissory Note issued to the Advisor Parent in connection with the Internalization, which was repaid in full in January 2025.

(2) Included in general and administrative expenses in the consolidated statements of operations.

Includes $ 2.2 million and $ 2.0 million for the three months ended September 30, 2024 and 2023, respectively, and $ 7.1 million and $ 5.2 million for the nine months ended September 30, 2024 and 2023, respectively.

(2) The three months ended September 30, 2024 and 2023 includ es $ 0.1 million and $ 0.2 million, respectively, and the nine months ended September 30, 2024 and 2023 includes $ 0.8 million and $ 0.4 million, respectively, of leasing commissions which are capitalized and included in deferred costs, net on the Company’s consolidated balance sheets.

(3) The nine months ended September 30, 2024 includes the Closing Payments payable to the Advisor pursuant to the terms of the Internalization, including an internalization fee of $ 98.2 million, an asset management fee of $ 5.5 million and a property management fee of $ 2.9 million.

See Note 1 — Organization — Internalization for additional information.

Also reflects the Promissory Note issued to the Advisor Parent in connection with the Internalization.

(3) The three months ended March 31, 2024 includ e $ 0.6 million of leasing commissions which are capitalized and included in deferred costs, net on the Company’s consolidated balance sheets.

Internalization

2 unchanged sentences

Fees Incurred in Connection with a Listing

If the common stock of the Company is listed on a national securities exchange, the Special Limited Partner will be entitled to receive a promissory note as evidence of its right to receive a subordinated incentive listing distribution from the OP equal to 15.0 % of the amount by which the market value of all issued and outstanding shares of common stock plus distributions exceeds the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax non-compounded annual return to investors in the Company’s initial public offering of common stock.

No such distribution was incurred during the three or nine months ended September 30, 2024 or 2023.

If the Special Limited Partner or any of its affiliates receives the subordinated incentive listing distribution, the Special Limited Partner and its affiliates will no longer be entitled to receive the subordinated participation in net sales proceeds distribution described below.

Under the LPA, if the common stock of the Company is listed on a national securities exchange, an affiliate of the Advisor Parent will be entitled to receive a promissory note as evidence of its right to receive a subordinated incentive listing distribution from the OP equal to 15.0 % of the amount by which the market value of all issued and outstanding shares of common stock plus distributions exceeds the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax non-compounded annual return to investors in the Company’s initial public offering of common stock.

None of these distributions has been earned through the date of this Quarterly Report on Form 10-Q and no such distribution was incurred during the three months ended March 31, 2025 or 2024.

Subordinated Participation in Net Sales Proceeds

Under the LPA, upon a liquidation or sale of all or substantially all of the Company’s assets, including through a merger or sale of stock, an affiliate of the Advisor Parent will be entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0 % of remaining net sale proceeds after return of capital contributions to investors in the Company’s initial public offering of common stock plus payment to investors of a 6.0 % cumulative, pre-tax non-compounded annual return on the capital contributed by investors.

None of these distributions has been earned through the date of this Quarterly Report on Form 10-Q and no such participation in net sales proceeds became due and payable during the three months ended March 31, 2025 or 2024.

Termination Fees

Under the LPA, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, an affiliate of the Advisor Parent was entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax, non-compounded annual return to investors in the Company’s initial public offering of common stock.

However, in accordance with the terms of the LPA, in connection with the Internalization and the Company’s termination of the Advisory Agreement, the affiliate of the Advisor Parent deferred its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

NATIONAL HEALTHCARE PROPERTIES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Subordinated Participation in Net Sales Proceeds

Upon a liquidation or sale of all or substantially all of the Company’s assets, including through a merger or sale of stock, the Special Limited Partner will be entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets from the OP equal to 15.0 % of remaining net sale proceeds after return of capital contributions to investors in the Company’s initial public offering of common stock plus payment to investors of a 6.0 % cumulative, pre-tax non-compounded annual return on the capital contributed by investors.

No such participation in net sales proceeds became due and payable during the three or nine months ended September 30, 2024 or 2023.

Any amount of net sales proceeds paid to the Special Limited Partner or any of its affiliates prior to the Company’s listing will reduce dollar for dollar the amount of the subordinated incentive listing distribution described above.

Termination Fees

Under the LPA, upon termination or non-renewal of the advisory agreement with the Advisor, with or without cause, the Special Limited Partner was entitled to receive a promissory note as evidence of its right to receive subordinated termination distributions from the OP equal to 15.0 % of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed plus an amount equal to a 6.0 % cumulative, pre-tax, non-compounded annual return to investors in the Company’s initial public offering of common stock.

However, in accordance with the terms of the LPA, in connection with the Internalization and the Company’s termination of the Advisory Agreement, the Special Limited Partner deferred its right to receive a subordinated distribution upon termination until either a listing on a national securities exchange or other liquidity event occurs.

March 31, 2025

Note 10 — Economic Dependency

3 unchanged sentences

Restricted Share Plan

The Company adopted an employee and director incentive restricted share plan (as amended from time to time, the “RSP”), which provided the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”) to the Company’s directors, officers and employees, employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.

The RSP expired in accordance with its terms in February 2023.

The total number of shares of common stock that may be subject to awards granted under the RSP could not exceed 5.0 % of the Company’s outstanding shares of common stock on a fully diluted basis at any time and in any event could not exceed 4.2 million shares (as such number may be further adjusted for stock splits, stock dividends, combinations and similar events).

Restricted shares vest on a straight-line basis over periods of three to five years and may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

Holders of restricted shares may receive cash distributions prior to the time that the restrictions on the restricted shares have lapsed.

Any distributions payable in shares of common stock are subject to the same restrictions as the underlying restricted shares.

The following table reflects the amount of restricted shares outstanding as of September 30, 2024 and activity for the period presented (as adjusted to reflect the Reverse Stock Split):

Number of Shares of Common Stock Weighted Average Issue Price

Unvested, December 31, 2023 12,911 $ 67.76

Stock dividend 196 56.00

Vested ( 13,107 ) 67.60

Unvested, September 30, 2024 — $ —

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

As of September 30, 2024, the Company did not have any remaining unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

Compensation expense related to restricted shares was $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2024, respectively, and $ 0.2 million and $ 0.7 million for the three and nine months ended September 30, 2023, respectively.

The Company previously adopted an employee and director incentive restricted share plan (the “RSP”), which provided the Company with the ability to grant awards of restricted shares of common stock (“restricted shares”).

The RSP expired in February 2023.

As of March 31, 2025, there were no unvested shares under the RSP plan and the Company did not have any remaining unrecognized compensation cost related to unvested restricted share awards granted under the RSP.

Compensation expense related to restricted shares was $ 0.2 million for the three months ended March 31, 2024.

Other Share-Based Compensation

1 unchanged sentence

There are no restrictions on shares issued in lieu of cash compensation since these payments in lieu of cash relate to fees earned for services performed.

No such shares were issued during the nine months ended September 30, 2024 or 2023.

No such shares were issued during the three months ended March 31, 2025 or 2024.

Note 12 — Accumulated Other Comprehensive Income

The following table illustrates the changes in accumulated other comprehensive income as of and for the period presented:

(In thousands) Unrealized Gain (loss) on Designated Derivative

(In thousands) Unrealized Gain on Designated Derivative

Balance, December 31, 2024

1 unchanged sentence

Amount of gain reclassified from accumulated other comprehensive income ( 3,794 )

Balance, September 30, 2024

Balance, March 31, 2025

Accumulated other comprehensive income predominately relates to the unrealized gains (losses) on designated derivatives, however, as previously discussed in Note 7 — Derivatives and Hedging Activities , previously designated hedges were terminated and the termination costs are being amortized over the term of the hedged item.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Note 13 — Non-controlling Interests

1 unchanged sentence

Balance as of

(In thousands) September 30, 2024 December 31, 2023

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

Series A Preferred Units held by third parties $ 2,578 $ 2,578

4 unchanged sentences

Net loss attributable to non-controlling interests on the Company’s consolidated statements of operations and comprehensive loss are comprised of the following:

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

Three Months Ended March 31,

(in thousands) 2025 2024

4 unchanged sentences

Net loss attributable to non-controlling interests $ ( 54 ) $ —

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

Non-Controlling Interests in the OP

8 unchanged sentences

The remaining rights of the limited partners in the OP are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

During both the three and nine months ended September 30, 2024 and 2023, Series A Preferred Unit holders were paid $ 46,000 and $ 0.1 million, respectively.

During the three months ended March 31, 2025 and 2024, Series A Preferred Unit holders were paid $ 47,000 and $ 46,000 , respectively.

Common OP Units

The Company is the sole general partner and holds substantially all of the Common OP Units.

As of December 31, 2023, the Advisor held 90 partnership units in the OP designated as “Common OP Units”.

In connection with the Internalization, immediately prior to Closing, the Advisor transferred the 90 Common OP Units to the Advisor Parent.

As of September 30, 2024, the Advisor Parent held 90 Common OP Units.

In November 2014, the Company partially funded the purchase of an OMF from an unaffiliated third party by causing the OP to issue 405,908 Common OP Units, with a value of $ 10.1 million, or $ 25.00 per unit, to the unaffiliated third party.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

A holder of Common OP Units has the right to receive cash distributions equivalent to the cash distributions, if any, on the Company’s common stock in an amount retroactively adjusted to reflect the stock dividends, other stock dividends and other similar events.

1 unchanged sentence

Dur ing the nine months ended September 30, 2024 and 2023 , Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

Dur ing the three months ended March 31, 2025 and 2024 , Common OP Unit non-controlling interest holders were no t paid any cash distribu tions.

Stock dividends do not cause the OP to issue additional Common OP Units, rather, the redemption ratio to common stock is adjusted.

The 405,998 Common OP Units outstanding as of September 30, 2024 would be redeemable for 124,161 shares of common stock, giving effect to adjustments for the impact of the stock dividends through January 2024 and the Reverse Stock Split.

The 405,998 Common OP Units outstanding as of March 31, 2025 would be redeemable for 124,161 shares of common stock, giving effect to adjustments for the impact of the stock dividends through January 2024 and the Reverse Stock Split.

Non-Controlling Interests in Property Owning Subsidiaries

4 unchanged sentences

A non-controlling interest is recorded for the investor’s ownership interest in the properties.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table summarizes the activity related to investment arrangements with the unaffiliated third parties:

Distributions

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended September 30,

Third Party Net Investment Amount Non-Controlling Ownership Percentage Net Real Estate Assets Subject to Investment Arrangement Three Months Ended March 31,

Property Name

(Dollar amounts in thousands)

Investment Date September 30, 2024 September 30, 2024 September 30, 2024 December 31, 2023 2024 2023

Investment Date March 31, 2025 March 31, 2025 March 31, 2025 December 31, 2024 2025 2024

Plaza Del Rio Outpatient Medical Campus Portfolio (1)

4 unchanged sentences

The following is a summary of the basic and diluted net loss per share computation for the periods presented and has been retroactively adjusted to reflect the stock dividends and the Reverse Stock Split (see Note 1 — Organization and Note 8 — Stockholders’ Equity for additional details):

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

2024 2023 2024 2023

Three Months Ended March 31,

Net loss attributable to common stockholders (in thousands)

7 unchanged sentences

Series A Preferred Units are non-participating.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

The Company had the following common stock equivalents on a weighted-average basis that were excluded from the calculation of diluted net loss per share attributable to stockholders as their effect would have been antidilutive.

The amounts in the table below have been retroactively adjusted to reflect the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details):

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

2024 2023 2024 2023

Three Months Ended March 31,

Unvested restricted shares (1)

— 17,951 — 23,429

Common OP Units (2)

5 unchanged sentences

(1) Weighted average number of antidilutive unvested restricted shares outstanding for the periods presented.

Th ere were no and 50,871 unvested restricted shares outstanding as of September 30, 2024 and 2023, respectively.

Th ere were zero and 52,428 unvested restricted shares outstanding as of March 31, 2025 and 2024, respectively.

(2) Weighted average number of antidilutive Common OP Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details).

There were 405,998 Common OP Units outstanding as of September 30, 2024 and 2023.

There were 405,998 Common OP Units outstanding as of March 31, 2025 and 2024.

The securities held by the Company are eliminated in consolidation.

(3) Weighted average number of antidilutive Class B Units presented as shares outstanding for the periods presented, at the current redemption rate reflecting adjustments for the effect of the stock dividends and the Reverse Stock Split (see Note 1 — Organization for additional details).

There were 359,250 Class B Units outstanding as of September 30, 2024 and 2023.

These Class B Units were unvested as of September 30, 2024 and 2023 (see Note 9 — Related Party Transactions and Arrangements for additional information).

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

There were 359,250 Class B Units outstanding as of March 31, 2025 and 2024.

These Class B Units were unvested as of March 31, 2025 and 2024 (see Note 9 — Related Party Transactions and Arrangements for additional information).

Note 15 — Segment Reporting

The disclosures below for the three and nine months ended September 30, 2024 and 2023 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes:

The Company has two operating and reportable business segments:

OMFs and SHOPs.

The Company evaluates performance and makes resource allocations based on its two business segments.

The OMF segment primarily consists of facilities leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals, inpatient rehabilitation facilities and skilled nursing facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses.

The disclosures below for the three months ended March 31, 2025 and 2024 are presented for the Company’s two reportable business segments for management and internal financial reporting purposes.

The Company’s CODM is provided financial data on a periodic basis which includes net operating income (as defined below) for each of the reportable business segments.

This serves as the profit or loss measure used by the CODM for performance assessment and resource allocation.

The Company’s CODM is its Chief Executive Officer.

The Company, through its CODM, evaluates performance and makes resource allocations based on its two business segments.

The OMF segment primarily consists of facilities leased to healthcare-related tenants under long-term leases, which may require such tenants to pay a pro rata share of property-related expenses as well as seniors housing properties, hospitals and inpatient rehabilitation facilities under long-term leases, under which tenants are generally responsible to directly pay property-related expenses.

The SHOP segment consists of direct investments in seniors housing properties, primarily providing assisted living, independent living and memory care services, which are operated through engaging independent third-party operators.

Segment Income

The Company evaluates the performance of the combined properties in each segment based on total revenues from tenants, less property operating costs.

As such, this excludes all other items of expense and income included in the financial statements in calculating net loss.

The Company uses segment income to assess and compare property level performance and to make decisions concerning the operation of the properties.

The Company believes that segment income is useful as a performance measure because, when compared across periods, segment income reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net loss.

Segment income excludes certain components from net loss in order to provide results that are more closely related to a property’s results of operations.

Net Operating Income

The Company evaluates the performance of the combined properties in each segment using net operating income (“NOI”) which is defined as total revenues from tenants, less property operating costs.

As such, this excludes all other items of expense and income included in the consolidated financial statements in calculating consolidated income (loss) before income taxes.

The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties.

The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from consolidated income (loss) before income taxes.

NOI excludes certain components from consolidated income (loss) before income taxes in order to provide results that are more closely related to a property’s results of operations.

For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level.

In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.

Segment income presented by the Company may not be comparable to segment income reported by other REITs that define segment income differently.

The following table presents the operating financial information for the Company’s two business segments for the three and nine months ended September 30, 2024 and 2023:

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

NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

The following table presents the operating financial information for the Company’s two business segments for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in thousands) 2025 2024

1 unchanged sentence

Property operating and maintenance 11,169 9,700

Segment income $ 23,647 $ 24,278 $ 73,490 $ 73,415

$ 19,466 $ 24,899

Revenue from tenants $ 55,808 $ 53,700

Property operating and maintenance

Segment income $ 8,886 $ 7,082 $ 26,009 $ 23,952

Compensation related expenses (2)

27,003 27,983

Other property operating and maintenance (3)

19,368 17,462

$ 9,437 $ 8,255

(1) The CODM uses NOI to evaluate performance of the OMF segment as a large portion of the property-level operating expenses is recovered from tenants.

(2) Includes costs incurred for salaries, benefits and other labor related costs.

(3) Includes costs incurred for supplies, management fees, taxes, insurance and overhead.

NATIONAL HEALTHCARE PROPERTIES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Reconciliation to Consolidated Financial Information

A reconciliation of the total reportable segments’ revenue from tenants to consolidated revenue from tenants and the total reportable segments’ income to consolidated net loss attributable to common stockholders is presented below:

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

A reconciliation of the total reportable segments’ NOI to consolidated net loss attributable to common stockholders is presented below:

Three Months Ended March 31,

(in thousands) 2025 2024

Revenue from tenants:

OMFs $ 34,303 $ 33,657 $ 103,573 $ 101,187

SHOPs 54,637 52,029 162,483 157,958

Total consolidated revenue from tenants $ 88,940 $ 85,686 $ 266,056 $ 259,145

Net loss attributable to common stockholders:

Segment income:

Net Operating Income:

OMFs $ 19,466 24,899

SHOPs 9,437 8,255

Total segment income 32,533 31,360 99,499 97,367

28,903 33,154

Impairment charges ( 11,899 ) ( 260 )

Operating fees to related parties

( 6,391 ) ( 6,397 ) ( 19,181 ) ( 19,153 )

Termination fees to related parties

( 8,409 ) — ( 106,650 ) —

Acquisition and transaction related ( 51 ) ( 142 )

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Gain (loss) on sale of real estate investment

1,579 ( 173 ) 1,354 ( 364 )

Interest expense ( 14,529 ) ( 16,383 )

Interest and other income 548 258 1,077 576

Interest and other income (expense)

(Loss) gain on non-designated derivatives

Loss before income taxes

( 1,521 ) ( 15,480 )

Income tax expense

Income tax expense (benefit)

( 1,515 ) ( 15,550 )

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Net loss attributable to common stockholders $ ( 5,019 ) $ ( 19,000 )

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table reconciles the segment activity to consolidated total assets as of the periods presented:

(In thousands) September 30, 2024 December 31, 2023

The following table reconciles investments in real estate, net by segment to consolidated total assets as of the periods presented:

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

Investments in real estate, net:

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Deferred costs, net 18,630 21,269

Accounts receivable, net

$ 8,096 $ 5,850

Total assets $ 1,831,885 $ 1,946,023

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented:

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

Three Months Ended March 31,

(In thousands) 2025 2024

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Note 16 — Commitments and Contingencies

As of September 30, 2024, the Company had seven operating and six direct financing lease agreements.

The seven operating leases have durations, including assumed renewals, ranging from 18.1 years to 83.0 years, excluding an adjacent parking lot lease with a term of 2.0 years.

The Company did not enter into any additional ground leases during the nine months ended September 30, 2024.

As of September 30, 2024, the Company had ROU assets and liabilities of $ 7.6 million and $ 8.1 million, re spectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the Company’s consolidated balance sheets.

As of March 31, 2025, the Company had six operating and five direct financing lease agreements.

The six operating leases have durations, including assumed renewals, ranging from 17.6 years to 36.6 years, excluding an adjacent parking lot lease with a term of 1.5 years.

The Company did not enter into any additional ground leases during the three months ended March 31, 2025.

As of March 31, 2025, the Company had ROU assets and liabilities of $ 6.9 million and $ 7.8 million, re spectively, which are included in operating lease right-of-use assets and operating lease liabilities, respectively, on the Company’s consolidated balance sheets.

In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the adoption of the lease guidance issued in 2019, as well as for new operating leases in the current period, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases.

Because the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 32.4 years and a weighted-average discount rate of 7.35 % as of September 30, 2024.

For each of the three months ended September 30, 2024 and 2023, the Company paid cash of $ 0.2 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million on a straight-line basis in accordance with the current accounting guidance.

For each of the nine months ended September 30, 2024 and 2023, the Company paid cash of $ 0.6 million and recorded expense of $ 0.6 million.

The Company’s ground operating leases have a weighted-average remaining lease term, including assumed renewals, of 29.6 years and a weighted-average discount rate of 7.35 % as of March 31, 2025.

For each of the three months ended March 31, 2025 and 2024, the Company paid cash of $ 0.2 million for amounts included in the measurement of lease liabilities and recorded expense of $ 0.2 million on a straight-line basis in accordance with the current accounting guidance.

The ground operating lease expense is recorded in property operating expenses in the Company’s consolidated statements of operations and comprehensive loss.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

The following table reflects the base cash rental payments due from the Company for the next five years as of September 30, 2024:

The following table reflects the base cash rental payments due from the Company for the next five years as of March 31, 2025:

Future Base Rent Payments

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Total present value of minimum lease payments $ 7,815 $ 4,020

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of September 30, 2024.

(1) The direct finance lease liability is included in accounts payable and accrued expenses on the balance sheet as of March 31, 2025.

The direct financing lease asset is included as part of building and improvements as the land component was not required to be bifurcated under ASU 840.

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In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters.

As of September 30, 2024, there are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.

As of March 31, 2025, there are no material legal or regulatory proceedings pending or known to be contemplated against the Company or its properties.

NATIONAL HEALTHCARE PROPERTIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters.

As of September 30, 2024, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

As of March 31, 2025, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Note 17 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have not been any events that have occurred that would require adjustments to disclosures in the consolidated financial statements except for those listed below:

The Company disposed of one OMF in Indiana subsequent to September 30, 2024 for a contract sales price of $ 2.4 million .

Subsequent to March 31, 2025, the Company disposed of one OMF and three SHOPs for an aggregate contract sales price of $ 9.1 million.

In April 2025, the Company repaid the OMF Warehouse Facility in full in the amount of $ 21.7 million plus unpaid interest and terminated the facility and the two related interest rate caps with a notional of $ 21.7 million.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of National Healthcare Properties, Inc.

(formerly known as Healthcare Trust, Inc.) and the notes thereto.

and the notes thereto.

As used herein, the terms the “Company,” “we,” “our” and “us” refer to National Healthcare Properties, Inc., a Maryland corporation, including, as required by context, National Healthcare Properties Operating Partnership, LP (our “OP”), a Delaware limited partnership, and its subsidiaries.

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These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements.

These risks and uncertainties include the risks associated with the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, including related sanctions and other penalties imposed by the U.S.

and European Union, and the related impact on us, our tenants, operators and the global economy and financial markets;

that any potential future acquisitions by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all.

Some of the additional risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023 (as amended) as well as Part II — Other Information, Item IA — Risk Factors below.

These risks and uncertainties include the risks associated with the internalization of our property management and advisory functions;

the geopolitical instability due to the ongoing military conflicts between Russia and Ukraine, including related impact on us, our tenants, operators and the global economy and financial markets;

the increased economic and political uncertainties due to the tariffs imposed by, or imposed on, the United States and its trading relationships;

and that our ongoing or potential future transactions are subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all.

Some of the additional risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2024 as well as Part II — Other Information, Item IA — Risk Factors below.

We are a real estate investment trust (“REIT”) for U.S.

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We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on outpatient medical facilities and senior housing operating properties.

As of September 30, 2024, we owned 198 properties located in 32 states and comprised of 8.6 million rentable square feet.

As of March 31, 2025, we owned 181 properties (including one land parcel) located in 30 states and comprised of 7.6 million rentable square feet.

Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries.

Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our property manager, Healthcare Trust Properties, LLC (the “Property Manager”);

Prior to the Internalization, the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us.

In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce after terminating the Advisory Agreement;

the Property Manager became our wholly-owned subsidiary as a result of the Internalization and the Property Management Agreement remains in place as an intercompany agreement (see Note 9 — Related Party Transactions and Arrangements in Part I, Item 1 in this Quarterly Report on Form 10-Q).

the Advisor and Property Manager were under common control with AR Global Investments, LLC (the “Advisor Parent”) and these related parties received compensation and fees for providing services to us.

In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce;

the Property Manager became our wholly-owned subsidiary as a result of the Internalization (See Note 1 - Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q).

We operate in two reportable business segments for management and financial reporting purposes:

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In our SHOP segment, we invest in seniors housing properties through the REIT Investment Diversification and Empowerment Act of 2007 structure.

As of September 30, 2024, we had four eligible independent contractors operating 44 SHOPs.

As of March 31, 2025, we had four eligible independent contractors operating 44 SHOPs.

We declared and issued quarterly dividends entirely in shares of our common stock from October 2020 through January 2024.

1 unchanged sentence

On March 26, 2025, we published a new Estimated Per-Share NAV equal to $32.15 as of December 31, 2024.

The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV.

Dividends paid in the form of additional shares of common stock will, all things equal, cause the value of each share of common stock to decline because the number of shares outstanding will increase when dividends paid in stock are issued;

however, because each stockholder will receive the same number of new shares, the total value of our common stockholder’s investment, all things equal, will not change assuming no sales or other transfers.

Since October 2020, we issued an aggregate of approximately 5.2 million shares as stock dividends (as adjusted to reflect the Reverse Stock Split (as defined below)).

No other additional shares of common stock have been issued since October 2020.

The Estimated Per-Share NAV has not been adjusted since publication and will not be adjusted until our board of directors (“Board”) determines a new Estimated Per-Share NAV.

We intend to publish Estimated Per-Share NAV periodically at the discretion of the Board, provided that such estimates will be made at least once annually unless and until we list our common stock.

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For more information regarding the Internalization, including the fees paid therewith, see Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q.

As a result of the Internalization, our termination of the Advisory Agreement and the Property Manager becoming our wholly-owned subsidiary, we will no longer incur the asset management, property management and other fees and expenses that we were obligated to pay to the Advisor and its affiliates prior to the Internalization.

As a result of the Internalization, our termination of the advisory agreement and the Property Manager becoming our wholly-owned subsidiary, we no longer incur the asset management, property management and other fees and expenses that we were obligated to pay to the Advisor and its affiliates prior to the Internalization.

With an internalized workforce, we have incurred and will continue to incur costs for employee compensation and other general and administrative expenses.

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Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 15, 2024, as amended on March 22, 2024.

Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

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See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

The following table presents certain additional information about the properties we owned as of September 30, 2024:

The following table presents certain additional information about the properties we owned as of March 31, 2025:

Portfolio Number

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Total Portfolio 181 7,550,117 $ 2,265,778

(1) Inclusive of leases signed but not yet commenced as of September 30, 2024.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of September 30, 2024.

(3) Gross asset value represents total real estate investments, at cost ($2.5 billion total as of September 30, 2024) net of gross market lease intangible liabilities ($23.5 million total as of September 30, 2024).

(1) Inclusive of leases signed but not yet commenced as of March 31, 2025.

(2) Weighted-average remaining lease term in years is calculated based on square feet as of March 31, 2025.

(3) Gross asset value represents total real estate investments, at cost ($2.3 billion total as of March 31, 2025) net of gross market lease intangible liabilities ($20.0 million total as of March 31, 2025).

Cumulative impairment charges are reflected within gross asset value.

(4) Includes one parcel of land.

As of September 30, 2024, we had 3,919 rentable units in our SHOP segment.

The SHOP segment excludes one closed SHOP with 39 rentable units, one SHOP with 20 units under renovation and land parcel.

As of March 31, 2025, we had 3,939 rentable units in our SHOP segment.

The SHOP segment excludes one closed SHOP with 39 rentable units and a land parcel.

(5) Percentage leased for the OMF segment is presented as of the end of the peri od shown;

percentage leased for the SHOP segment is presented for the duration of the period shown.

Same Store Properties

Information based on Same Store Properties, Acquired Properties and Disposed Properties (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered.

As of September 30, 2024, we owned 198 properties.

There were 187 properties owned for the entire year ended December 31, 2023 and the nine months ended September 30, 2024 (our “Same Store Properties”), including one vacant land parcel.

Since January 1, 2023, we acquired 11 properties (our “Acquired Properties”) and disposed of 15 properties (our “Disposed Properties”).

The following table presents a roll-forward of our properties owned from January 1, 2023 to September 30, 2024:

OMF SHOP Total

Number of properties, January 1, 2023

Acquisition activity during the year ended December 31, 2023

Disposition activity during the year ended December 31, 2023

Number of properties, December 31, 2023

Acquisition activity during the nine months ended September 30, 2024

Disposition activity during the nine months ended September 30, 2024

Number of properties, September 30, 2024

Number of Same Store Properties 142 45 187

Number of Acquired Properties 11 — 11

Number of Disposed Properties 8 7 15

Results of Operations

Comparison of the Three Months Ended September 30, 2024 and 2023

Net loss attributable to common stockholders was $44.1 million and $19.6 million, respectively, for the three months ended September 30, 2024, and 2023.

The following table shows our results of operations for the three months ended September 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended September 30, Increase (Decrease)

Comparison of the Three Months Ended March 31, 2025 and 2024

Net loss attributable to common stockholders was $5.0 million and $19.0 million, respectively, for the three months ended March 31, 2025, and 2024.

The following table shows our results of operations for the three months ended March 31, 2025 and 2024 and the period to period change by line item of the consolidated statements of operations:

Three Months Ended March 31, Increase (Decrease)

(Dollars in thousands) 2025 2024 $

5 unchanged sentences

— 6,366 (6,366)

Termination fees to related parties

8,409 — 8,409

Acquisition and transaction related 51 142 (91)

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(11,965) (1,120) (10,845)

Gain (loss) on sale of real estate investments

Gain on sale of real estate investments

24,989 — 24,989

Operating loss

Operating income (loss)

13,024 (1,120) 14,144

Other income (expense):

Other expense:

Interest expense (14,529) (16,383) 1,854

Interest and other income 548 258 290

Interest and other (expense) income

(Loss) gain on non-designated derivatives

2 unchanged sentences

Loss before income taxes (1,521) (15,480) 13,959

Income tax expense — (157) 157

Income tax expense (benefit)

Net loss (1,515) (15,550) 14,035

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Segment Results — Outpatient Medical Facilities

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the three months ended September 30, 2024 and 2023:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total (4)

Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease) Three Months Ended September 30, Increase (Decrease)

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, Increase (Decrease) to NOI

(in thousands) 2025 2024 $

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Property operating and maintenance 11,169 9,700 1,469 15.1 %

Segment income $ 22,889 $ 23,206 $ (317) $ 472 $ 7 $ 465 $ 284 $ 1,065 $ (781) $ 23,645 $ 24,278 $ (633)

$ 19,466 $ 24,899 $ (5,433) (21.8) %

(1) Our OMF segment included 142 Same Store Properties.

(2) Our OMF segment included 11 Acquired Properties.

(3) Our OMF segment included eight Disposed Properties.

(4) Our OMF segment included 153 total properties.

Number of Properties at March 31,

Occupancy for the Three Months Ended March 31,

2025 2024 2025 2024

Total Portfolio

136 160 90.5 % 90.5 %

Revenue from tenants primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements.

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Pursuant to many of our lease agreements in our OMFs, tenants are required to pay their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, in addition to base rent.

Revenue from Tenants

During the three months ended September 30, 2024, revenue from tenants decreased by $0.6 million in our OMF segment as compared to the three months ended September 30, 2023, which was primarily driven by a $1.3 million decrease in revenue from tenants associated with our Disposed Properties, partially offset by an increase in revenue from tenants of $1.4 million from our Same Store Properties.

The increase in our Same Store properties revenue from tenants was primarily due to increased expense reimbursements from higher expenses in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Property Operating and Maintenance

Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees.

During the three months ended September 30, 2024, property operating and maintenance expenses increased by $1.3 million in our OMF segment as compared to the three months ended September 30, 2023.

This increase was primarily driven by our Same Store Properties, partially offset by our Disposed Properties.

The increase in property operating and maintenance expenses from our Same Store properties was primarily the result of the impacts of inflation on utility and maintenance costs, which were largely reimbursed by tenants.

Property operating and maintenance expenses reflect the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees.

The OMF net operating income (“NOI”) decrease for the three months ended March 31, 2025 over the same period in 2024 was primarily driven by the disposition of 24 OMFs subsequent to March 31, 2024.

Segment Results — Seniors Housing Operating Properties

The following table presents the revenue and property operating and maintenance expenses and the period to period change within our SHOP segment for the three months ended September 30, 2024 and 2023:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total (4)

The following table presents the revenue and property operating and maintenance expenses and the period to period change within our SHOP segment for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, Increase (Decrease) to NOI

(in thousands) 2025 2024 $ %

1 unchanged sentence

Property operating and maintenance 46,371 45,445 926 2.0 %

Segment income $ 8,594 $ 6,937 $ 1,657 $ — $ — $ — $ 292 $ 145 $ 147 $ 8,886 $ 7,082 $ 1,804

(1) Our SHOP segment included 45 Same Store Properties (including one land parcel).

(2) Our SHOP segment did not include any Acquired Properties.

(3) Our SHOP segment included seven Disposed Properties.

(4) Our SHOP segment included 45 total properties (including one land parcel).

Revenue from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

$ 9,437 $ 8,255 $ 1,182 14.3 %

Number of Properties at March 31,

Occupancy for the Three Months Ended March 31,

2025 2024 2025 2024

Total Portfolio (1)

45 48 78.8 % 75.6 %

(1) Includes two and one land parcels for the three months ended March 31, 2025 and 2024, respectively.

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents depending on the level of care required, as well as fees associated with other ancillary services.

Property operating and maintenance expenses relate to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third-party operators and costs associated with maintaining the physical site.

Revenue from Tenants

During the three months ended September 30, 2024, revenue increased by $2.6 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily from an increase in revenue from tenants of $3.5 million from our Same Store Properties, partially offset by a $0.9 million decrease in revenue from tenants associated with our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Additionally, we offered more rent concessions to drive occupancy during the three months ended September 30, 2024, which amounted t o $1.9 million as compared to $0.8 million during the three months ended September 30, 2023 .

Property Operating and Maintenance

During the three months ended September 30, 2024, property operating and maintenance expenses increased by $0.8 million in our SHOP segment as compared to the three months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $1.8 million in our Same Store Properties, partially offset by a decrease of $1.0 million from our Disposed Properties.

Our Same Store Properties property operating and maintenance expenses increased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily from $1.2 million of i ncreased costs for wages, including overtime, training and bonus wages paid to employees of our third party operators, partially offset by decreased costs for contract labor of $0.2 million.

The SHOP NOI increase for the three months ended March 31, 2025 over the same period in 2024 was primarily due to positive trends in revenue driven by occupancy gains and continued expense management, partially offset by the disposition of two SHOPs subsequent to March 31, 2024.

Other Results of Operations

Impairment Charges

We recorded $8.8 million of impairment charges during the three months ended September 30, 2024.

This impairment was recorded to reduce the carrying value of a held-for-use OMF to its estimated fair value .

This OMF has been marketed for sale since June 2024 .

We did not record any impairment charges in the three months ended September 30, 2023.

We recorded $11.9 million of impairment charges during the three months ended March 31, 2025, related primarily to two held-for-use SHOPs ($11.2 million) and one held-for-use OMF ($0.7 million).

These properties were impaired to their contractual sales price as determined by their purchase and sale agreements and were subsequently sold in April 2025 or expected to be sold.

See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges.

Operating Fees to Related Parties

Prior to the consummation of the Internalization, the Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis.

Operating fees to these related parties were consistent at $6.4 million for the three months ended September 30, 2024 and 2023, including asset management fees of $5.5 million and property management fees of $0.9 million for both the three months ended September 30, 2024 and 2023.

There were no incentive fees incurred in either of the three months ended September 30, 2024 or 2023.

Following the consummation of the Internalization, we no longer have to pay the above-referenced fees to the related parties, but we will incur expenses related to the compensation and benefits of our officers, employees and consultants, as well as overhead expenses, previously paid by the related parties managing our business and operations, which expenses will be recorded in our general and administrative expenses going forward.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements.

Termination Fees to Related Parties

We recorded $8.4 million of termination fees to related parties in the three months ended September 30, 2024 as a result of our termination of the Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Prior to the consummation of the Internalization, our former Advisor and the Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis.

Following the consummation of the Internalization, we are no longer paying the above-referenced fees to the related parties.

Operating fees to these related parties were 6.4 million for the three months ended March 31, 2024.

No operating fees to related parties were incurred during the three months ended March 31, 2025 as a result of the Internalization.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements to our former Advisor.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses increased by $5.0 million to $5.2 million for the three months ended September 30, 2024 as compared to $0.2 million for the three months ended September 30, 2023.

This increase was mainly due to $4.7 million of advisory, legal and other professional costs and non-recurring employee transition expenses directly related to the Internalization.

Acquisition and transaction related expenses were relatively consistent for the three months ended March 31, 2025 and 2024.

General and Administrative Expenses

General and administrative expenses increased by $0.7 million to $5.5 million for the three months ended September 30, 2024 compared to $4.8 million for the three months ended September 30, 2023, which includes $3.0 million and $2.8 million, respectively, for the three months ended September 30, 2024 and September 30, 2023, incurred in expense reimbursements.

The increase in general and administrative expenses was also attributable to $0.4 million of employee compensation expenses incurred for the three months ended September 30, 2024.

General and administrative expenses decreased by $1.6 million to $5.2 million for the three months ended March 31, 2025 from $6.8 million for the three months ended March 31, 2024, primarily due to higher expense reimbursements to the former Advisor for the three months ended March 31, 2024, which included $0.7 million of severance costs for employees of the Advisor, partially offset by the lower professional fees incurred for the three months ended March 31, 2025 after the Internalization .

Depreciation and Amortization Expenses

Depreciation and amortization expense decreased by $0.1 million to $20.7 million for the three months ended September 30, 2024 from $20.8 million for the three months ended September 30, 2023.

Gain (Loss) on Sale of Real Estate Investments

During the three months ended September 30, 2024, we disposed of seven OMFs, one SHOP and one land parcel for an aggregate contract sales price of $79.3 million and recorded an aggregate gain on sale of $1.6 million.

These seven OMFs had been previously impaired by $10.6 million in the year ended December 31, 2022.

During the three months ended September 30, 2023, we did not dispose of any properties.

However, we did record a loss on sale of $0.2 million in the three months ended September 30, 2023, related to various settlements of liens and accruals on formerly disposed properties.

Depreciation and amortization expense increased by $3.0 million to $23.7 million for the three months ended March 31, 2025 from $20.7 million for the three months ended March 31, 2024.

The increase was primarily attributable to amortization of deferred leasing commissions.

Gain on Sale of Real Estate Investments

During the three months ended March 31, 2025, we disposed of twelve OMFs for an aggregate contract sales price of $168.4 million and recorded an aggregate gain on sale of $25.0 million.

During the three months ended March 31, 2024, we did not dispose of any properties.

Interest Expense

Interest expense increased by $2.3 million to $18.0 million for the three months ended September 30, 2024 from $15.7 million for the three months ended September 30, 2023.

The increase in interest expense was mainly due to higher average balances of our indebtedness during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

As of September 30, 2024, our outstanding debt obligations were $1.2 billion at a weighted average interest rate of 5.61% per year.

As of September 30, 2023, we had total borrowings of $1.2 billion, at a weighted average interest rate of 5.49% per year.

The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.

Interest expense decreased by $1.9 million to $14.5 million for the three months ended March 31, 2025 from $16.4 million for the three months ended March 31, 2024.

The decrease in interest expense was mainly due to lower average balances of our indebtedness and lower weighted average interest rates during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, and the proceeds of $1.5 million in connection to the partial unwind of an interest rate swap.

In conjunction with the partial unwind, the Company accelerated the reclassification of gains of $1.5 million from other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur.

This gain was recorded as a reduction in interest expense on its consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

Our interest expense in future periods will vary based on our level of future borrowings and the cost of borrowings, among other factors (including the impact of variable rates to the extent such borrowings are not hedged).

Continued high interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Interest and Other Income

Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other income was approximately $0.5 million and $0.3 million, respectively, for the three months ended September 30, 2024 and 2023.

Interest and other income increased in the three months ended September 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Interest and Other (Expense) Income

Interest and other (expense) income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other (expense) income was relatively flat for the three months ended March 31, 2025 and 2024.

Gain (loss) on Non-Designated Derivatives

The gain (loss) in the three months ended September 30, 2024 and 2023 on non-designated derivative instruments related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our credit facilities, which have floating interest rates.

The gain (loss) in the three months ended March 31, 2025 and 2024 on non-designated derivative instruments related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with our credit facilities, which have floating interest rates.

The relevant amounts in each period represent the change in value and any cash received on the non-designated derivatives.

Income Tax Expense

Income Tax Expense (Benefit)

Income taxes generally relate to our SHOPs, which are leased to our TRS.

We recorded an income tax expense of approximately nil and $0.2 million for the three months ended September 30, 2024 and 2023, respectively.

We recorded an income tax expense of approximately $0.1 million for the three months ended March 31, 2024 .

Income tax expense for the three months ended March 31, 2025 was not material.

Because of our TRS’s recent operating history of losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of our SHOP assets, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets;

thus we have recorded a 100% valuation allowance on our net deferred tax assets through September 30, 2024.

thus we have recorded a 100% valuation allowance on our net deferred tax assets through March 31, 2025.

If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive loss.

Allocation for Preferred Stock Distributions

Allocation for preferred stock was $3.5 million for the three months ended September 30, 2024 and 2023.

Allocation for preferred stock was $3.5 million for each of the three months ended March 31, 2025 and 2024.

These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and Series B Preferred Stock.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Net loss attributable to common stockholders was $183.1 million and $57.8 million, respectively, for the nine months ended September 30, 2024 and 2023.

The following table shows our results of operations for the nine months ended September 30, 2024 and 2023 and the period to period change by line item of the consolidated statements of operations:

Nine Months Ended September 30, Increase (Decrease)

(in thousands) 2024 2023

Revenue from tenants $ 266,056 $ 259,145 $ 6,911

Operating expenses:

Property operating and maintenance 166,557 161,778 4,779

Impairment charges 11,498 — 11,498

Operating fees to related parties

19,181 19,153 28

Termination fees to related parties

106,650 — 106,650

Acquisition and transaction related 5,686 384 5,302

General and administrative 16,938 14,105 2,833

Depreciation and amortization 63,386 61,520 1,866

Total expenses

389,896 256,940 132,956

Operating (loss) income before loss on sale of real estate investments (123,840) 2,205 (126,045)

Gain (loss) on sale of real estate investments

1,354 (364) 1,718

Operating (loss) income (122,486) 1,841 (124,327)

Other income (expense):

Interest expense (52,142) (50,208) (1,934)

Interest and other income

1,077 576 501

Gain on non-designated derivatives 449 510 (61)

Total other expenses

(50,616) (49,122) (1,494)

Loss before income taxes (173,102) (47,281) (125,821)

Income tax expense (135) (244) 109

Net loss (173,237) (47,525) (125,712)

Net loss attributable to non-controlling interests 529 45 484

Allocation for preferred stock (10,350) (10,349) (1)

Net loss attributable to common stockholders $ (183,058) $ (57,829) $ (125,229)

Segment Results — Outpatient Medical Facilities

The following table presents the revenue and property operating and maintenance expense and the period to period change within our OMF segment for the nine months ended September 30, 2024 and 2023:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease) Nine Months Ended September 30, Increase (Decrease)

(in thousands) 2024 2023 2024 2023 2024 2023 2024 2023

Revenue from tenants $ 98,197 $ 96,231 $ 1,966 $ 2,966 $ 1,176 $ 1,790 $ 2,410 $ 3,780 $ (1,370) $ 103,573 $ 101,187 $ 2,386

Property operating and maintenance 29,943 27,056 2,887 302 108 194 (162) 608 (770) 30,083 27,772 2,311

Segment income $ 68,254 $ 69,175 $ (921) $ 2,664 $ 1,068 $ 1,596 $ 2,572 $ 3,172 $ (600) $ 73,490 $ 73,415 $ 75

_______________

(1) Our OMF segment included 142 Same Store Properties.

(2) Our OMF segment included 11 Acquisition Properties.

(3) Our OMF segment included eight Disposed Properties.

(4) Our OMF segment included 153 total properties.

Revenue from tenants primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements.

These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses in our OMF segment.

Revenue from Tenants

During the nine months ended September 30, 2024, revenue from tenants increased by $2.4 million in our OMF segment as compared to the nine months ended September 30, 2023, primarily as a result of an increase in revenue from tenants of $2.0 million from our Same Store Properties and $1.8 million from our Acquisition Properties, partially offset by a $1.4 million decrease in revenue from tenants associated with our Disposed Properties.

The increase in our Same Store Properties revenue from tenants was primarily driven by an increase of operating expense reimbursement revenue from increased property, operating and maintenance expenses, as well as from higher occupancy in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Property Operating and Maintenance

Property operating and maintenance expenses reflect the costs associated with our properties, including real estate taxes, utilities, repairs, maintenance, and unaffiliated third-party property management fees.

During the nine months ended September 30, 2024, property operating and maintenance costs in our OMF segment increased by $2.3 million as compared to the same period last year, primarily as a result of increased costs from our Same Store Properties of $2.9 million and our Acquired Properties of $0.2 million, partially offset by a decrease from our Disposed Properties of $0.8 million.

The increase in property operating and maintenance expenses from our Same Store properties is primarily the result of the impacts of inflation on utility and maintenance costs, which are largely reimbursed by tenants.

Segment Results — Seniors Housing - Operating Properties

The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the nine months ended September 30, 2024 and 2023:

Same Store (1)

Acquisitions (2)

Dispositions (3)

Segment Total

The following table presents a reconciliation of our net cash provided by operations from our net loss for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31, Increase

(in thousands)

Revenue from tenants $ 155,184 $ 147,149 $ 8,035 $ — $ — $ — $ 7,299 $ 10,809 $ (3,510) $ 162,483 $ 157,958 $ 4,525

Property operating and maintenance 129,558 123,417 6,141 — — — 6,916 10,589 (3,673) 136,474 134,006 2,468

Segment income $ 25,626 $ 23,732 $ 1,894 $ — $ — $ — $ 383 $ 220 $ 163 $ 26,009 $ 23,952 $ 2,057

_______________

(1) Our SHOP segment included 45 Same Store Properties (including one land parcel).

(2) Our SHOP segment did not include any Acquired Properties.

(3) Our SHOP segment included seven Disposed Properties.

(4) Our SHOP segment included 45 total properties (including one land parcel).

Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents in our SHOPs depending on the level of care required, as well as fees associated with other ancillary services.

Property operating and maintenance expenses relate to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third-party operators, and costs associated with maintaining the physical site.

Revenue from Tenants

During the nine months ended September 30, 2024, revenue from tenants increased by $4.5 million in our SHOP segment as compared to the nine months ended September 30, 2023, primarily from an increase in revenue from tenants of $8.0 million for our Same Store Properties, partially offset by a $3.5 million decrease in revenue from tenants associated with our Disposed Properties.

The increase to our Same Store properties revenue from tenants was primarily driven by higher leasing rates and higher occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

These increases were partially offset by $3.2 million of increased rent concessions offered to drive occupancy during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Property Operating and Maintenance

During the nine months ended September 30, 2024, property operating and maintenance expenses increased by $2.5 million in our SHOP segment as compared to the nine months ended September 30, 2023, primarily due to an increase in property operating and maintenance expenses of $6.1 million from our Same Store Properties, partially offset by a decrease of $3.7 million from our Disposed Properties.

Our Same Store properties operating and maintenance expenses increased in the nine months ended September 30, 2024 compared to the same period last year, primarily from (i) $4.6 million of increased costs for overtime, training and bonus wages paid to employees of our third party operators, (ii) $0.5 million of increased management fees paid to our third party operators, (iii) $1.2 million of higher insurance expense and (iv) the effects of inflation which raised the general costs of food, supplies and utilities generally.

These increases to property operating and maintenance expenses were partially offset by decreased costs for contract labor of $0.6 million.

Other Results of Operations

Impairment Charges

We recorded $11.5 million of impairment charges during the nine months ended September 30, 2024 on two held-for-use OMFs and one SHOP which was disposed in the nine months ended September 30, 2024.

Two held-for-use OMFs were impaired by $11.2 million and the disposed SHOP was impaired by $0.3 million.

We did not record any impairment charges during the nine months ended September 30, 2023.

See Note 3 — Real Estate Investments, Net to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on the impairment charges for the nine months ended September 30, 2024 and 2023.

Operating Fees to Related Parties

Prior to the consummation of the Internalization, the Advisor and Property Manager were paid for asset management and property management services for managing our properties on a day-to-day basis.

Operating fees to these related parties were consistent at $19.2 million for each of the nine months ended September 30, 2024 and 2023, including asset management fees of $16.4 million for both the nine months ended September 30, 2024 and 2023 and property management fees of $2.8 million and $2.8 million for the nine months ended September 30, 2024 and 2023, respectively.

There were no incentive fees incurred in either of the nine months ended September 30, 2024 or 2023.

See Note 9 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q which provides detail on our fees and expense reimbursements.

Termination Fees to Related Parties

We recorded $106.7 million of termination fees to related parties in the nine months ended September 30, 2024 as a result of our termination of the Advisory Agreement with the Advisor and transition to self-management through the Internalization.

Acquisition and Transaction Related Expenses

Acquisition and transaction related expenses increased by $5.3 million, to $5.7 million for the nine months ended September 30, 2024 from $0.4 million for the nine months ended September 30, 2023.

This increase was due to $4.7 million of advisory, legal and other professional costs and non-recurring employee transition expenses directly related to the Internalization.

General and Administrative Expenses

General and administrative expenses increased by $2.8 million to $16.9 million for the nine months ended September 30, 2024 compared to $14.1 million for the nine months ended September 30, 2023, which includes $10.0 million and $7.6 million, respectively, for the nine months ended September 30, 2024 and 2023, incurred in expense reimbursements.

The increase in general and administrative expenses was primarily attributable to certain severance and other compensation reimbursement payments incurred in the nine months ended September 30, 2024 made to the Advisor prior to the Internalization, as well as $0.4 million of employee compensation expenses incurred for the nine months ended September 30, 2024 .

Depreciation and Amortization Expenses

Depreciation and amortization expense increased by $1.9 million to $63.4 million for the nine months ended September 30, 2024 as compared with $61.5 million for the nine months ended September 30, 2023.

Gain (Loss) on Sale of Real Estate Investments

During the nine months ended September 30, 2024, we disposed of seven OMFs, two SHOPs and one land parcel for an aggregate contract sales price of $82.6 million and recorded an aggregate gain on sale of $1.4 million.

One of the SHOPs was impaired during the nine months ended September 30, 2024 by $0.3 million, and had been previously impaired by a cumulative total of $2.3 million in the years ended December 31, 2023 and 2022.

The seven OMFs had been previously impaired by $10.6 million in the year ended December 31, 2022.

During the nine months ended September 30, 2023, we disposed of four SHOPs and one OMF for an aggregate contract sales price of $13.8 million.

Two of the four disposed SHOPs were previously impaired by $15.1 million in the year ended December 31, 2022.

These dispositions resulted in an aggregate loss on sale of $0.4 million for the nine months ended September 30, 2023.

Interest Expense

Interest expense increased by $1.9 million to $52.1 million for the nine months ended September 30, 2024 from $50.2 million for the nine months ended September 30, 2023.

The increase in interest expense was mainly due to higher average balances of amounts outstanding under our indebtedness during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

As of September 30, 2024, our outstanding debt obligations were $1.2 billion, at a weighted average interest rate of 5.61% per year.

As of September 30, 2023, we had total borrowings of $1.2 billion, at a weighted average interest rate of 5.49% per year.

The weighted-average interest rates include the impact of our “pay-fixed” interest rate swaps which are designated as hedges on a portion of our variable-rate borrowings.

Continued high interest rates may adversely impact the terms on which we may borrow in the future and thus our results of operations.

Interest and Other Income

Interest and other income includes income from our investment securities and interest income earned on cash and cash equivalents held during the period.

Interest and other income was approximately $1.1 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Interest and other income increased in the nine months ended September 30, 2024 due to $0.4 million of excess insurance reimbursement, as well as higher interest rates on, and balances of, our cash accounts.

Gain on Non-Designated Derivatives

Gain on non-designated derivative instruments for the nine months ended September 30, 2024 and 2023 related to interest rate caps that are designed to protect us from adverse interest rate changes in connection with the Fannie Mae Master Credit Facilities, which have floating interest rates.

Income Tax Expense

Income taxes generally relate to our SHOPs, which are leased to our TRS.

We recorded an income tax expense of approximately $0.1 million and 0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

thus we have recorded a 100% valuation allowance on our net deferred tax assets through September 30, 2024.

Allocation for Preferred Stock

Allocation for preferred stock was $10.4 million for the nine months ended September 30, 2024 and 2023.

These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and Series B Preferred Stock.

Cash Flows from Operating Activities

The following table presents a reconciliation of our net cash provided by operations from our net loss for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Cash flows from operating activities:

Net loss $ (173,237) $ (47,525)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 63,386 61,520

Amortization of deferred financing costs 2,519 5,954

(Accretion) amortization of terminated swap (1,218) (2,660)

Amortization of mortgage premiums and discounts, net 67 69

Accretion of market lease and other intangibles, net (822) (675)

Bad debt expense 914 909

Equity-based compensation 613 689

(Gain) loss on sale of real estate investments (1,354) 364

Cash received from non-designated derivative instruments 5,405 3,866

Gain on non-designated derivative instruments (449) (510)

Impairment charges 11,498 —

Changes in assets and liabilities:

Straight-line rent receivable (360) (938)

Prepaid expenses and other assets (1,338) (4,180)

Deferred tax allowance 2,126 —

Accounts payable, accrued expenses and other liabilities 6,314 (1,504)

Deferred rent (364) 979

2025 2024 (Decrease)

Cash, cash equivalents and restricted cash, beginning of period $ 74,095 $ 91,316 $ (17,221)

Net cash (used in) provided by operating activities (21,229) 2,543 (23,772)

$ (86,300) $ 16,358

The level of cash flows used in or provided by operating activities is affected by, among other things, the number of properties owned, the performance of those properties, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments and the level of operating expenses.

Cash Flows from Investing Activities

The following table presents our net cash used in investing activities for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Net cash provided by (used in) investing activities 78,043 (12,216) 90,259

Net cash used in financing activities (4,501) (5,229) 728

Cash, cash equivalents and restricted cash, end of period $ 126,408 $ 76,414 $ 49,994

Cash Flows from Operating Activities

Cash flows provided by operating activities decreased by $23.8 million during the three months ended March 31, 2025 compared to the same period in 2024, primarily due to full repayment of the $30.3 million promissory note issued to the Advisor Parent in connection with the Internalization, which was repaid in full in January 2025.

Cash Flows from Investing Activities

Property acquisitions $ (5,606) $ (35,261)

Capital expenditures (16,400) (13,998)

Investments in non-designated interest rate caps (1,709) (4,580)

Proceeds from sales of real estate investments 82,278 4,803

Cash provided by (used in) investing activities

$ 58,563 $ (49,036)

Cash Flows from Financing Activities

The following table presents our net cash provided by financing activities for the nine months ended September 30, 2024 and 2023:

(in thousands) Nine Months Ended September 30,

Cash flows provided by investing activities increased by $90.3 million during the three months ended March 31, 2025 compared to the same period in 2024, primarily due to proceeds from the sale of 12 held-for-use OMFs during the three months ended March 31, 2025 .

Cash Flows from Financing Activities

Payments on credit facilities (4,327) (199,160)

Proceeds from credit facilities 6,960 20,000

Proceeds from mortgage notes payable — 240,000

Payments on mortgage notes payable (879) (850)

Proceeds from termination of derivative instruments — 5,413

Payments of deferred financing costs (199) (7,774)

Proceeds from promissory note 30,267 —

Contributions from non-controlling interests — 284

Distributions paid on Series A Preferred Stock (5,501) (5,500)

Distributions paid on Series B Preferred Stock (4,849) (4,849)

Distributions to non-controlling interest holders (139) (138)

Net cash provided by financing activities

21,333 47,426

Cash flows used in financing activities decreased by $0.7 million during the three months ended March 31, 2025 compared to the same period in 2024, primarily due to proceeds received from the partial unwind of an interest rate swap.

Liquidity and Capital Resources

Our existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), the repayment of the Promissory Note (as discussed below) and distributions to holders of our Series A Preferred Stock and Series B Preferred Stock.

Our existing principal demands for cash are to fund acquisitions, capital expenditures, the payment of our operating and administrative expenses, debt service obligations (including principal repayment), and distributions to holders of our Series A Preferred Stock and Series B Preferred Stock.

We closely monitor our current and anticipated liquidity position relative to our current and anticipated demands for cash and believe that we have sufficient current liquidity to meet our financial obligations for at least the next twelve months.

Our future liquidity requirements and available liquidity, however, depend on many factors, such as recent and continuing increases in inflation, labor shortages, supply chain disruptions and higher property insurance, property tax and interest rates, all of which have and may continue to have adverse impacts on our results of operations and thus ultimately our liquidity.

Moreover, these adverse impacts, as well as the ongoing wars in Ukraine, Israel and related sanctions, may also impact our tenant and residents’ ability to pay rent and thus our cash flows.

We expect to fund our future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our operating activities, potential future advances under our Fannie Mae Master Credit Facilities and OMF Warehouse Facility, net cash provided by our property dispositions (as discussed below) and potential new financings utilizing certain of our currently unencumbered properties.

As of September 30, 2024, we had $32.9 million of cash and cash equivalents.

Moreover, these adverse impacts, as well as the increased economic and political uncertainties due to the ongoing wars in Ukraine, Israel and related sanctions and the tariffs imposed by, or imposed on, the United States and its trading relationships, may also adversely impact our tenants’ and residents’ ability to pay rent and thus our cash flows.

We expect to fund our future short-term operating liquidity requirements, including distributions to holders of Series A Preferred Stock and Series B Preferred Stock, through a combination of current cash on hand, net cash provided by our operating activities, potential future advances under our Fannie Mae Master Credit Facilities, net cash provided by our property dispositions (as discussed below) and potential new financings utilizing certain of our currently unencumbered properties.

As of March 31, 2025, we had $71.4 million of cash and cash equivalents.

The Barclays OMF Loan Agreement requires us to maintain a minimum balance of cash and cash equivalents of $12.5 million at all times.

Internalization and the Promissory Note

Pursuant to the merger agreement dated August 6, 2024 (the “Internalization Agreement”) effecting the Internalization, (i) the outstanding membership interests of the Advisor were converted into the right to receive from us an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate Base Management Fee (as defined in the Advisory Agreement) that we would have been required to pay to the Advisor during the remaining three month notice period required to terminate the Advisory Agreement, and (y) a property management fee of $2.9 million, representing the aggregate Management Fees (as defined in the Property Management Agreement) that we would have been required to pay to the Property Manager through the current term of the Property Management Agreement, subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million).

Internalization

Pursuant to the merger agreement dated August 6, 2024 (the “Internalization Agreement”) effecting the Internalization, (i) the outstanding membership interests of the Advisor were converted into the right to receive from us an internalization fee of $98.2 million and (ii) the Advisor Parent received (x) an asset management fee of $5.5 million, representing the aggregate base management fee that we would have been required to pay to our former Advisor during the remaining three month notice period required to terminate the advisory agreement, and (y) a property management fee of $2.9 million, representing the aggregate management fees that we would have been required to pay to the Property Manager through the current term of the property management agreement, subject to certain other adjustments (collectively, the “Closing Payments” in an aggregate amount of $106.6 million).

Because the Closing Payments exceeded our Available Cash (as defined in the Internalization Agreement), we paid the Advisor Parent aggregate cash consideration of $75.0 million (such cash amount, the “Closing Date Cash Consideration”), and the Company issued to the Advisor Parent an unsecured promissory note (the “Promissory Note”) in a principal amount of $30.3 million, equal to the difference between the Closing Date Cash Consideration and the Closing Payments .

The Promissory Note is a senior unsecured obligation and ranks equal in right of payment with all of our existing and future indebtedness.

The Promissory Note bears interest per annum of Term SOFR (as defined in the Promissory Note) plus 1.25% until January 1, 2025 and Term SOFR plus 3.25% on and after January 1, 2025, with such interest payable monthly.

Beginning on January 2, 2025, we will be required to make monthly payments of principal to the extent of our available cash existing on the applicable payment date.

The Promissory Note matures on June 28, 2025 and may be prepaid, in whole or in part, prior to the maturity date without any pre-payment penalties.

As of September 30, 2024, the full principal amount under the Promissory Note was outstanding.

Following the Internalization, we are no longer required to pay asset management and property management fees to the Advisor Parent.

We paid total asset management fees of $5.5 million and $16.4 million, respectively, during the three and nine months ended September 30, 2024 and total property management fees, including capitalized leasing commissions, of $1.1 million and $3.6 million, respectively, during the three and nine months ended September 30, 2024, exclusive of the asset management fee and property management fee paid to the Advisor Parent as part of the Closing Payments discussed above.

As of September 30, 2024, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 46.1%.

As of March 31, 2025, our total debt leverage ratio (total debt divided by total gross asset value) was approximately 44.6%.

Net debt totaled $1.0 billion, which represents gross debt ($1.1 billion) less cash and cash equivalents ($71.4 million).

1 unchanged sentence

Cumulative impairment charges are reflected within gross asset value.

As of September 30, 2024, we had total gross borrowings of $1.2 billion, at a weighted-average interest rate of 5.61% and a weighted-average remaining term of 4.4 years.

As of March 31, 2025, we had total gross borrowings of $1.1 billion, at a weighted-average interest rate of 5.40% and a weighted-average remaining term of 3.9 years.

The weighted-average interest rate includes the impact of “pay-fixed” swaps that are designated as hedging instruments on a portion of our variable-rate debt, but does not include the impact of our non-designated interest rate caps (discussed below).

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.01% as of September 30, 2024.

As of September 30, 2024, the carrying value of our real estate investments, at cost was $2.5 billion, with $1.3 billion of this asset value pledged as collateral for mortgage notes payable and $650.4 million of this asset value pledged to secure advances under our credit facilities.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our total gross borrowings was 5.1% as of March 31, 2025.

As of March 31, 2025, the carrying value of our real estate investments, at cost was $2.3 billion, with $1.2 billion of this asset value pledged as collateral for mortgage notes payable and $655.1 million of this asset value pledged to secure advances under our credit facilities.

These real estate assets are not available to satisfy other debts and obligations, or to serve as collateral with respect to new indebtedness, as applicable, unless the existing indebtedness associated with the property is satisfied or the property is removed from the borrowing base of the credit facilities, which would impact availability thereunder.

Unencumbered real estate investments, at cost as of September 30, 2024 was $523.4 million.

Unencumbered real estate investments, at cost as of March 31, 2025 was $427.0 million.

There can be no assurance as to the amount of liquidity we would be able to generate from leveraging these unencumbered real estate investments, if we are able to leverage them at all.

Mortgage Notes Payable

As of September 30, 2024, we had $828.0 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap at a weighted-average annual interest rate of 4.60% and a weighted-average remaining term of 5.4 years.

Future scheduled principal payments on our mortgage notes payable for the remainder of 2024 and 2025 are $0.3 million and $13.3 million, respectively.

During the nine months ended September 30, 2024, we entered into the BMO CPC Mortgage Loan in connection with a four-property acquisition also completed in the nine months ended September 30, 2024.

The mortgage has a principal balance of $7.5 million, bears interest at an annual fixed rate of 6.84% and matures in February 2034 with no principal amounts due until that time.

As of March 31, 2025, we had $721.0 million in mortgage notes payable outstanding, all of which is either fixed-rate or effectively fixed through our interest rate swap at a weighted-average annual interest rate of 4.63% and a weighted-average remaining term of 5.1 years.

During the three months ended March 31, 2024, we entered into the BMO CPC Mortgage Loan in connection with a four-property acquisition also completed in the three months ended March 31, 2025.

The mortgage has a principal balance of $7.5 million, bears interest at an annual fixed rate of 6.84% and matures in March 2034 with no principal amounts due until that time.

Credit Facilities

As of September 30, 2024, $363.7 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 7.91% and had a weighted-average remaining term of 2.1 years.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.94% as of September 30, 2024.

Fannie Mae Master Credit Facilities

As of September 30, 2024, $342.0 million was outstanding under our Fannie Mae Master Credit Facilities which bore interest at a weighted-average annual rate of 7.89%.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on the Fannie Mae Master Credit Facilities was 5.90% as of September 30, 2024.

We may request future advances under the Fannie Mae Master Credit Facilities by adding eligible properties to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

We do not expect to draw any further amounts on the Fannie Mae Master Credit Facilities.

Borrowings under the Fannie Mae Master Credit Facilities bear annual interest at a rate that varies on a monthly basis and is equal to the sum of the current SOFR for one month U.S.

dollar-denominated deposits and a spread (2.41% and 2.46% for the Capital One Facility and the KeyBank Facility, respectively) with a combined floor of 2.62%.

The Fannie Mae Master Credit Facilities mature on November 1, 2026.

Future scheduled principal payments on our Fannie Mae Master Credit Facilities for the remainder of 2024 and 2025 are $1.4 million and $5.8 million, respectively.

In the year ended December 31, 2023, we provided cash deposits totaling $11.8 million to Fannie Mae because the debt service coverage ratios of the underlying properties of each facility were below the minimum required amounts per the debt agreements.

We provided an additional deposit of $0.3 million during the nine months ended September 30, 2024, bringing the total deposit to $12.1 million as of September 30, 2024.

These deposits are recorded as restricted cash on our consolidated balance sheet and are pledged as additional collateral for the Fannie Mae Master Credit Facilities.

These deposits will be refunded upon the earlier of the our achievement of a debt service coverage ratio above the minimum required amount of 1.40 or the maturity of the Fannie Mae Master Credit Facilities.

OMF Warehouse Facility

On December 22, 2023, we entered into a loan agreement with Capital One to provide up to $50.0 million of variable-rate financing.

As of September 30, 2024, $21.7 million was outstanding under the OMF Warehouse Facility which bore interest at an annual rate of 8.20%.

Inclusive of our non-designated interest rate caps, the economic interest rate on our OMF Warehouse Facility was 6.50% as of September 30, 2024.

We may request future advances under the OMF Warehouse Facility by adding eligible OMFs to the collateral pool subject to customary conditions, including satisfaction of minimum debt service coverage and maximum loan-to-value tests.

Borrowings under the OMF Warehouse Facility bear interest at a monthly rate equal to the sum of the current SOFR for one-month denominated deposits and a spread of 3.0%.

Interest payments are due monthly, with no principal payments due until maturity in December 2026.

As of March 31, 2025, $360.8 million was outstanding under our credit facilities, which bore interest at a weighted-average annual rate of 6.93% and had a weighted-average remaining term of 1.6 years.

Inclusive of our non-designated interest rate caps, the weighted-average economic interest rate on our credit facilities was 5.95% as of March 31, 2025.

In April 2025, the Company repaid the OMF Warehouse Facility in full in the amount of $21.7 million plus unpaid interest and terminated the facility.

Non-Designated Interest Rate Caps

Our interest rate caps are used to limit our exposure to interest rate movements on our Fannie Mae Master Credit Facilities for economic purposes, however, we do not elect to apply hedge accounting to these instruments.

As of September 30, 2024, we had eight SOFR-based interest rate caps with an aggregate notional amount of $369.2 million, which limits one-month SOFR to 3.50% and have varying maturities through January 2027.

As of March 31, 2025, we had eight SOFR-based interest rate caps with an aggregate notional amount of $369.2 million, which limits one-month SOFR to 3.50% and have varying maturities through January 2027.

Although these interest rate caps are not designated hedging instruments, we consider them economically related to our variable-rate credit facility borrowings.

As SOFR has increased beyond 3.50%, we received cash payments of $5.4 million in the three months ended September 30, 2024.

We received $3.9 million of cash payments in the three months ended September 30, 2023.

We paid total premiums of $1.7 million to renew one cap with an aggregate notional amount of $58.1 million which matures in April 2024, and to execute a new cap of $7.0 million, which matures in January 2027.

As SOFR has increased beyond 3.50%, we received cash payments of $0.9 million in the three months ended March 31, 2025.

We received $1.8 million of cash payments in the three months ended March 31, 2024.

We have five interest rate caps with a notional amount of $289.4 million which mature in 2025, which represents the next maturing interest rate caps.

During the year ended December 31, 2023, we paid premiums of $10.0 million to renew expiring interest rate cap contracts.

In April 2025, the Company terminated two interest rate caps with a notional of $21.7 million.

Capital Expenditures

During the nine months ended September 30, 2024, our capital expenditures were $16.4 million, of which $6.1 million related to our OMF segment and $10.3 million related to our SHOP segment.

We anticipate this rate of capital expenditures for the OMF and SHOP segments throughout the remainder of 2024.

Acquisitions — Nine Months Ended September 30, 2024

During the nine months ended September 30, 2024, we acquired four single-tenant OMFs for an aggregate contract purchase price of $12.6 million.

These acquisitions were funded with $7.5 million of new mortgage debt from our BMO CPC Mortgage Loan and the remainder with cash on hand.

Acquisitions — Subsequent to September 30, 2024

We have not acquired any properties subsequent to September 30, 2024.

Dispositions — Nine Months Ended September 30, 2024

We disposed of seven OMFs, two SHOPs and one land parcel during the nine months ended September 30, 2024 for an aggregate contract sales price of $82.6 million.

These proceeds were primarily used to fund a portion of the Closing Payments.

Dispositions — Subsequent to September 30, 2024

Sub sequent to September 30, 2024, we disposed of one OMF in Indiana for a contract sales price of $2.4 million.

These proceeds are availab le for general and corporate uses, including for the potential partial repayment of t he Promissory Note.

We have also signed purchase and sale agreements t o dispose of seven OMFs for an aggregate contract sales price of $49.8 million.

There can be no assurance that these signed agreements will close on their contemplated terms or at all.

We anticipate primarily using net proceeds from these strategic dispositions, which we expect to occur during the fourth quarter of 2024 or the first quarter of 2025, to repay the Promissory Note, which matures on June 28, 2025 and provides for an interest rate step-up to Term SOFR plus 3.25% on and after January 1, 2025.

There can be no assurance that we will generate enough net proceeds through these strategic dispositions to fully repay the Promissory Note before the interest rate step-up becomes effective or that these strategic dispositions will occur on the contemplated terms or at all.

Share Repurchase Program

We did not repurchase any shares during the nine months ended September 30, 2024 and 2023.

During the three months ended March 31, 2025, our capital expenditures were $5.7 million, of which $3.6 million related to our OMF segment and $2.1 million related to our SHOP segment.

We anticipate our quarterly rate of capital expenditures for the OMF and SHOP segments throughout the remainder of 2025 to be relatively stable.

Dispositions — Three Months Ended March 31, 2025

We disposed of 12 held-for-use OMFs during the three months ended March 31, 2025 for an aggregate contract sales price of $168.4 million.

These dispositions resulted in an aggregate gain on sale of $25.0 million, which is presented in our consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

Dispositions — Subsequent to March 31, 2025

We disposed of one OMF and three SHOPs subsequent to March 31, 2025 for an aggregate contract sales price of $9.1 million.

Preferred Stock Repurchase Program

On May 2, 2025, our Board authorized a stock repurchase program for up to an aggregate amount of $50.0 million of our Series A Preferred Stock and Series B Preferred Stock.

Under the program, which does not have a stated expiration date, we may repurchase shares of Series A Preferred Stock and Series B Preferred Stock from time to time through open market purchases, including pursuant to Rule 10b5-1 pre-set trading plans, block trades, privately negotiated transactions, accelerated share repurchase transactions entered into with one or more counterparties or otherwise, in compliance with applicable securities laws and other legal requirements.

The timing, volume, and nature of repurchases are subject to market conditions, applicable securities laws and other factors, and the program may be amended, suspended or discontinued at any time.

The program does not obligate us to repurchase any specific number of shares of Series A Preferred Stock and Series B Preferred Stock.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).

This section discusses certain of the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”).

A description of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP measure, which is net loss attributable to common stockholders, are provided below.

We consider FFO and AFFO to be useful supplemental measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies.

We consider FFO and AFFO to be useful supplemental measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed below, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies.

While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent, nor are they meant to replace, cash flows from operations and net income or loss as defined by GAAP, and should not be considered alternatives to those measures in evaluating our liquidity or operating performance.

Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements and are not necessarily indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders.

Rather, FFO and AFFO should be reviewed in conjunction with these and other GAAP measurements as an indication of our operational performance and are not necessarily indicative of cash available to fund our future cash requirements, including our ability to pay dividends and other distributions to our stockholders.

Additionally, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition or that interpret the current NAREIT definition or define AFFO differently than we do.

The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and AFFO, and the adjustments to GAAP in calculating FFO and AFFO.

Funds from Operations

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We believe that AFFO is a beneficial indicator of our ongoing portfolio performance and isolates the financial results of our operations.

Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs (including certain expenses directly related to the Internalization and the Reverse Stock-Split), (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense and (ix) similar adjustments for non-controlling interests and unconsolidated entities.

Our adjustments to FFO to arrive at AFFO include removing the impacts of (i) acquisition and transaction related costs (including certain expenses directly related to the Internalization and the Reverse Stock-Split), (ii) amortization of market-lease intangible assets and liabilities, (iii) adjustments for straight-line rent, (iv) termination fees to related parties, (v) equity-based compensation expense, (vi) depreciation and amortization related to non-real estate related assets, (vii) mark-to-market gains and losses from our non-designated derivatives, (viii) non-cash components of interest expense, (ix) casualty-related charges, (x) gains or losses on extinguishment of debt and (xi) similar adjustments for non-controlling interests and unconsolidated entities.

We believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry and is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.

The table below reflects the items deducted from or added to net loss attributable to stockholders in our calculation of FFO and AFFO for the periods indicated:

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

Three Months Ended March 31,

(In thousands) 2025 2024

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(Gain) loss on sale of real estate investments

(1,579) 173 (1,354) 364

Adjustments for non-controlling interests

(64) (97) (285) (298)

FFO (as defined by NAREIT) attributable to stockholders

(17,663) 475 (113,255) 1,720

Accretion of market lease and other intangibles, net (134) (203) (822) (672)

(Amortization) accretion of market lease and other intangibles, net

Straight-line rent adjustments

(458) (352) (360) (938)

Acquisition and transaction related (1)

5,187 173 5,686 384

Termination fees to related parties (3)

8,409 — 106,650 —

Equity-based compensation — 230

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Mark-to-market (gains)/losses from derivatives (2)

4,224 1,159 4,956 3,356

Non-cash components of interest expense (3)

880 (768) 1,368 3,363

Adjustments for non-controlling interests

(91) 2 (540) 16

Casualty-related charges (4)

AFFO attributable to stockholders $ 8,785 $ 1,505

(1) Represents the portion of the adjustments allocable to non-controlling interests.

(2) Includes certain advisory, legal, accounting, information technology, tax and other professional expenses and other non-recurring employee transition expenses of $4.8 million for each of the three and nine months ended September 30, 2024, respectively, that were directly related to the Internalization and the Reverse Stock Split.

(1) Includes certain advisory, legal, accounting, information technology, tax and other professional expenses and other non-recurring employee transition expenses that were directly related to the Internalization and the Reverse Stock Split.

We do not consider these expenses to be indicative of our performance given their unique and non-recurring nature.

(3) Represents the Closing Payments paid in connection with the Internalization.

We do not consider such payments to be indicative of our performance given its unique and non-recurring nature.

(2) Presented as total gains or losses from our non-designated derivatives net of cash received.

(3) Non-cash components of interest expense include (i) deferred financing cost amortization, (ii) mortgage discount and premium amortization and (iii) amortized gains or losses from terminated hedging instruments.

(4) Includes labor, supplies and evacuation expenses from natural disasters not covered by insurance.

Dividends and Other Distributions

Distributions on our Series A Preferred Stock are declared quarterly in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to holders of Series A Preferred Stock, which is equivalent to 7.375% of per annum in the $25.00 liquidation preference per share of Series A Preferred Stock.

Distributions on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Distributions on our Series B Preferred Stock are declared quarterly in an amount equal to $1.78125 per share each year ($0.445313 per share per quarter) to holders of Series B Preferred Stock, which is equivalent to 7.125% of per annum in the $25.00 liquidation preference per share of Series B Preferred Stock.

Distributions on the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our board of directors and declared by us.

Distributions on the Series A Preferred Stock and the Series B Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year or, if not a business day, the next succeeding business day to holders of record on the close of business on the record date set by our Board and declared by us.

Since mid-2020, we have not paid cash dividends on our shares of common stock but we issued stock dividends to the holders from October 2020 until January 2024.

The stock dividends were declared quarterly using a rate of $3.40 (as adjusted to reflect the Reverse Stock Split) per share per year.

The number of shares issued with each dividend is based on the estimated per share asset value in effect on the applicable date.

The number of shares issued with each dividend was based on the estimated per share asset value in effect on the applicable date.

We do not intend to declare further stock dividends in the future.

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The following table shows the sources for the payment of distributions to preferred stockholders, including distributions on unvested restricted shares and Common OP Units, but excluding distributions related to Class B Units as these distributions are recorded as an expense in our consolidated statements of operations and comprehensive loss, for the periods indicated.

No cash distributions were made to common stockholders, restricted shareholders, holders of Common OP Units or holders of Class B Units in the three months ended September 30, 2024.

Three Months Ended Year-To-Date

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

(Dollars in thousands) Amounts Percentage of Distributions Amounts Percentage of Distributions Amounts Percentage of Distributions Amounts Percentage of Distributions

No cash distributions were made to common stockholders, restricted shareholders, holders of Common OP Units or holders of Class B Units in the three months ended March 31, 2025.

Three Months Ended

March 31, 2025

(Dollars in thousands) Amounts Percentage of Distributions

Distributions:

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Distributions to holders of Series B Preferred Stock

1,616 46.2% 1,616 46.2% 1,617 46.3% 4,849 46.2%

Distributions paid to holders of Series A Preferred Units 47 1.4%

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Source of distribution coverage:

Cash flows provided by operations (1)

$ 2,543 72.7% $ 3,496 100.0% $ 3,497 100.0% $ (86,300) (822.8)%

Cash flows used in operations (1)

Available cash on hand (2)

953 27.3% — —% — —% 96,789 922.8%

Total source of distribution coverage $ 3,497 100.0%

Cash flows provided by operations (in accordance with GAAP) $ 2,543 $ 8,935 $ (97,778) $ (86,300)

Cash flows used in operations (in accordance with GAAP)

Net loss (in accordance with GAAP) $ (1,515)

(1) Assumes the use of available cash flows from operations before any other sources.

(2) Year-to-date total does not equal the sum of the quarters.

Each quarter and year-to-date period is evaluated separately for purposes of this table.

For the nine months ended September 30, 2024, cash flows provided by operations were $86.3 million.

(2) Cash available cash on hand also includes proceeds from property dispositions and additional secured financings and borrowings under our credit facilities.

For the three months ended March 31, 2025, cash flows used in operations were $21.2 million.

We had not historically generated sufficient cash flows from operations to fund the payment of dividends and other distributions at the current rate prior to switching from paying cash dividends to stock dividends on our common stock.

As shown in the table above, we funded distributions to holders of Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units with cash flows provided by operations and with available cash on hand.

As shown in the table above, we funded distributions to holders of Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units with available cash on hand.

Our ability to pay distributions on our Series A Preferred Stock, Series B Preferred Stock and Series A Preferred Units and other distributions depends on our ability to increase the amount of cash we generate from property operations which in turn depends on a variety of factors, including but not limited to our ability to complete acquisitions of new properties and our ability to improve operations at our existing properties.

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Our ability to improve operations at our existing properties is also subject to a variety of risks and uncertainties, many of which are beyond our control, and there can be no assurance we will be successful in achieving this objective.

Election as a REIT

We elected to be taxed as a REIT under the Code, effective for our taxable year ended December 31, 2013.

Commencing with that taxable year, we have been organized and operated in a manner so that we qualify as a REIT under the Code.

We intend to continue to operate in such a manner but we can provide no assurances that we will operate in a manner so as to remain qualified for taxation as a REIT.

To continue to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) determined without regard to the deduction for dividends paid and excluding net capital gains, and comply with a number of other organizational and operational requirements.

If we continue to qualify as a REIT, we generally will not be subject to U.S.

federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders.

Even if we continue to qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties as well as U.S.

federal income and excise taxes on our undistributed income.

We may be adversely impacted by inflation on the leases with tenants in our OMF segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates.

As of September 30, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.0%.

Recent increases in inflation, driven by factors such as labor shortages, supply chain disruptions, higher property insurance, property tax and interest rates and increased economic and political uncertainties due to the tariffs imposed by, or imposed on, the United States, have and may continue to have adverse impacts on our results of operations and our liquidity as well as our tenants’ and residents’ ability to pay rent.

As of March 31, 2025, the increase to the 12-month Consumer Price Index for all items, as published by the Bureau of Labor Statistics, was 3.0%.

To hel p mitigate the adverse impact of inflation, most of our leases with our tenants in our OMF segment contain rent escalation provisions which increase the cash that is due under these leases over time.

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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 1. Financial Statements