What changed in this filing

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Item 1A. Risk Factors

2026-02-09 compared with 2025-02-13 · 110 added, 74 removed, 301 unchanged (38% of the section changed)

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Risks Related to the Operators of Our Facilities

Our financial position could be weakened and our ability to make distributions and fulfill our obligations with respect to our indebtedness could be limited if our operators, or a portion thereof, become unable to meet their obligations to us or fail to renew or extend their relationship with us as their lease terms expire or their mortgages mature, or if we become unable to lease or re-lease our facilities or make mortgage loans on economically favorable terms.

We have no operational control over our operators.

Our financial position could be weakened and our ability to make distributions and fulfill our obligations with respect to our indebtedness could be limited if our operators (which reference, throughout this section, includes our TRS entities when we use a RIDEA structure and our managers, unless otherwise noted), or a portion thereof, become unable to meet their obligations to us or fail to renew or extend their relationship with us as their lease terms expire or their mortgages mature, or if we become unable to lease or re-lease our facilities or make mortgage loans on economically favorable terms.

We have no operational control over our operators and limited contractual rights against our managers.

The bankruptcy or insolvency of our operators could limit or delay our ability to recover on our investments.

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Finally, the bankruptcy court could re-characterize our lease agreement as a disguised financing arrangement, which could require us to receive bankruptcy court approval to foreclose or pursue other remedies with respect to the facility.

A bankruptcy filing by an operator to which we have made a loan secured by a mortgage would typically prevent us from collecting unpaid pre-bankruptcy mortgage payments and foreclosing on our collateral, absent approval of the bankruptcy court.

As an initial matter, we could ask the bankruptcy court to order the operator to make periodic payments or provide other financial assurances to us during the bankruptcy case (known as “adequate protection”), but the ultimate decision regarding “adequate protection” (including the timing and amount of any “adequate protection” payments) rests with the bankruptcy court.

Mortgages and Secured Loans.

A bankruptcy filing by an operator to which we have made a loan secured by a mortgage or other collateral would typically prevent us from collecting unpaid pre-bankruptcy mortgage payments and foreclosing on our collateral, absent approval of the bankruptcy court.

As an initial matter, we could ask the bankruptcy court to order the operator to make periodic payments or provide other financial assurances on secured loans to us during the bankruptcy case (known as “adequate protection”), but the ultimate decision regarding “adequate protection” (including the timing and amount of any “adequate protection” payments) rests with the bankruptcy court.

In addition, we would need bankruptcy court approval before commencing or continuing any foreclosure action against the operator’s collateral (including a facility).

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Should such events occur, our income and cash flow from operations would be adversely affected.

Unsecured Loans.

In the event of the bankruptcy of a borrower on an unsecured loan made by us, we may not be able to recover against all or any of the assets of the borrower.

In addition, certain unsecured loans may be subordinate to other debt of a borrower, and in the event of the bankruptcy of a borrower, our loan will be satisfied only after the borrower’s senior creditors’ claims are satisfied.

Further, the presence of intercreditor arrangements may limit our ability to amend or assign loan documents, accept prepayments, exercise remedies and control decisions made in borrower bankruptcy proceedings.

Personal Guarantees and Loans.

While we sometimes have third-party guarantees of an operator’s lease or loan obligations, and while from time to time we may make loans to individual obligors, such guarantees or loans can be expensive to enforce and have their own risks of collection against the guarantors or obligors or the estates or successors of such obligors.

Failure by our operators to comply with government regulations may adversely impact their ability to make debt or lease payments to us.

Our operators are subject to numerous federal, state and local laws and regulations in the U.S.

and, for certain operators, in the U.K., including those described in Item 1 – Business – Government Regulation and Reimbursement.

Laws and regulations impacting our operators include, without limitation, those relating to reimbursement (including Medicare and Medicaid reimbursement programs in the U.S.), quality of care initiatives (including the implementation of proposed federal minimum staffing requirements in the U.S.), licensing and certification of our operators, fraud and abuse laws and regulations, and privacy and security laws.

We cannot predict the effect that the costs of complying with these laws may have on the revenues of our operators, and thus their ability to meet their obligations to us.

In addition, requirements applicable to our operators are subject to frequent and substantial changes (sometimes applied retroactively) resulting from new legislation, adoption of rules and regulations, and administrative and judicial interpretations of existing law, and any changes in the regulatory framework could have a material adverse effect on our tenants, operators, guarantors and managers.

Any of these changes may be more pronounced following governmental leadership changes, particularly following a change in presidential administrations.

The ultimate timing or effect of these changes cannot be predicted.

These changes may have a dramatic effect on our operators’ costs of doing business and on the amount of reimbursement by both government and other third-party payors.

The failure of any of our operators to comply with these laws, requirements and regulations could adversely affect their ability to meet their obligations to us.

If we fail to effectively implement or appropriately adjust our operational and strategic initiatives with respect to the implementation of new laws and regulations, or do not do so as effectively as our competitors, our results of operations may be materially adversely affected.

Failure by operators to comply with government regulations may adversely impact their ability to make debt or lease payments or meet their obligations to us.

Our operators are subject to numerous national, state and local laws and regulations in the U.S., U.K.

or Canada, including those described in Item 1 – Business – Government Regulation and Reimbursement.

These include, without limitation, those relating to reimbursement (including U.S.

Medicare and Medicaid reimbursement programs), quality of care, licensing and certification, fraud and abuse, and privacy and security.

We cannot predict the effect that the costs of complying with these laws may have on our operators’ revenues, and thus their ability to meet their obligations to us.

In addition, requirements applicable to our operators are subject to frequent and substantial changes (sometimes retroactive) resulting from new legislation, rules and regulations, changes in presidential administrations, and administrative and judicial legal interpretations, and any changes in the regulatory framework could have a material adverse effect on our operators and obligors.

The ultimate timing or effect of these changes cannot be predicted, and they may have a dramatic effect on our operators’ costs of doing business and on the level of government and third-party payor reimbursements.

The failure of an operator to comply with these laws, requirements and regulations could adversely affect their ability to meet their obligations to us.

If we fail to effectively implement new requirements or appropriately adjust our operational and strategic initiatives with respect to such implementation, or do not do so as effectively as our competitors, our results of operations may be materially adversely affected.

Our operators depend on reimbursement from governmental and other third-party payors, and reimbursement rates from such payors may be reduced, modified or delayed, including through reductions to the Medicare and Medicaid programs for U.S.

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Reimbursement from governmental and other third-party payors could be reduced or delayed as part of spending cuts and tax reform and governmental efficiency initiatives that impact Medicare, Medicaid or Medicare Advantage Plans, or as part of retroactive adjustments during claims settlement processes or as a result of post-payment audits.

The July 2025 passage of the OBBBA enacted significant reforms regarding funding and operation of the Medicaid program, including an estimated $920 billion in cuts to Medicaid over the next decade, reforms related to enactment of new home and community-based services waivers, and freezing nursing home provider taxes.

The OBBBA’s cuts to Medicaid and restrictions on provider taxes to other types of healthcare providers may adversely impact our operators indirectly to the extent states reduce reimbursement levels generally to offset reductions, including general provider tax reductions.

Further, alternative payment models, as well as other regulatory initiatives, have the potential to affect Medicare payments to SNFs, including, but not limited to, provisions changing the payment methodology, setting reimbursement caps, implementing value-based purchasing and payment bundling, and studying the appropriateness of restrictions on payments for healthcare acquired conditions.

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If funding for Medicare and/or Medicaid is reduced, it could have a material adverse effect on our operators’ results of operations and financial condition, which could adversely affect our operators’ ability to meet their obligations to us.

Significant limits on the scope of services reimbursed and on reimbursement rates, as well as changes in reimbursement policies or other measures altering payment methodologies or delaying reimbursements for services provided by our operators, could have a material adverse effect on our operators’ results of operations and financial condition, which could cause the revenues of our operators to decline and negatively impact their ability to meet their obligations to us.

Significant limits on the scope of services reimbursed and on reimbursement rates, as well as changes in reimbursement policies, payment methodologies or delayed reimbursements for services provided by our operators, could have a material adverse effect on our operators’ results of operations and financial condition, which could cause the revenues of our operators to decline and negatively impact their ability to meet their obligations to us.

We may be unable to find a replacement operator for one or more of our leased properties.

From time to time, we need to find a replacement operator for one or more of our leased properties for a variety of reasons, including upon the expiration of the lease term or the occurrence of an operator default.

While we are attempting to locate one or more replacement operators, we sometimes experience and may in the future experience a decrease or cessation of rental payments on the applicable property or properties.

In identifying replacement operators, we sometimes experience and may in the future experience a decrease or cessation of rental payments on the applicable property or properties.

We cannot assure you that any of our current or future operators will elect to renew their respective leases with us upon expiration of the terms thereof.

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Our operators may be subject to claims for damages relating to the services that they provide.

While we are unable to predict the scope of future federal, state and local regulations and legislation, including the Medicare and Medicaid statutes and regulations, we believe that long-term care providers will continue to be the focus of governmental investigations, particularly in the area of Medicare/Medicaid false claims and in the use of COVID-19 related funds, including the Employee Retention Credit, and compliance with infection control and quality standards.

While we are unable to predict the scope of future regulations and legislation, we believe that long-term care providers will continue to be the focus of governmental investigations, particularly in the area of Medicare/Medicaid false claims and compliance with infection control and quality standards.

We can give no assurance that the insurance coverage maintained by our operators will cover all claims made against them or continue to be available at a reasonable cost, if at all.

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Although we generally have no involvement in the services provided by our operators, and our standard lease and loan agreements generally require our operators to indemnify us and carry insurance to cover us in certain cases, a significant judgment against us in such litigation could exceed our and our operators’ insurance coverage, which would require us to make payments to cover the judgment.

Increased competition as well as increased operating costs result in lower revenues for some of our operators and may affect the ability of our operators to meet their obligations to us.

Furthermore, with respect to our properties that are operated in RIDEA structures, we generally directly bear the costs of any such increases in litigation, monitoring, reporting and insurance due to our direct exposure to the cash flows of such properties.

We are responsible for these claims, litigation and liabilities, with limited indemnification rights against our operators, which are typically based on the gross negligence or willful misconduct by the manager.

Increased competition as well as increased operating costs, including due to macroeconomic trends, result in lower revenues for some of our operators and may affect the ability of our operators to meet their obligations to us.

The long-term healthcare industry is highly competitive, and we expect that it may become more competitive in the future.

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Our operators compete on several different levels including the quality of care provided, reputation, the physical appearance of a facility, price, the range of services offered, family preference, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location and the size and demographics of the population in the surrounding areas.

Our operators may encounter increased competition in the future that could limit their ability to attract residents or expand their businesses and therefore affect their ability to pay their lease or mortgage payments and meet their obligations to us.

In addition, the market for qualified personnel is highly competitive.

Our operators have experienced and may continue to experience difficulties in attracting and retaining such personnel, in particular due to labor constraints and, in some cases, wage increases, which have been elevated since the beginning of the COVID-19 pandemic and may remain elevated.

These labor constraints may also be adversely impacted by immigration restrictions and changes to immigration enforcement policy to the extent they impact our operators’ workforces and by minimum staffing requirements that have been established in certain states and proposed at the federal level.

Increases in labor costs could affect our operators’ ability to meet their obligations to us.

Our operators may encounter increased competition in the future, including due to changing technologies, political and regulatory conditions, and cultural trends, that could limit their ability to attract residents or expand their businesses and therefore affect their ability to pay their lease or mortgage payments and meet their obligations to us.

Many of our operators’ and managers’ other operating and administrative costs, including labor and utility costs, have been and may continue to be adversely affected by macroeconomic trends, including inflation, unemployment, immigration restrictions, rising interest rates, supply chain disruptions, geopolitical conflicts, the global tariff environment and other events impacting the macroeconomic environment.

If any of these adverse macroeconomic trends continue or recur in the future, our operators and borrowers’ operating expenses may exceed increases in their reimbursements or other revenue sources, which may adversely affect their ability to pay rent or other obligations owed to us.

We may be unable to successfully foreclose on the collateral securing our loans, and even if we are successful in our foreclosure efforts, we may be unable to successfully find a replacement operator, or operate or occupy the underlying real estate, which may adversely affect our ability to recover our investments.

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Even if we are able to successfully foreclose on the collateral securing our loans, we may be unable to expeditiously find a replacement operator, if at all, or otherwise successfully operate or occupy the property, which could adversely affect our ability to recover our investment.

Inflation could adversely impact our operators and our results of operations.

Inflation, both real or anticipated, as well as any responsive governmental policies, has and may continue to adversely affect the economy and the costs of labor, goods and services to our operators or borrowers.

Inflation may also be adversely impacted by the imposition of additional tariffs by the U.S.

federal government, which have been proposed and the impacts of which remain uncertain.

Our long-term leases and loans typically contain provisions such as rent and interest escalators that are designed to mitigate the adverse impact of inflation on our results of operations.

However, these provisions may have limited effectiveness at mitigating the risk of high levels of inflation due to contractual limits on escalation that exist in substantially all of our escalation provisions.

Our leases are triple-net and typically require the operator to pay all property operating expenses, and therefore, increases in property-level expenses at our leased properties generally do not directly affect us.

However, increased operating costs resulting from inflation have had, and may continue to have, an adverse impact on our operators and borrowers if increases in their operating expenses exceed increases in their reimbursements, which has and may continue to adversely affect our operators’ or borrowers’ ability to pay rent or other obligations owed to us.

An increase in our operators’ expenses and a failure of their reimbursements to increase at least with inflation could adversely impact our operators’ and our financial condition and our results of operations.

Uninsured losses or losses in excess of our operators’ insurance coverage could adversely affect our financial position and our cash flow.

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We consider and, when appropriate, invest in various development and redevelopment projects.

In deciding whether to make an investment in a particular project, we make certain assumptions regarding the expected future performance of the property.

Our assumptions are subject to risks generally associated with development and redevelopment projects, including, among others, that:

In deciding whether to make an investment in a particular project, we make certain assumptions regarding the expected future performance of the property, which assumptions are subject to risks, including, among others, that:

● Our operators may not be able to complete the project on schedule or within budgeted amounts;

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If any of the risks described above occur, our development and redevelopment projects may not yield anticipated returns, which could have a material adverse effect on us.

We are exposed to operational risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition.

During the fourth quarter of 2025, we began utilizing a RIDEA structure, under which, a REIT may lease a qualified healthcare property on an arm’s-length basis to a TRS if the property is managed and operated on behalf of such TRS by a person or entity who qualifies as an “eligible independent contractor.” Under this structure, the manager receives a management fee from our TRS for managing and operating the property as an independent third party.

We may in the future acquire or transition other properties to a RIDEA structure.

As the owner of a property under a RIDEA structure, we are responsible for, and our financial performance is impacted by, operational and legal risks and liabilities of the property.

Although we have some general oversight approval rights and the right to review operational and financial reporting information with respect to a typical RIDEA structure, our managers ultimately control the day-to-day business of the property.

We rely on the personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment of our managers to set appropriate resident fees, provide accurate property-level financial results for our properties in a timely manner and to otherwise operate our managed properties in compliance with the terms of our management agreements and all applicable laws and regulations.

The income we generate from RIDEA structures is subject to a number of operational risks including but not limited to fluctuations in occupancy levels and resident fee levels, competitive pressures and market dynamics, impacts from quality of care, private pay collectibility, insurance reimbursement rate changes, increases in the cost of food, materials, energy, labor or other services, macroeconomic conditions, the imposition of new or increased taxes and regulation, capital expenditure requirements, professional and general liability claims and the availability and cost of professional and general liability insurance.

In addition, as our operating companies are required to hold healthcare licenses and in some cases may enroll in a government healthcare program (e.g., Medicare or Medicaid), we may experience penalties for failure to comply with applicable healthcare laws, including loss or suspension of licenses and certificates of need, certification or accreditation, exclusion from government healthcare programs, administrative sanctions and civil monetary penalties.

If our managers fail to effectively conduct operations on our behalf, or to maintain and improve our properties, it could adversely affect our business reputation as the owner of the properties, as well as the business reputation of our managers and their ability to attract and retain patients and residents in our properties, which could have a material adverse effect on our and our managers’ business, results of operations, and financial condition.

Risks Related to Us and Our Operations

Severe respiratory disease seasons, epidemics, pandemics or other widespread illnesses could adversely affect our properties and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Our business and operations were significantly impacted by the COVID-19 pandemic and are exposed to continuing risks from COVID-19, severe respiratory disease seasons or the occurrence of other epidemics, pandemics or other widespread illnesses.

Our revenues and our operators’ revenues are dependent on occupancy, and the occupancy of our properties could significantly decrease in the event of a severe respiratory disease season, a resurgence of COVID-19 or other epidemics or widespread illnesses.

Such a decrease would affect the operating income of our properties and the ability of our operators to make payments to us.

As we experienced during the COVID-19 pandemic, a future respiratory disease or other epidemic or pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, as well as cause a reduction in occupancy, each of which could adversely affect their ability to meet their obligations to us, which could have a material adverse effect on our financial results.

Our business and operations were significantly impacted by the COVID-19 pandemic and are exposed to continuing risks from severe respiratory disease seasons or the occurrence of other epidemics, pandemics or other widespread illnesses.

As we experienced during the COVID-19 pandemic, a future respiratory disease or other epidemic or pandemic could significantly increase the cost burdens faced by our operators, including if they are required to implement quarantines for residents, as well as cause a reduction in occupancy, each of which could adversely affect our operators’ revenues and their ability to meet their obligations to us, which could have a material adverse effect on our financial results.

The effect of a pandemic or other future widespread illness on our and our operators’ operational and financial performance will depend on future developments, including the ability to control the spread of the outbreak generally and in our facilities, and the delivery and efficacy of and participation in vaccination programs and other treatments, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic or illness.

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Our ability to pay dividends may be adversely affected upon the occurrence of any of the risks described herein.

Our payment of dividends is subject to compliance with restrictions contained in our credit agreements, the indentures governing our senior notes and any preferred stock that our Board of Directors (“Board”) may from time to time designate and authorize for issuance.

All dividends will be paid at the discretion of our Board and will depend upon our earnings, our financial condition, maintenance of our REIT status and such other factors as our Board may deem relevant from time to time.

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As a result, we rely on external sources of capital, including debt and equity financing.

If we are unable to obtain needed capital at all or only on unfavorable terms from these sources, we might not be able to make the investments needed to grow our business, or to meet our obligations and commitments as they mature, which could negatively affect the ratings of our debt and even, in extreme circumstances, affect our ability to continue operations.

We may not be in a position to take advantage of future investment opportunities in the event that we are unable to access the capital markets on a timely basis or we are only able to obtain financing on unfavorable terms.

If we are unable to obtain needed capital at all or only on unfavorable terms from these sources, we might not be able to make the investments needed to grow our business, or to meet our obligations and commitments as they mature, which could negatively affect our debt ratings and, in extreme circumstances, affect our ability to continue operations.

We may not be in a position to take advantage of future investment opportunities if we are unable to access the capital markets on a timely basis or we are only able to obtain financing on unfavorable terms.

Our ability to raise capital through equity sales is dependent, in part, on the market price of our common stock, and our failure to meet market expectations with respect to our business, or other factors we do not control, could negatively impact such market price and availability of equity capital.

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● our financial performance and that of our operators;

● concentrations in our investment portfolio by operator and facility type;

● actual results differing from the assumptions on which we base our guidance;

● concentrations in our investment portfolio by operator, facility type and jurisdiction, as well as our exposure to RIDEA transactions;

● concerns about our operators’ financial condition due to uncertainty regarding reimbursement from governmental and other third-party payor programs;

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The degree of leverage could have important consequences to stockholders, including affecting our investment grade ratings and our ability to obtain additional financing in the future, and making us more vulnerable to a downturn in our results of operations or the economy generally.

We may from time to time seek to manage our exposure to interest rate volatility with hedging arrangements, which involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that the amount of income we earn from hedging transactions may be limited by federal tax provisions governing REITs, and that these arrangements may reduce the benefits to us if interest rates decline.

Developing and implementing an interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations and there can be no assurance that our hedging activities will be effective.

Failure to hedge effectively against interest rate risk, if we choose to engage in such activities, could adversely affect our business, financial condition and results of operations.

We may from time to time seek to manage our exposure to interest rate and foreign currency exchange volatility with hedging arrangements, which involve additional risks, including the risks that counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate or currency exchange rate changes, that the amount of income we earn from hedging transactions may be limited by U.S.

federal tax provisions governing REITs, and that these arrangements may reduce the benefits to us if interest rates or foreign exchange rates decline.

Developing and implementing a strategy to hedge these risks is complex and no strategy can completely insulate us from risks associated with fluctuations in these rates, and there can be no assurance that our hedging activities will be effective.

Failure to hedge effectively against interest rate or foreign exchange risk, if we choose to engage in such activities, could adversely affect our business, financial condition and results of operations.

We may be subject to additional risks in connection with our acquisitions of long-term care facilities.

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● acts of God or terrorism affecting our properties.

Our real estate investments are relatively illiquid.

Our real estate investments are relatively illiquid, and we may not be able to acquire or dispose of properties or otherwise redeploy capital when desired or on favorable terms.

Real estate investments are relatively illiquid and generally cannot be sold quickly.

The real estate market is affected by many factors which are beyond our control, including general economic conditions, availability of financing, interest rates and supply and demand.

The real estate market is affected by many factors which are beyond our control, including general economic conditions, availability of financing, competition, interest rates and supply and demand.

Additional factors that are specific to our industry also tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

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To the extent we are unable to sell any properties for our book value, we may be required to take a non-cash impairment charge or loss on the sale, either of which would reduce our net income.

In addition, we may not be able to redeploy the proceeds from asset dispositions or loan repayments on equally favorable terms or in an expeditious time frame.

This may impact our results of operations and our ability to meet earnings guidance.

We face possible risks and costs associated with severe weather conditions, natural disasters or the physical effects of climate change.

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In the event of a loss in excess of insured limits, we could lose our incremental capital invested in the affected property.

Although Congress has not yet enacted comprehensive federal legislation to address climate change, numerous states and municipalities, as well as the U.K., have adopted laws and policies on climate change and emission reduction targets.

Although Congress has not enacted comprehensive federal legislation to address climate change, numerous states and municipalities, as well as the U.K., have adopted laws and policies on climate change and emission reduction targets.

Changes in legislation and regulation within the U.S.

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We have investments in the U.K.

and may from time to time may seek to acquire other properties in the U.K.

or otherwise outside the U.S.

and Jersey and have committed to make investments in Canada.

We may from time to time seek to acquire other properties in such jurisdictions or otherwise outside the U.S.

International development, investment, ownership and operating activities involve risks that are different from those we face with respect to our U.S.

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These risks include, but are not limited to, any international currency gain recognized with respect to changes in exchange rates may not qualify under the income tests that we must satisfy annually in order to qualify and maintain our status as a REIT;

fluctuations in the exchange rates between USD and the British Pound Sterling (“GBP”), or other foreign currencies in which we may transact in the future, which we may be unable to protect against through hedging;

fluctuations in the exchange rates between USD, the British Pound Sterling (“GBP”) and the Canadian dollar, or other foreign currencies in which we may transact in the future, which we may be unable to protect against through hedging;

changes in foreign political, regulatory, and economic conditions, including increases in energy prices, such as those experienced in the U.K.

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challenges in managing international operations and enforcing obligations in other countries;

challenges of complying with a variety of foreign laws and regulations, including those relating to real estate, healthcare operations, environmental, climate impacts, taxes, employment and legal proceedings;

financial risks to our operators, including differences in expenses and government reimbursement practices, as well as funding challenges in the public sector;

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Our assets are generally not diversified by industry and face risks associated with the long-term care industry.

In addition, at December 31, 2024, one operator represented greater than 10% of our investments, and the three states in which we had our highest concentration of investments were Texas (9.2%), Indiana (6.2%) and California (5.7%).

In addition, our concentration of investments in the U.K.

In addition, at December 31, 2025, one operator represented greater than 10% of our investments, and the three geographic locations in which we had our highest concentration of investments were the U.K.

(17.7%), Texas (8.5%) and Indiana (6.0%).

As a result, we are subject to increased exposure to adverse conditions affecting these operators and regions, with regional risks including unfavorable Medicaid reimbursements rates for SNFs, downturns in the local economies, local real estate conditions, staffing challenges, increased competition or decreased demand for our facilities, regional climate events, and unfavorable legislative or regulatory developments, which could adversely affect our business and results of operations.

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Our investments in joint ventures or other equity investments could be adversely affected by shared decision-making authority, our counterparty’s financial condition, and our exposure to potential losses from the actions of our counterparties.

As of December 31, 2024, we have ownership interests in one consolidated joint venture and several unconsolidated joint ventures, and we manage other equity investments.

As of December 31, 2025, we have ownership interests in one consolidated joint venture and a number of unconsolidated joint ventures, and we manage other equity investments.

These joint ventures and investments involve additional risks, including the following:

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● we may suffer losses resulting from actions taken by our joint venture partners or other counterparties with respect to our joint venture or other investments.

The use of, or inability to use, artificial intelligence by us, our operators, managers, vendors and our investors presents risks and challenges that may adversely impact our business and operating results or the business and operating results of our operators, managers and vendors or may adversely impact the requirements and demand for properties.

We may use generative artificial intelligence and/or machine learning (collectively, “AI”) tools in our operations.

If our peers use AI tools to optimize operations and we fail to utilize AI tools in a comparable manner, we may be competitively disadvantaged.

However, while AI tools may facilitate optimization and operational efficiencies, they also have the potential for inaccuracy, bias, infringement or misappropriation of intellectual property, and risks related to data privacy and cybersecurity.

The use of AI tools may introduce errors or inadequacies that are not easily detectable, including deficiencies, inaccuracies or biases in the data used for AI training, or in the content, analyses or recommendations generated by AI applications.

The results of such errors or inadequacies may adversely affect our business, financial condition and results of operations.

The legal requirements relating to AI continue to evolve and remain uncertain, including how legal developments could impact our business and ability to enforce our proprietary rights or protect against infringement of those rights.

Cybersecurity threat actors may utilize AI tools to automate and enhance cybersecurity attacks against us.

We utilize software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect, contain and mitigate, which may pose significant risks to our data security and systems.

Such cybersecurity attacks, if successful, could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm.

The integration of AI tools in the healthcare industry may present significant opportunities and risks for our operators and managers, similar to those risks described above.

Our vendors may use AI tools in their products or services without our knowledge, and the providers of these tools may not meet the evolving regulatory or industry standards for privacy and data protection.

Consequently, this may inhibit our or our vendors’ ability to uphold an appropriate level of service and data privacy.

If we, our vendors, or other third parties with which we conduct business experience an actual or perceived breach of privacy or security incident due to the use of AI, we may be adversely impacted, lose valuable intellectual property or confidential information and incur harm to our reputation and the public perception of the effectiveness of our security measures.

In addition, investors, analysts and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us.

The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.

Risks Related to Taxation

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Any such failure could have an adverse effect on our ability to comply with the REIT income and asset tests, and thus our ability to qualify as a REIT, unless we are able to avail ourselves of certain relief provisions.

Rents we receive from a TRS in a RIDEA structure are treated as qualifying rents from real property for REIT tax purposes only if (i) they are paid pursuant to a lease of a “qualified healthcare property” and (ii) the operator qualifies as an “eligible independent contractor,” as each term is defined in the Code.

If either of these requirements is not satisfied, then the rents we receive from the TRS will not be qualifying rents and we may not satisfy the REIT gross income requirements.

If we lose our REIT status, we will face serious tax consequences that will substantially reduce the funds available to make payments of principal and interest on the debt securities we issue and to make distributions to stockholders.

If we fail to qualify as a REIT:

● we will not be allowed a deduction for distributions to stockholders in computing our taxable income;

● we will be subject to corporate-level income tax on our taxable income at regular corporate rates;

● we will be subject to increased state and local income taxes;

● unless we are entitled to relief under relevant statutory provisions, we will be disqualified from taxation as a REIT for the four taxable years following the year during which we fail to qualify as a REIT.

As a result of all these factors, our failure to qualify as a REIT could also impair our ability to expand our business and raise capital and could materially adversely affect the value of our common stock.

There is a risk of changes in the tax law applicable to REITs.

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We cannot predict whether, when or to what extent new U.S.

federal tax laws, regulations, interpretations or rulings will be adopted.

Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us, our properties, or our shareholders.

federal tax laws, regulations, administrative interpretations or court rulings will be adopted.

Several recent federal and state governmental initiatives have increased scrutiny on the role of private equity and REITs in the U.S.

healthcare industry and proposed legislation related to certain SNF financial arrangements with REITs.

While the likelihood of such measures being enacted remains uncertain, they could, if enacted, result in additional requirements or restrictions on our operators or us.

New legislation, regulations, administrative interpretations or court decisions could change the tax laws or interpretations of the tax laws regarding our qualification as a REIT, the federal income tax consequences of that qualification or otherwise prospectively or retroactively modify our tax treatment in a manner that is materially adverse to us, our properties or our stockholders.

Accordingly, we cannot assure you that we have operated or will continue to operate in a manner so as to qualify or remain qualified as a REIT.

Risks Related to Our Stock and Capital Structure

Our issuance of additional capital stock, warrants or debt securities, whether or not convertible, may reduce the market price for our outstanding securities, including our common stock, and dilute the ownership interests of existing stockholders, and we may issue securities with greater dividend, liquidation and other rights than our common stock.

We cannot predict the effect, if any, that future sales of our capital stock, warrants or debt securities, or the availability of our securities for future sale, will have on the market price of our securities, including our common stock.

Sales of substantial amounts of our common stock or preferred shares, warrants or debt securities convertible into or exercisable or exchangeable for common stock in the public market, or the perception that such sales might occur, could negatively impact the market price of our stock and the terms upon which we may obtain additional equity financing in the future.

Our issuance of additional capital stock, warrants, OP units or debt securities, whether or not convertible, may reduce the market price for our outstanding securities, including our common stock, and dilute the ownership interests of existing stockholders, and we may issue securities with greater dividend, liquidation and other rights than our common stock.

We cannot predict the effect, if any, that future sales or issuance of our capital stock, warrants, OP units or debt securities, or the availability of our securities for future sale, will have on the market price of our securities, including our common stock.

Sales or issuances of substantial amounts of our common stock or preferred shares, warrants, OP units or debt securities convertible into or exercisable or exchangeable for common stock in the public market, or the perception that such sales or issuance might occur, could negatively impact the market price of our stock and the terms upon which we may obtain additional equity financing in the future.

Our Board has the authority to designate and issue preferred stock that may have dividend, liquidation and other rights that are senior to those of our common stock.

Any debt securities, preferred shares, warrants or other rights to acquire shares or convertible or exchangeable securities that we issue in the future may have some rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock.

Any debt securities, preferred shares, warrants, OP units or other rights to acquire shares or convertible or exchangeable securities that we issue in the future may have some rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock.

Holders of our common stock are not entitled to preemptive rights or other protections against dilution.

Our preferred shares, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends or other distributions to the holders of our common stock.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

Thus, our stockholders bear the risk that our future offerings could reduce the per share trading price of our common stock and dilute their interest in us.

Our preferred shares, if issued, could have a preference on liquidating distributions or dividend payments that could limit our ability pay dividends or other distributions to the holders of our common stock.

Thus, our stockholders bear the risk that our future offerings or issuances could reduce the per share trading price of our common stock and dilute their interest in us.

General Risk Factors

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In addition, our failure to successfully attract, hire, retain and train qualified personnel may impede our ability to implement our business strategy.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology, including related to artificial intelligence, could harm our business.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

Privacy and security laws and regulations may also increase costs for our business.

We rely on information technology networks and systems, including the Internet and including services that may incorporate artificial intelligence technologies, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, tenant and lease data.

In addition, we may, from time to time, make investments in unconsolidated entities that offer technology services, some of which may rely on artificial intelligence technologies, to operators, which may involve storage of customer or resident data.

We rely on information technology networks and systems, including the Internet and services that may incorporate AI technologies, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information and tenant and lease data.

In addition, we may, from time to time, make investments in unconsolidated entities that offer technology services, some of which may rely on AI technologies, to operators, which may involve storage of customer or resident data.

We purchase some of our information technology from vendors, on whom our systems depend.

We generally rely on third-party systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant and other customer information, such as individually identifiable information, including information relating to financial accounts.

It is possible that our safety and security measures or other controls will not be able to prevent the systems’ improper functioning, the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks, or other security or integrity challenges, including as a result of the rapid development and increased adoption of artificial intelligence technologies, which may also heighten our information technology security risks by making cyberattacks more difficult to detect, contain and mitigate.

It is possible that our safety and security measures or other controls will not be able to prevent the systems’ improper functioning, the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks, or other security or integrity challenges, including as a result of the increased use of AI, which may also heighten our information technology security risks by making cyberattacks more sophisticated and difficult to detect, contain and mitigate.

Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information.

Any failure to maintain proper function, security and availability of our information systems, and the privacy of the data we store, or failure to comply with related regulations, could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations.

The regulatory environment related to cyber and information security, artificial intelligence, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business or to which we may become subject, including certain U.S.

state laws and E.U.

data protection legislation, such as they General Data Protection Regulation, or the GDPR, and the U.K.’s Data Protection Act, which impose significant data protection requirements and penalties for noncompliance.

Compliance with any of these requirements may result in additional costs and could impact how we conduct in business in new jurisdictions.

The regulatory environment related to cyber and information security, data collection and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business or to which we may become subject, including HIPAA and HITECH, as well as certain U.S.

state laws and U.K.

data protection legislation, such as the General Data Protection Regulation, or the GDPR, and the U.K.’s Data Protection Act, which impose significant data protection requirements and penalties for noncompliance.

Compliance with any of these requirements may result in additional costs and could impact our ability to conduct business in new jurisdictions.

Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, results of operations, financial condition and stock price.

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If we fail to maintain the adequacy of our internal controls or to implement required new or improved controls, our business, results of operations and financial condition could be materially adversely harmed, we could fail to meet our reporting obligations and there could be a material adverse effect on our stock price.

In addition, we may be adversely impacted by new accounting pronouncements which change our lease recognition or other accounting practices or otherwise alter how we report our financial results, or which require that we change our internal control and operating procedures, which we may be unable to do in a timely manner.

In addition, we may be adversely impacted by new accounting pronouncements which change our accounting practices or otherwise alter how we report our financial results, or which require that we change our internal control and operating procedures, which we may be unable to do in a timely manner.

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What changed 10-K

Item 1A. Risk Factors