Chiron Real Estate Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion should be read in conjunction with our financial statements, including the notes to those financial statements, included elsewhere in this Quarterly Report on Form 10-Q (this “Report”). Some of the statements we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain risk factors may cause actual results, performance, or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), that was filed with the U.S. Securities and Exchange Commission (the “SEC” or the “Commission”) on March 2, 2026 and Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. Unless otherwise indicated, all dollar amounts in the following discussion are presented in thousands.

Special Note Regarding Forward-Looking Statements

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). In particular, statements pertaining to our trends, liquidity, capital resources, future dividends, pending acquisitions, potential sales, the healthcare industry, the healthcare real estate markets and seniors housing opportunities, among others, contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology including, but not limited to, “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

• difficulties in identifying healthcare and seniors housing facilities to acquire (due to increased cost of capital, competition or otherwise) and completing such acquisitions;
• defaults on or non-renewal of leases by tenants;
• our ability to collect rents;
• increases in interest rates and increased operating costs;
• our operating assets in our SHOP segment may expose us to various operational risks, liabilities and claims;
• our ability to renew our management agreements with our SHOP managers on as favorable terms or at all, and our ability when necessary, to effectively and efficiently transition a SHOP community to a new manager;
• our ability to successfully re-align our portfolio in connection with the expansion of our investment strategy to focus primarily on seniors housing properties;
• macroeconomic and geopolitical factors, including, but not limited to, inflationary pressures, tariffs and international trade policies, elevated interest rates, distress in the banking sector, global supply chain disruptions and ongoing geopolitical conflicts and war;
• changes in current healthcare and healthcare real estate trends and costs, including wage inflation;
• an epidemic or pandemic (such as the COVID-19 epidemic), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it;
• our ability to satisfy the covenants in our existing and any future debt agreements;
• our ability to refinance our existing debt when needed or on favorable terms;
• decreased rental rates or increased vacancy rates, including expected rent levels on acquired properties;
• adverse economic or real estate conditions or developments, either nationally or in the markets in which our facilities are located;
• our failure to generate sufficient cash flows to service our outstanding obligations;
• our ability to satisfy our short and long-term liquidity requirements;
• our ability to deploy the debt and equity capital we raise;
• our ability to hedge our interest rate risk;
• our ability to raise additional equity and debt capital on attractive terms or at all;
• our ability to make distributions on shares of our common and preferred stock or to redeem our preferred stock;
• expectations regarding the timing and/or completion of any acquisition;
• expectations regarding the timing and/or completion of dispositions, and the expected use of proceeds therefrom;
• our use of joint ventures may limit our returns on and our flexibility with jointly-owned investments;
• general volatility of the market price of our common and preferred stock;
• changes in our business or our investment or financing strategy;
• our dependence upon key personnel, whose continued service is not guaranteed;
• our ability to identify, hire and retain highly qualified personnel in the future;
• the degree and nature of our competition;
• changes in healthcare laws, governmental regulations, tax laws and similar matters;
• changes in expected trends in Medicare, Medicaid and commercial insurance reimbursement trends, including changes in Medicaid reimbursement rates pursuant to the One Big Beautiful Bill Act (the “OBBBA”);
• competition for investment opportunities;
• our failure to achieve the anticipated benefits from, and effectively integrate, our completed or anticipated acquisitions and investments;
• our expected capital and tenant improvement expenditures;
• changes in accounting policies generally accepted in the United States of America (“GAAP”);
• lack of, or insufficient amounts of, insurance;
• other factors affecting the real estate industry generally;
• changes in the tax treatment of our distributions;
• our failure to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
• our ability to qualify for the safe harbor from the 100% prohibited transactions tax under the REIT rules with respect to our property dispositions; and
• limitations imposed on our business due to, and our ability to satisfy, complex rules relating to REIT qualification for U.S. federal income tax purposes.

See Item 1A. Risk Factors in our 2025 Annual Report and Item 1A. Risk Factors in this Quarterly Report on Form 10-Q for further discussion of these and other risks, as well as the risks, uncertainties and other factors discussed in this Report and identified in other documents we may file with the SEC from time to time. You should carefully consider these risks before making any investment decisions in our company. New risks and uncertainties may also emerge from time to time that could materially and adversely affect us. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes after the date of this Report, except as required by applicable law. You should not place undue reliance on any forward-looking statements that are based on information currently available to us or the third parties making the forward-looking statements.

Overview

Chiron Real Estate Inc. (the “Company”) is a Maryland corporation and internally managed real estate investment trust (“REIT”) that owns (i) healthcare facilities leased to physician groups and regional and national healthcare systems and (ii) seniors housing communities. The Company’s seniors housing includes independent living communities (“IL”), assisted living communities (“AL”), memory care communities (“MC”) and active adult communities. As of June 30, 2026, the Company’s total gross investment portfolio consisted of 82% healthcare facilities, primarily outpatient medical facilities, 16% seniors housing operating portfolio (“SHOP”) assets, and 2% unconsolidated joint ventures and other investments.

The Company holds its facilities and conducts its operations through a Delaware limited partnership subsidiary, Chiron Real Estate LP (the “Operating Partnership”). The Company serves as the sole general partner of the Operating Partnership through a wholly owned subsidiary of the Company, Chiron Real Estate GP LLC, a Delaware limited liability company. As of June 30, 2026, the Company owned 91.3% of the outstanding common operating partnership units (“OP Units”), with the remaining 8.7% owned by holders of long-term incentive plan units (“LTIP Units”) and third-party limited partners who contributed properties or services in exchange for OP Units.

Our revenues are derived from the rental and operating expense reimbursement payments we receive from our tenants, and most of our leases are medium to long-term triple net leases with contractual rent escalation provisions. We also derive revenue from resident agreements at our SHOP communities. Our primary expenses are depreciation, interest, property operating and general and administrative expenses. We finance our acquisitions with a mixture of debt and equity primarily from our cash from operations, borrowings under our Credit Facility, and stock issuances.

On September 19, 2025, the Company completed a one-for-five reverse stock split of its outstanding shares of common stock, with a corresponding adjustment to the outstanding partnership units of the Operating Partnership (the “Reverse Stock Split”). Unless otherwise noted, all common share and unit amounts shown herein are shown on a split-adjusted basis.

Business Overview and Strategy

We have expanded our business strategy to focus primarily on investments in seniors housing communities that provide an attractive rate of return relative to our cost of capital and are in attractive markets with favorable demographic trends. We believe these asset classes are well positioned to benefit from the growing needs of an aging population and support our goals of providing stockholders with (i) attractive dividends and (ii) stock price appreciation. We are focused on transitioning our asset base from one historically concentrated in outpatient medical facilities to one more heavily weighted toward seniors housing communities.

We also intend to utilize our experience and knowledge of inpatient rehabilitation facilities and outpatient medical real estate to manage our existing joint ventures and to evaluate healthcare real estate opportunities that complement our seniors housing strategy.

Most of our legacy healthcare facilities are leased to single tenants under triple-net leases. Our portfolio also contains some multi-tenant properties with gross lease or modified gross lease structures. In addition, we own SHOP communities from which we derive revenue from resident agreements. As of June 30, 2026, we also had an interest in four unconsolidated joint ventures that own or are developing healthcare and active adult facilities.

Our Properties

As of June 30, 2026, we had gross investments of approximately $1.6 billion in real estate, consisting of 182 healthcare facilities, primarily outpatient medical facilities, with an aggregate of approximately 4.6 million leasable square feet, and 2 SHOP communities, with an aggregate of 292 homes. This data does not include amounts for properties held in our unconsolidated joint ventures.

2026 Investment Activity

Acquired Properties

On June 1, 2026, the Company completed the acquisition of The Landing Alexandria (the “Landing”), a 163-home, luxury seniors housing community located in Alexandria, Virginia, from affiliates of Silverstone Senior Living (“SSL”) for a purchase price of approximately $130 million. The Landing has operated since May 2022 and offers independent living, assisted living and memory care.

On June 1, 2026, the Company completed the acquisition of The Riviera at Alexandria (the “Riviera”), a 129-home, luxury seniors housing community located in Alexandria, Virginia, from affiliates of SSL for a purchase price of approximately $119 million. The Riviera is a newly developed independent living community that opened in March 2026 and remains in lease-up.

The Company operates the Landing and the Riviera as SHOP communities and one of its taxable REIT subsidiaries (“TRS”) has engaged an affiliate of Greystone Communities to manage the day-to-day operations of the communities. Under this structure, the

Company owns the real estate and participates directly in the operating results of the communities, including revenues and operating expenses, rather than receiving fixed lease payments from a third-party tenant.

Properties Under Contract

On May 6, 2026, the Company entered into an agreement to acquire The Pinnacle North Bethesda (the “Pinnacle”), a newly constructed luxury senior housing community located in North Bethesda, Maryland, from an affiliate of SSL for a purchase price of approximately $176 million, subject to customary closing conditions and purchase price adjustments. The Pinnacle is expected to contain 175 homes, including independent living, assisted living, and memory care homes, together with ground floor retail. The closing of the Pinnacle acquisition is expected to occur on or before October 2026, subject to the satisfaction or waiver of customary closing conditions.

On July 10, 2026, the Company entered into a purchase agreement with SSL to acquire a parcel of land located in Reston, Virginia for a purchase price of approximately $15.0 million. The Company expects that a seniors housing community will be developed on the land. The acquisition remains subject to customary closing conditions and is expected to close in August 2026.

On August 3, 2026, the Company entered into an agreement to sell its surgical hospital in Beaumont, Texas for approximately $49 million to an affiliate of a Delaware statutory trust (“DST”). The Company expects to receive proceeds from the sale as beneficial interests in the DST are sold to investors.

There can be no assurance that acquisitions or dispositions will be completed on the anticipated timeline or at all.

Joint Ventures

On January 6, 2026, the Company entered into a joint venture with a developer to facilitate the development of a 132-home, active adult residential community in a suburb of Minneapolis, Minnesota (the “Maple Grove Active Adult Joint Venture”). We invested $7.1 million for a 49% equity interest in the Maple Grove Active Adult Joint Venture, with the developer retaining a 51% interest. The Maple Grove Active Adult Joint Venture entered into a construction loan with a principal balance of $31.0 million, of which $10.1 million was drawn on as of June 30, 2026. The developer is serving as the managing member of the Maple Grove Active Adult Joint Venture. We account for our interest in the Maple Grove Active Adult Joint Venture using the equity method of accounting.

On May 13, 2026, the Company entered into a joint venture with a developer to facilitate the development of an active adult residential community near Hudson, Wisconsin (the “Hudson Active Adult Joint Venture”). We invested $6.7 million for a 49% equity interest, with the developer retaining a 51% interest and serving as the managing member. We account for our interest in the Hudson Active Adult Joint Venture using the equity method of accounting.

On June 10, 2026, the Heitman OM Joint Venture acquired an additional medical office building located near Minneapolis, Minnesota, for a purchase price of $10.3 million, with the Company contributing its 12.5% proportionate share of the purchase price in accordance with the joint venture agreement. The Heitman OM Joint Venture has obtained two mortgage loans with a total principal balance of $22.9 million.

On June 29, 2026, the Company completed the sale of seven inpatient rehabilitation facilities (“IRFs”) to a newly formed joint venture (the “IRF Joint Venture”) between the Company, through its Operating Partnership, and a U.S. public pension fund (the “IRF JV Partner”). The portfolio was valued at an aggregate purchase price of $217 million and comprised approximately 456,000 square feet of space that was 100% leased with a weighted average remaining lease term of eight years. In connection with the transaction, the Company received net proceeds of $211.4 million, before funding its $16.3 million retained equity investment in the IRF Joint Venture, and recognized a gain on the sale of investment properties of $71.9 million. The IRF JV Partner acquired an 85% equity interest and controls the IRF Joint Venture through its voting interest, while the Company acquired a 15% equity interest, serves as manager of the joint venture, and continues to oversee asset management in exchange for a management fee. The IRF Joint Venture obtained a mortgage loan with a principal balance of $108.5 million, and the Company accounts for its retained interest using the equity method of accounting.

Real Estate Loans

On April 1, 2026, the Company originated a $3.0 million mezzanine loan secured by interests in an entity that owns an under-development medical facility located in Fort Myers, Florida, of which $2.9 million was drawn as of June 30, 2026. The medical facility is an on-campus outpatient surgical facility that is 100% pre-leased to an investment-grade tenant under a 15-year lease. The loan bears interest at a rate of 12.0% per annum and has an initial term of 24 months and included a 2.0% origination fee, with completion and repayment supported by a corporate guaranty. In connection with the loan, the Company holds a right of first offer and right of first refusal with respect to a sale of the property, which are subject to the pre-leased tenant’s corresponding rights.

On July 28, 2026, the Company originated an approximately $2.2 million mezzanine loan secured by interests in an entity that owns an under-development medical facility in Daleville, Virginia. The medical facility is a two-story, approximately 40,000 square foot freestanding emergency department and medical office building that is 100% pre-leased to an investment-grade regional healthcare system under a 15-year lease. The loan bears interest at 12% per annum, has an initial term of 24-month and included a 2.0% origination fee, with completion and repayment supported by a corporate guaranty. In connection with the loan, the Company holds a right of first offer and right of first refusal with respect to a sale of the property, which are subject to the pre-leased tenant’s corresponding rights.

2026 Disposition Activity

On June 29, 2026, the Company disposed of certain properties in connection with its investment activity, including the sale of seven IRFs to the IRF Joint Venture described above under “Joint Ventures.”

Recent Developments

On January 20, 2026, White Rock Medical Center LLC, filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code. At the time of its bankruptcy filing, White Rock operated two hospitals in Texas, including the White Rock Medical Center in Dallas, Texas, an acute-care hospital owned by the Company where White Rock is the sole tenant and has been operating the hospital since October 2023. There are 12 years remaining on this lease. According to the filed bankruptcy documents, the primary reason for the bankruptcy is a dispute with the former operator of the facility related to amounts due to the former operator. Accordingly White Rock plans to (i) restructure indebtedness related to its purchase of the hospital operations at the White Rock Medical Center and a related transition services agreement and (ii) sell its hospital operations to a third party, with the goal of stabilizing its operations and maximizing value to its stakeholders. As a means of assisting White Rock in its stabilization efforts, the Company has funded annual property tax obligations due under the lease and accepted reduced monthly payments. As of August 3, 2026, the Company has a receivable balance, net of security deposits, of approximately $1.7 million (exclusive of late fees and interest thereon). On July 10, 2026, White Rock filed its Second Plan of Reorganization where it indicated that it plans on affirming our lease as part of its reorganization plan. Although White Rock indicated that it intends on affirming our lease, there can be no assurance that White Rock will not change its plan to affirm its lease with us or that we will receive any amounts owed to us.

Trends Which May Influence Our Results of Operations

We believe the following trends may positively impact our results of operations:

• An aging population. The general aging of the population, driven by the large baby boomer generation (born 1946-1964) and increases in life expectancy due to advances in medical technology and services, continues to be a key driver of growth in healthcare expenditures. According to the most recent U.S. Census Bureau estimates, the population age 65 and older grew by over a third during the past decade, and roughly 3.1% from 2023 to 2024 and is projected to continue growing at a rate that exceeds that of the overall U.S. population. We believe this segment of the U.S. population will utilize many of the services provided at our healthcare facilities, including orthopedics, cardiovascular, gastroenterology and rehabilitation services.
• Seniors housing communities. As occupancy continues to recover in many markets and new supply remains constrained, owners of seniors housing properties have generally seen improving profitability and greater pricing power, including the ability to increase resident fees and reduce concessions. Margin recovery remains influenced by labor availability and wage pressure, as well as elevated insurance and other operating costs; accordingly, community performance tends to be strongest at well-located assets with experienced operators and favorable payer/resident mix.
• A continuing shift towards outpatient care. According to the American Hospital Association, patients are demanding more outpatient operations. We believe this shift in patient preference from inpatient to outpatient facilities will benefit our tenants as most of our properties consist of outpatient facilities.
• Physician practice group and hospital consolidation. We believe the trend towards physician group consolidation will serve to strengthen the credit quality of our tenants if our tenants merge or are consolidated with larger health systems.

We believe the following trends may negatively impact our results of operations:

• Interest rates remain at elevated levels. During 2025, the U.S. Federal Reserve (the “Fed”) continued lowering the Federal Funds Rate, with the most recent reduction in December 2025 bringing the target range to 3.50% to 3.75%, where it remained through June 30, 2026. During the first six months of 2026, the 10-year U.S. Treasury yield and the Secured Overnight Financing Rate (“SOFR”) increased modestly. As of June 30, 2026 the 10-year U.S. Treasury yield was 4.44% and one-month term SOFR was 3.63%.
• Although interest rates declined during 2025, they remain significantly higher than in 2021, when we entered into interest rate swaps with respect to the $350 million Term Loan A component of our Credit Facility. Those swaps fixed the SOFR component of the interest rate on Term Loan A at 1.36% and expired in April 2026, the original maturity date of Term Loan A. In connection with the extension and restructuring of Term Loan A, we entered into new interest rate swaps that fully hedge the SOFR components of the three new Term Loan A tranches through their respective maturities at fixed SOFR rates ranging from 3.24% to 3.32%. The current elevated interest rate environment has resulted in material increases in our interest expense with respect to our unhedged floating-rate indebtedness and, beginning in May 2026, increased our interest expense on the hedged Term Loan A tranches due to the higher fixed SOFR rates under the new swaps.
• Labor and wage pressure. Assisted living wage rates continued to rise in 2025 across nursing and direct-care roles. The Assisted Living Salary & Benefits Report cited by Senior Housing News reported 2025 hourly wage increases of approximately 2.96% for registered nurses, 2.77% for certified nursing assistants, 2.98% for resident assistants and 3.15% for medication aides. It also reported assisted living turnover of 34.53%, with resident assistant and personal care aide turnover above 40%.
• Increased Cost of Healthcare Delivery. Healthcare delivery costs continue to increase due to, among other things, increases in labor costs, medical supplies and technology investments. Increases in the cost of healthcare delivery can put stress on our tenants’ business, which, if not offset by revenue increases, could negatively affect our tenants’ ability to pay rent to us.
• Changes in third party reimbursement methods and policies. The price of healthcare services has been increasing, and, as a result, we believe that third-party payors, such as Medicare and commercial insurance companies, will continue to scrutinize and reduce the types of healthcare services eligible for, and the amounts of, reimbursement under their health insurance plans or increase the portion of premiums for which covered individuals are responsible. In January 2026, CMS announced proposed rate increases for 2027 to Medicare Advantage health plans of less than a tenth of a percent, which was less than market expectations. However, in April 2026, CMS finalized a net average increase of approximately 2.5%, representing more than $13 billion of additional payments to Medicare Advantage plans compared to 2026. While the final rate increase was significantly higher than initially proposed, reimbursement pressure on healthcare providers and payors remains a continuing industry concern. Additionally, beginning on January 1, 2026, premium tax credits that were intended to assist certain participants on the healthcare insurance exchanges in purchasing health insurance expired, which could result in significant premium increases for these participants. If these trends continue, our tenants’ businesses will continue to be negatively affected, which may impact their ability to pay rent to us.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our financial statements. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Report.

Segment Results

Beginning June 1, 2026, we operate through two reportable segments: Healthcare Real Estate and SHOP. Healthcare Real Estate continues to represent the majority of our revenues and Segment NOI for the three and six months ended June 30, 2026. SHOP results reflect one month of operations from the Landing and the Riviera following their acquisition on June 1, 2026. SHOP Segment NOI was $0.3 million for both the three and six months ended June 30, 2026, reflecting the partial-period contribution from these communities. We expect SHOP to become a more significant component of our results as recently acquired communities stabilize and as we continue to pursue our seniors housing investment strategy.

Consolidated Results of Operations

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

(in thousands)

Revenue

Total Revenue

Total revenue for the three months ended June 30, 2026 was $39.7 million, compared to $38.0 million for the same period in 2025, representing an increase of $1.7 million. The increase was primarily driven by $1.8 million of resident fees and services recognized during the one-month period that we owned the Landing and the Riviera. These increases were partially offset by the impact of dispositions completed during 2026 and 2025. Within total revenue, $5.6 million was recognized from net lease expense recoveries during the three months ended June 30, 2026, compared to $5.4 million for the same period in 2025.

Expenses

General and Administrative

General and administrative expenses for the three months ended June 30, 2026 were $5.2 million, compared to $6.0 million for the same period in 2025, a decrease of $0.8 million. The decrease was primarily driven by a decrease in professional fees of $0.4 million, non-cash LTIP compensation expense of $0.3 million, and general corporate expenses of $0.1 million.

Operating Expenses

Operating expenses for the three months ended June 30, 2026 were $10.0 million, compared to $8.2 million for the same period in 2025, an increase of $1.8 million. The increase was primarily attributable to $1.6 million of operating expenses related to the Landing and the Riviera for the one-month period that we owned these properties during the three months ended June 30, 2026. Operating expenses in the existing portfolio also increased by $0.4 million, reflecting higher property‑level costs year-over-year. These increases were partially offset by the dispositions completed during 2026 and 2025. Included in these amounts were $5.6 million of recoverable property operating expenses incurred during the three months ended June 30, 2026, compared to $5.4 million for the same period in 2025.

Depreciation Expense

Depreciation expense for the three months ended June 30, 2026 was $11.4 million, compared to $11.3 million for the same period in 2025, an increase of $0.1 million. The increase was primarily driven by our 2026 acquisitions, partially offset by the impact of dispositions completed during 2026 and 2025.

Amortization Expense

Amortization expense for the three months ended June 30, 2026 was $3.8 million, compared to $4.0 million for the same period in 2025, a decrease of $0.2 million. The decrease was primarily driven by decreases on the existing portfolio during that same period.

Interest Expense

Interest expense for the three months ended June 30, 2026 was $8.8 million, compared to $8.0 million for the same period in 2025, an increase of $0.8 million. The increase was partially driven by higher interest rates resulting from the expiration in April 2026 of the prior interest rate swaps on our Term Loan A and the replacement of those swaps with new interest rate swaps on the Term Loan A tranches that fix the SOFR component of the applicable interest rate at higher rates than the prior swaps. The increase was also partially attributable to higher average borrowings during the three months ended June 30, 2026 compared to the same period in 2025.

The weighted average interest rate of our debt for the three months ended June 30, 2026 was 4.32% compared to 4.03% for the same period in 2025. Additionally, the weighted average interest rate and term of our debt was 4.56% and 3.6 years, respectively, at June 30, 2026, compared to 4.09% and 1.6 years, respectively, at June 30, 2025.

Income Before Other Income (Expense)

Income before other income (expense) for the three months ended June 30, 2026 was $0.4 million, compared to $0.4 million for the same period in 2025.

Gain on Sale of Investment Properties

During the three months ended June 30, 2026, we recognized a gain on sale of investment properties of $71.9 million related to properties sold in connection with the establishment of the IRF Joint Venture. During the three months ended June 30, 2025, we completed one disposition recognizing a gain on sale of investment properties of $0.2 million.

Equity Loss from Unconsolidated Joint Ventures

Equity Loss from Unconsolidated Joint Ventures for the three months ended June 30, 2026 was $10 thousand, compared to $50 thousand for the same period in 2025, a decrease of $40 thousand.

Net Income

Net income for the three months ended June 30, 2026 was $72.3 million, compared to net income of $0.6 million for the same period in 2025, an increase of $71.7 million.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

(in thousands)

Revenue

Total Revenue

Total revenue for the six months ended June 30, 2026 was $77.8 million, compared to $72.6 million for the same period in 2025, representing an increase of $5.2 million. The increase was primarily attributable to $2.5 million of rental revenue from acquisitions completed during the six months ended June 30, 2025, reflecting a full six months of ownership in 2026. The increase was also driven by $2.4 million of growth in our existing portfolio and $1.8 million of resident fees and services recognized during the one-month period in which we owned the Landing and the Riviera. These increases were partially offset by the impact of dispositions completed during 2026 and 2025. Within total revenue, $11.9 million was recognized from net lease expense recoveries during the six months ended June 30, 2026, compared to $10.6 million for the same period in 2025.

Expenses

General and Administrative

General and administrative expenses for the six months ended June 30, 2026 were $10.3 million, compared to $9.6 million for the same period in 2025, an increase of $0.7 million. The increase was primarily driven by an increase in non-cash LTIP compensation expense of $0.7 million.

Operating Expenses

Operating expenses for the six months ended June 30, 2026 were $19.3 million, compared to $15.8 million for the same period in 2025, an increase of $3.5 million. The increase was primarily attributable to $1.6 million of SHOP operating expenses recognized during the one-month period in which we owned the Landing and the Riviera, $1.3 million of operating expenses from acquisitions completed during the six months ended June 30, 2025, reflecting a full six months of ownership in 2026, and $1.1 million of growth in our existing portfolio, reflecting higher property‑level costs year-over-year. These increases were partially offset by the impact of dispositions completed during 2026 and 2025. Included in these amounts were $11.9 million of recoverable property operating expenses incurred during the six months ended June 30, 2026, compared to $10.6 million for the same period in 2025.

Depreciation Expense

Depreciation expense for the six months ended June 30, 2026 was $22.5 million, compared to $21.6 million for the same period in 2025, an increase of $0.9 million. The increase was primarily attributable to $1.2 million of depreciation expense from acquisitions completed during the six months ended June 30, 2025, reflecting a full six months of ownership in 2026, and $0.4 million of SHOP depreciation expense recognized during the one-month period in which we owned the Landing and the Riviera. These increases were partially offset by the impact of dispositions completed during 2026 and 2025.

Amortization Expense

Amortization expense for the six months ended June 30, 2026 was $7.6 million, compared to $7.5 million for the same period in 2025, an increase of $0.1 million. The increase was primarily attributable to $0.7 million of amortization expense from acquisitions completed during the six months ended June 30, 2025, reflecting a full six months of ownership in 2026, and $0.1 million of SHOP amortization expense recognized during the one month period in which we owned the Landing and the Riviera. These increases were partially offset by $0.5 million of amortization expense decreases in our existing portfolio, and $0.2 million due to the impact of dispositions completed during 2026 and 2025.

Interest Expense

Interest expense for the six months ended June 30, 2026 was $16.0 million, compared to $15.2 million for the same period in 2025, an increase of $0.8 million. The increase was partially driven by higher interest rates resulting from the expiration in April 2026 of the prior interest rate swaps on our Term Loan A and the replacement of those swaps with new interest rate swaps on the Term Loan A tranches that fixed the SOFR component of the applicable interest rate at higher rates than the prior swaps. The increase was also partially attributable to higher average borrowings during the six months ended June 30, 2026 compared to the same period in 2025.

The weighted average interest rate of our debt for the six months ended June 30, 2026 was 4.03% compared to 3.93% for the same period in 2025. Additionally, the weighted average interest rate and term of our debt was 4.56% and 3.6 years, respectively, at June 30, 2026 compared to 4.09% and 1.6 years, respectively, at June 30, 2025.

Income Before Other Income (Expense)

Income before other income (expense) for the six months ended June 30, 2026 was $2.1 million, compared to $2.8 million for the same period in 2025, a decrease of $0.7 million.

Gain on Sale of Investment Properties

During the six months ended June 30, 2026, we recognized a gain on sale of investment properties of $71.9 million related to properties sold in connection with the establishment of the IRF Joint Venture. During the six months ended June 30, 2025, we completed three dispositions and recognized a gain on the sale of investment properties of $1.6 million.

Equity Loss from Unconsolidated Joint Ventures

Equity Loss from Unconsolidated Joint Ventures for the six months ended June 30, 2026 was $21 thousand, compared to $91 thousand for the same period in 2025, a decrease of $70 thousand.

Net Income

Net income for the six months ended June 30, 2026 was $73.9 million, compared to net income of $4.3 million for the same period in 2025, an increase of $69.6 million.

Assets and Liabilities

As of June 30, 2026 and December 31, 2025 our principal assets consisted of investments in real estate, net, of $1.2 billion and $1.2 billion, respectively. We completed two acquisitions and seven dispositions during the six months ended June 30, 2026. Our liquid assets consisted primarily of cash and cash equivalents and restricted cash of $12.9 million and $11.9 million, as of June 30, 2026 and December 31, 2025, respectively.

The increase in our cash and cash equivalents and restricted cash balances to $12.9 million as of June 30, 2026, compared to $11.9 million as of December 31, 2025, was primarily due to net proceeds received from the sale of investment properties, and net cash provided by operating activities, partially offset by net repayments on our Credit Facility, funds used to acquire investment properties and joint ventures, the payment of dividends to common and preferred stockholders as well as holders of OP Units and LTIP Units, and funds used for capital expenditures on existing real estate investments and leasing commissions.

The decrease in our total liabilities to $687.7 million as of June 30, 2026 compared to $712.4 million as of December 31, 2025, was primarily the result of higher net repayments on our Credit Facility and lower dividends payable.

Cash Flow Information

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

(in thousands)

Net cash provided by operating activities for the six months ended June 30, 2026 was $35.9 million, compared to $34.4 million for the same period in 2025. Net cash provided by operating activities increased primarily due to the impact of our 2026 and 2025 acquisitions.

Net cash used in investing activities for the six months ended June 30, 2026 was $81.7 million, compared to $66.4 million for the same period in 2025. Net cash used in investing activities increased primarily due to higher net acquisition activity in 2026 compared to 2025.

Net cash provided by financing activities for the six months ended June 30, 2026 was $46.8 million, compared to $32.3 million for the same period in 2025. Net cash provided by financing activities increased primarily due to higher net proceeds received from preferred stock offerings. These increases were partially offset by net repayments on our Credit Facility, and lower dividends paid to common and preferred stockholders as well as holders of OP Units and LTIP Units.

Non-GAAP Financial Measures

Management considers certain non-GAAP financial measures to be useful supplemental measures of the Company's operating performance. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable measure determined in accordance with GAAP. The Company reports non-GAAP financial measures because these measures are observed by management to also be among the most predominant measures used by the REIT industry and by industry analysts to evaluate REITs. For these reasons, management deems it appropriate to disclose and discuss these non-GAAP financial measures. Set forth below are descriptions of the non-GAAP financial measures management considers relevant to the Company's business and useful to investors, as well as reconciliations of those measures to the most directly comparable GAAP financial measure.

The non-GAAP financial measures presented herein are not necessarily identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. These measures should not be considered as alternatives to net income, as indicators of the Company's financial performance, or as alternatives to cash flow from operating activities as measures of the Company's liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of the Company's needs. Management believes that in order to facilitate a clear understanding of the Company's historical consolidated operating results, these measures should be examined in conjunction with net income and cash flows from operations as presented in the Condensed Consolidated Financial Statements and other financial data included elsewhere in this Report.

Funds from Operations, Core Funds from Operations, and Funds Available for Distribution

Funds from operations attributable to common stockholders and noncontrolling interest (“FFO”), and core FFO attributable to common stockholders and noncontrolling interest (“Core FFO”) and funds available for distribution attributable to common stockholders and noncontrolling interest (“FAD”) are non-GAAP financial measures within the meaning of the rules of the SEC. The Company considers FFO, Core FFO, and FAD to be important supplemental measures of its operating performance and believes FFO is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.

In accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, FFO means net income or loss computed in accordance with GAAP before noncontrolling interests of holders of OP Units and LTIP Units, excluding gains (or losses) from sales of property and extraordinary items, property impairment losses, less preferred stock dividends, plus real estate-related depreciation and amortization (excluding amortization of debt issuance costs and the amortization of above and below market leases), and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis. Because FFO excludes real estate-related depreciation and amortization (other than amortization of debt issuance costs and above and below market lease amortization expense), the Company believes that FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from the closest GAAP measurement, net income or loss.

Core FFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations. Management calculates Core FFO by modifying the NAREIT computation of FFO by adjusting it for certain cash and non-cash items and certain recurring and non-recurring items. For the Company these items include recurring acquisition and disposition costs, loss on the extinguishment of debt, recurring straight line deferred rental revenue, recurring stock-based compensation expense, recurring amortization of above and below market leases, recurring amortization of debt issuance costs, severance and transition related expense, costs related to our reverse stock split, and other items related to unconsolidated partnerships and joint ventures.

We calculate FAD by subtracting from Core FFO capital expenditures, including tenant improvements, leasing commissions and building capital. Management believes FAD is useful in analyzing the portion of cash flow that is available for distribution to stockholders and unitholders. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential.

Management believes that reporting Core FFO in addition to FFO and FAD is a useful supplemental measure for the investment community to use when evaluating the operating performance of the Company on a comparative basis.

A reconciliation of net income to FFO and Core FFO and FAD for the three and six months ended June 30, 2026 and 2025 is as follows. All per share, per share and unit, and weighted average share and unit amounts have been adjusted to reflect the impact of the Reverse Stock Split.

(unaudited, in thousands except per share and unit amounts)

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDAre

The Company calculates EBITDAre in accordance with standards established by NAREIT and defines EBITDAre as net income or loss computed in accordance with GAAP plus depreciation and amortization, interest expense, gain or loss on the sale of investment properties, property impairment losses, and adjustments for unconsolidated partnerships and joint ventures to reflect EBITDAre on the same basis, as applicable. The Company defines Adjusted EBITDAre as EBITDAre plus loss on extinguishment of debt, non-cash stock compensation expense, non-cash intangible amortization related to above and below market leases, severance and transition related expense, expenses related to our reverse stock split, transaction expense, adjustments related to our investments in unconsolidated joint ventures, and other normalizing items. Management considers EBITDAre and Adjusted EBITDAre important measures because they provide additional information to allow management, investors, and our current and potential creditors to evaluate and compare our core operating results and our ability to service debt.

A reconciliation of net income to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2026 and 2025 is as follows:

(unaudited and in thousands)

(1) Includes joint venture interest, depreciation and amortization, and gain on sale of investment properties, if applicable, included in unconsolidated joint ventures net income or loss.

Net Operating Income (NOI), Cash NOI, and Same-Property Cash NOI

The Company considers net operating income (“NOI”) to be an appropriate supplemental measure to net income because it helps both investors and management understand the core operations of our properties. We define NOI as total net (loss) income, plus depreciation and amortization expenses, general and administrative expenses, transaction expenses, impairments, (gain) loss on sale of investment properties, interest expense, and other non-operating items. Cash NOI and Same-Property Cash NOI are key performance indicators. Management considers these to be supplemental measures that allow investors, analysts and Company management to measure unlevered property-level cash operating results. The Company defines Cash NOI as NOI excluding non-cash items such as above and below market lease intangibles and straight-line rent. Cash NOI is historical and not necessarily indicative of future results. Same-Property Cash NOI compares Cash NOI for stabilized properties. Stabilized properties are properties that have been included in operations for the duration of the year-over-year comparison period presented. Accordingly, stabilized properties exclude properties that were recently acquired or disposed of, properties classified as held for sale, properties undergoing redevelopment, and newly redeveloped or developed properties. Same-Property Cash NOI also excludes lease terminations fees and joint ventures and other income in order to remove non-recurring items and joint venture-related income from our NOI.

(unaudited and in thousands)

Liquidity and Capital Resources

General

Our short-term (up to 12 months) liquidity requirements include:

• Interest expense and scheduled principal payments on outstanding indebtedness;
• General and administrative expenses;
• Property operating expenses;
• Property acquisitions;
• Distributions on our common and preferred stock and OP Units and LTIP Units;
• Increased capital requirements for our joint ventures;
• Repurchases of our common stock; and
• Capital and tenant improvements and leasing costs.

On May 5, 2026, the Board of Directors reduced the Company’s monthly common stock dividend from $0.25 per share to $0.16 per share. The Company is resizing its dividend to focus on retaining cash flow and to accelerate the Company’s acquisition strategy and accelerate the ramp of its SHOP portfolio.

In 2026, we are contractually obligated to pay, or have capital commitments for, principal and interest payments on our outstanding debt and ground and operating lease expenses. In addition, if we decide to redeem our Series A Preferred Stock in full, we would have to pay the liquidation preference of $77.6 million plus accrued dividends, fees and expenses.

Our long-term (beyond 12 months) liquidity requirements consist primarily of funds necessary to pay for acquisitions, capital and tenant improvements at our properties, scheduled debt maturities, general and administrative expenses, operating expenses, common stock repurchases, and distributions. Beyond 2026, we are contractually obligated to pay, or have capital commitments for, principal and interest payments on our outstanding debt and ground and operating lease expenses.

We expect to satisfy our short and long-term liquidity needs through various internal and external sources, including cash flow from operations, debt financing, sales of additional equity securities, the issuance of OP Units in connection with acquisitions of additional properties, proceeds from select property dispositions and recapitalization transactions.

Sources of Liquidity

Our primary internal sources of liquidity include cash flow from operations and proceeds from select property dispositions and recapitalization transactions. Our primary external sources of liquidity include net proceeds received from equity issuances, including the issuance of OP Units in connection with acquisitions of additional properties, and debt financing, including borrowings under our Credit Facility, secured term loans and Senior Note Facility.

ATM Program

In January 2024, the Company and the Operating Partnership implemented a $300 million “at-the-market” equity offering program, pursuant to which we may offer and sell (including through forward sales), from time to time, shares of our common stock (the “2024 ATM Program”). No shares were sold under the 2024 ATM Program during the six months ended June 30, 2026 or from July 1, 2026 through August 3, 2026. As of June 30, 2026, the Company has $288.0 million remaining available under the 2024 ATM Program.

In February 2026, the Company and the Operating Partnership implemented a $75 million “at-the-market” equity offering program, pursuant to which the Company may offer and sell (including through forward sales), from time-to-time, shares of its 8.00% Series B Cumulative Redeemable Preferred Stock (the “2026 Series B Preferred ATM Program”). No shares were sold under the 2026 Series B Preferred ATM Program during the six months ended June 30, 2026 or from July 1, 2026 through August 3, 2026.

Debt Financing

Credit Facility. Our Credit Facility consists of (i) the $350 million Term Loan A Tranches, (ii) the $150 million Term Loan B, and (iii) the $400 million Revolver. The Credit Facility also contains a $500 million accordion feature. As of August 3, 2026, we had unutilized borrowing capacity under the Credit Facility of $245.5 million.

The Credit Facility is an unsecured facility with a maturity of (i) October 2029 for the Revolver (subject to two, six-month extension options), (ii) October 2029, October 2030, and April 2031 for the Term Loan A Tranches, and (iii) February 2028 for Term Loan B. Interest rates on amounts outstanding under the Credit Facility equal SOFR plus a borrowing spread based on the current pricing grid in the Credit Facility.

As of June 30, 2026, we had 11 interest rate swaps that are used to manage our interest rate risk. Four of our interest rate swaps relate to our Term Loan B with a combined notional value of $150 million that fix the SOFR component on Term Loan B through January 2028 at 2.54%. Seven of our interest rate swaps relate to our Term Loan A tranches that fix the SOFR component of the Term Loan A Tranches with a combined notional value of $350 million at rates between 3.24% to 3.32% and have maturities in October 2029, October 2030, and April 2031. The seven interest rate swaps related to our Term Loan A tranches became effective in May 2026 following the maturity of five previous interest rate swaps that fixed the SOFR component through April 2026 at 1.36%.

We are subject to a number of financial covenants under the Credit Facility, including, among other things, the following as of the end of each fiscal quarter, (i) a maximum consolidated unsecured leverage ratio of less than 60%, (ii) a maximum consolidated secured leverage ratio of less than 30%, (iii) a maximum consolidated secured recourse leverage ratio of less than 10%, (iv) a minimum fixed charge coverage ratio of 1.50:1.00, (v) a minimum unsecured interest coverage ratio of 1.50:1.00, (vi) a maximum consolidated leverage ratio of less than 60%, (vii) a maximum cash investment in joint ventures of 10% of total asset value and (viii) a minimum net worth of $595.6 million plus 75% of all net proceeds raised through equity offerings subsequent to June 30, 2025. As of June 30, 2026, management believed it complied with all of the financial and non-financial covenants contained in the Credit Facility.

Total Fixed Debt. Our fixed debt totaled $501.1 million on a gross basis at June 30, 2026, with a weighted average interest rate of 4.42% based on our interest rate swaps and current leverage. The weighted average maturity of our fixed debt was 3.4 years at June 30, 2026.

Other Fixed Debt. We have $1.1 million in gross notes payable as of June 30, 2026. This debt is comprised of one instrument.

Senior Note Facility

On March 2, 2026, the Company entered into a Master Note and Guaranty Agreement (the “Senior Note Agreement”) with NYL Investors LLC and certain of its affiliates (collectively, the “Purchasers”). The Agreement establishes an uncommitted senior unsecured note facility pursuant to which the Company may issue senior unsecured promissory notes (“Notes”) from time to time in one or more series to the Purchasers in an aggregate principal amount of up to $150.0 million. The Senior Note Agreement does not obligate the Purchasers to purchase any Notes, and each issuance is subject to the Purchasers’ discretion and satisfaction of customary conditions. Notes may be issued under the Senior Note Agreement during a period ending on the earliest of (i) the third anniversary of the effective date of the Senior Note Agreement, (ii) termination of the facility by either party upon written notice, (iii) termination following certain events of default, or (iv) acceleration of the Notes and termination of the facility. Notes issued under the Agreement may have maturities of up to ten years and will bear interest at rates determined at the time of issuance based on spreads over U.S. Treasury securities. As of June 30, 2026, no Notes had been issued or were outstanding under the Senior Note Agreement.

Debt Activity

During the six months ended June 30, 2026, we borrowed $241.1 million under the Credit Facility and repaid $263.3 million, for a net amount repaid of $22.2 million. During the six months ended June 30, 2025, we borrowed $94.5 million under the Credit Facility and repaid $28.5 million, for a net amount borrowed of $66.0 million. As of June 30, 2026, the net outstanding Credit Facility balance was $641.0 million and as of August 3, 2026, we had unutilized borrowing capacity under the revolver component of the Credit Facility (the “Revolver”) of $245.5 million.

Series C Convertible Preferred Stock Offering

On May 29, 2026 and June 2, 2026, the Company issued and aggregate of 1,000,000 shares of its Series C Convertible Preferred Stock, for aggregate gross proceeds of $100.0 million. The Series C Convertible Preferred Stock provides for cumulative dividends at a rate of 6.00% per annum, which increases to 8.00% on June 2, 2030 (the date that is four years after the date of last issuance) to the extent the Series C Convertible Preferred Stock has not been redeemed or converted as of that date and increases by an additional 2.00% on each subsequent anniversary thereafter, up to a maximum of 12.00%, to the extent the Series C Convertible Preferred Stock has not been redeemed or converted as of such anniversary dates. The Series C Convertible Preferred Stock is convertible into shares of the Company’s common stock at an initial conversion rate of 2.32558 shares of common stock per share of Series C Convertible Preferred Stock, which is based on an implied conversion price of $43.00 per share of common stock, subject to customary anti-dilution adjustments. The Company may redeem the Series C Convertible Preferred Stock, in whole or in part, at its option on or after June 2, 2030 (the date that is four years after the date of last issuance), at a cash redemption price equal to the liquidation preference of $100 per share, plus accumulated and unpaid regular dividends, including any defaulted regular dividends. The Series C Convertible Preferred Stock generally has no voting rights, except for limited voting rights with respect to certain matters affecting its rights and preferences. In addition, upon issuance of the Series C Convertible Preferred Stock, the Company’s ability to make distributions with respect to, or redeem, purchase or acquire, or make liquidation payments on, any other shares of capital stock ranking junior to or on a parity with the Series C Convertible Preferred Stock became subject to certain restrictions in the event that the Company does not declare distributions on the Series C Convertible Preferred Stock during any distribution period.

Common Stock Repurchase Program

In August 2025, the Board approved a $50 million common stock repurchase program (the “Stock Repurchase Program”). Under the Stock Repurchase Program, we may purchase up to $50 million of our outstanding shares of common stock from time to time in the open market, including through block purchases, through privately negotiated transactions or pursuant to any Rule 10b5-1 trading plan, in accordance with applicable securities laws. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions and other considerations. The Stock Repurchase Program does not obligate us to repurchase any dollar amount or number of shares of our common stock and may be suspended or discontinued at any time. No shares were repurchased during the six months ended June 30, 2026 or from July 1, 2026 through August 3, 2026.

Off-Balance Sheet Arrangements

As of June 30, 2026, we have investments in four unconsolidated joint ventures with ownership interests of 49%, 49%, 15% and 12.5%. The aggregate carrying amount of debt, including both our and our partners’ share, incurred by these ventures was approximately $141.5 million (of which our proportionate share is approximately $24.1 million). See Note 2 (Summary of Significant Accounting Policies) to our accompanying condensed consolidated financial statements for additional information. We have no other off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business and investment objectives, we expect that the primary market risk to which we will be exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a result of debt used to acquire healthcare facilities, including borrowings under the Credit Facility. The analysis below presents the sensitivity of the value of our variable rate financial obligations to selected changes in market interest rates. The range of changes chosen reflects our view of changes which are reasonably possible over a one-year period.

As of June 30, 2026, we had $141.0 million of unhedged borrowings outstanding under the Revolver (before the netting of unamortized debt issuance costs) that bears interest at a variable rate. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources,” for a detailed discussion of our Credit Facility. On June 30, 2026, SOFR on our outstanding floating-rate borrowings was 3.65%. Assuming no increase in the amount of our variable interest rate debt, if SOFR increased 100 basis points, our cash flow would decrease by approximately $1.4 million annually. Assuming no increase in the amount of our variable rate debt, if SOFR were reduced 100 basis points, our cash flow would increase by approximately $1.4 million annually.

Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or floating rates. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Sources of Liquidity—Debt Financing,” for a description of our interest rate swaps.

We may enter into additional derivative financial instruments, including interest rate swaps and caps, in order to mitigate our interest rate risk on our future borrowings. We will not enter into derivative transactions for speculative purposes.

In addition to changes in interest rates, the value of our investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants/operators and borrowers, which may affect our ability to refinance our debt if necessary.

Evaluation of Disclosure Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, the Company’s

Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2026, the Company’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information it is required to disclose in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No changes were made to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and the Company’s internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and the Company’s internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Information on risk factors can be found in Part I, Item 1A (Risk Factors) of our 2025 Annual Report. Except as set forth below, there have been no material changes from the risk factors previously disclosed in our 2025 Annual Report. Some statements in this Quarterly Report on Form 10-Q constitute forward-looking statements. Please refer to Part I, Item 2 of this Quarterly Report on Form 10-Q entitled “Special Note Regarding Forward-Looking Statements.”

Our SHOP segment may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.

Under the REIT tax rules, the senior housing communities in our SHOP segment that are “qualified healthcare properties” generally must be operated and managed for us by third-party managers and we have limited rights to direct or influence the business or operations of those communities. Both our qualified and non-qualified healthcare properties in our SHOP segment are managed or sub-managed by third-party managers. However, in each case, we nonetheless participate directly in the financial performance of the communities’ operations and are ultimately responsible for all operational risks and other liabilities of such properties, other than those arising out of certain actions by our managers, such as gross negligence, fraud or willful misconduct. These risks include, and our financial performance is impacted by, among other things, fluctuations in occupancy levels, the inability to charge desirable resident fees (including anticipated increases in those fees), increases in the cost of food, supplies, energy, labor (as a result of labor shortages, unionization, inflation or otherwise) or other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, changes in management or equity, accounting misstatements, professional and general liability claims, litigation and regulatory actions and the availability and cost of insurance. Additionally, new or smaller third-party managers may have less experience in managing these senior housing communities and may require more oversight or attention. Any one or a combination of these factors could impact the performance of our SHOP segment, which could adversely affect our business, financial condition and results of operations.

We generally hold the applicable healthcare license and enroll in applicable government healthcare programs on behalf of the properties in our SHOP segment, which subjects us to potential liability under various healthcare laws and regulations.

Our inability to renew our management agreements with our SHOP managers and sub-managers on as favorable terms or at all, and our inability when necessary, to effectively and efficiently transition a SHOP community to a new manager or sub-manager, may have an adverse effect on our business, financial condition and results of operations.

We are party to management agreements with our SHOP managers and sub-managers. While our management and sub-management agreements may be renewed, either pursuant to pre-negotiated renewal rights or through negotiation, there can be no assurance that our managers or sub-managers will renew with us. Even if a manager or sub-manager renews its agreement with us, we cannot assure you that the renewals will be on favorable terms. This risk may be exacerbated if market conditions at the time of the renewal are not as favorable as they were at the time the agreement was initially entered into or if the manager or sub-manager is subject to financial or operational difficulties.

Our management and sub-management agreements provide us and our managers and sub-managers with termination rights in certain circumstances. If our management or sub-management agreements are not renewed or are otherwise terminated, we may attempt to transition those properties to one or more managers or sub-managers or reposition those properties for an alternative use. We may not be successful in identifying suitable replacements or entering into management or sub-management agreements or other arrangements with new managers or sub-managers on a timely basis or on terms as favorable to us as our current management or sub-management agreements, if at all.

During transition periods to new managers or sub-managers or in connection with repositioning the property, the attention of existing managers or sub-managers may be diverted from the performance of the properties, which could cause the financial and operational performance at those properties to decline and could increase exposure to operational and compliance risks. We may be required to fund certain expenses and obligations (such as real estate taxes, debt costs and maintenance expenses) or provide certain indemnities to preserve the value of, and avoid the imposition of liens on, our properties while they are being repositioned. Our ability to transition our properties to a suitable replacement manager or sub-manager or reposition our properties could be significantly delayed or limited by state licensing, receivership, certificates of need, Medicaid change-of-ownership rules or other legal and regulatory requirements or restrictions. The inability to replace a manager or sub-manager on a timely or successful basis could have an adverse effect on our business, financial condition and results of operations.

Significant legal or regulatory proceedings could subject us or our managers or sub-managers to increased operating costs and substantial uninsured liabilities, which could adversely affect our or their liquidity, financial condition and results of operations.

From time to time, we or our managers or sub-managers may be subject to lawsuits, investigations, claims and other legal or regulatory proceedings arising out of our or their alleged actions or inactions. Also, in certain circumstances, regardless of whether we are a named party in a lawsuit, investigation, claim or other legal or regulatory proceeding, we may be contractually obligated to indemnify, defend and hold harmless our managers, sub-managers and other third parties against, or may otherwise be responsible for such actions, proceedings or claims. These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims, class action claims, employment-related claims, as well as regulatory proceedings, including proceedings related to our SHOP segment, where we are typically the holder of the applicable healthcare license. In addition, some of our properties may be in states in which the litigation environment may pose a significant business risk to us.

In our operating assets, we will be generally responsible for all liabilities of the properties, including any lawsuits, investigations, claims and other legal or regulatory proceedings, other than those arising out of certain limited actions by our managers or sub-managers, such as those caused by gross negligence, fraud or willful misconduct. As a result, we have exposure to, among other things, professional and general liability claims, employment-related claims and the associated litigation and other costs related to defending and resolving such claims, some of which may be uninsured, either as a result of insufficient coverage or unavailability of coverage at a reasonable price.

If one of our managers or sub-managers fails to comply with applicable law or regulation, we may be held responsible, which could subject us to civil, criminal and administrative penalties, including the loss or suspension of accreditation, licenses or certificates of need with respect to a single community or more broadly; suspension of or nonpayment for new admissions; denial of reimbursement; fines; suspension, decertification, or exclusion from federal, state or foreign healthcare programs; or facility closure. In addition, we cannot assure you that any contractual obligations to indemnify, defend and hold us harmless from such liabilities will be satisfied by third parties, or that any amounts held in escrow for such purpose will be sufficient.

An unfavorable resolution of any such lawsuit, investigation, claim or other legal or regulatory proceeding could materially and adversely affect our or our managers’ or sub-managers’ liquidity, financial condition and results of operations, and may not be protected by sufficient or any insurance coverage. Even with a favorable resolution of litigation or a proceeding, the effect of litigation and other potential litigation and proceedings may divert the attention of management and materially increase operating costs we or our managers or sub-managers incur. Negative publicity with respect to any lawsuits, claims or other legal or regulatory proceedings may also negatively impact their or our or the affected properties’ reputation.

Our business may be subject to lawsuits or other legal or regulatory proceedings such as professional or general liability litigation alleging wrongful death and negligence claims, some of which may result in large damage awards and not be indemnified or subject to sufficient insurance coverage, may require our support as a result of our indemnification agreements or may result in restrictions in the operations of our or our managers’ or sub-managers’ business.

Events that adversely affect the ability of seniors and their families to afford resident fees at our seniors housing facilities could cause our occupancy rates, revenues and results of operations to decline.

Costs to seniors associated with independent, assisted living and memory care services are generally not reimbursable under government reimbursement programs such as Medicare and Medicaid. Only seniors with sufficient income or assets or other resources will be able to afford to pay the monthly resident fees, and a weak economy, depressed housing market or changes in demographics could adversely affect their continued ability to do so. If our managers or sub-managers are unable to retain and attract seniors with sufficient income, assets or other resources required to pay the fees associated with independent and assisted living services, our occupancy rates and revenues could decline, which could, in turn, materially adversely affect our business, results of operations and financial condition.

Our ability to lease certain of our seniors housing facilities to our TRS lessee will be limited by the ability of those seniors housing facilities to qualify as “qualified healthcare properties.”

We lease certain of our seniors housing facilities to our TRS lessee, which contracts with managers to manage the healthcare operations at those facilities. Our ability to use this TRS lessee structure may be limited by the ability of those seniors housing facilities to qualify as “qualified healthcare properties” and the ability of the managers who our TRS lessee engages to manage the “qualified healthcare properties” to qualify as “eligible independent contractors.”

A “qualified healthcare property” includes any real property and any personal property that is, or is necessary or incidental to the use of, a hospital, nursing facility, assisted living facility, congregate care facility, qualified continuing care facility or other licensed facility which extends medical or nursing or ancillary services to patients and which is operated by a provider of such services which is eligible for participation in the Medicare program with respect to such facilities. Some of our properties may not be treated as “qualified healthcare properties.” To the extent a property does not constitute a “qualified healthcare property,” we will be unable to use the TRS lessee structure with respect to that property.

If our TRS lessee failed to qualify as a TRS or the facility managers engaged by our TRS lessee do not qualify as “eligible independent contractors,” we could fail to qualify as a REIT and could be subject to higher taxes.

Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. We lease certain of our seniors housing facilities that qualify as “qualified healthcare properties” to our TRS lessee. So long as our TRS lessee qualifies as a TRS, it will not be treated as a “related party tenant” with respect to our “qualified healthcare properties” that are managed by an independent facility manager that qualifies as an “eligible independent contractor.” We expect that our TRS lessee will qualify to be treated as a TRS for U.S. federal income tax purposes, but there can be no assurance that the IRS will not challenge the status of our TRS lessee for U.S. federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in disqualifying our TRS lessee from treatment as a TRS, we could fail to meet the asset tests applicable to REITs and we could fail to satisfy the gross income tests. If we failed to meet either the asset or gross income tests, we could lose our REIT qualification for U.S. federal income tax purposes unless we qualified for application of statutory savings provisions.

Additionally, if the managers engaged by our TRS lessee do not qualify as “eligible independent contractors,” we could fail to qualify as a REIT. Each of the managers that enter into a management contract with our TRS lessee must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRS lessee to be qualifying income for purposes of the REIT gross income tests. Among other requirements, in order to qualify as an eligible independent contractor, a manager must not own, directly or indirectly, more than 35% of our outstanding stock and no person or group of persons can own more than 35% of our outstanding stock and the ownership interests of the manager, taking into account certain ownership attribution rules. The ownership attribution rules that apply for purposes of these 35% thresholds are complex. Although we intend to monitor ownership of our stock by our managers and their owners, there can be no assurance that these ownership levels will not be exceeded.

In addition, in order to qualify as an “eligible independent contractor,” among other requirements, a manager (or a related person) must be actively engaged in the trade or business of operating “qualified healthcare properties” for persons who are not related to us or our TRS lessee. Consequently, if a manager (or a related person) with respect to a “qualified healthcare property” of ours does not operate sufficient “qualified healthcare properties” for third parties, the manager will not qualify as an “eligible independent contractor.”

The ability of our TRSs to manage certain of our independent living facilities will be dependent on such facilities not constituting “qualified healthcare properties.”

We engage TRSs to manage certain of our independent living facilities. Our ability to utilize TRSs in such a role depends on those independent living facilities not constituting “qualified healthcare properties” within the meaning of the U.S. federal income tax rules applicable to REITs. While we believe that such independent living facilities are not “qualified healthcare properties,” if the IRS challenged such belief and a court sustained such a challenge, our income from the properties could fail to qualify as rents from real property for purposes of the REIT gross income tests, and as a result we could fail to qualify as a REIT.