NATIONAL HEALTH INVESTORS INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

1 The condensed consolidated balance sheets include each of the following amounts related to our consolidated variable interest entities: $498.8 million and $505.9 million of real estate properties, net; $10.1 million and $9.7 million of cash and cash equivalents; $9.7 million and $10.0 million of straight-line rent receivable; $6.1 million and $7.5 million of other assets, net; and $4.4 million and $5.7 million of accounts payable and accrued expenses as of June 30, 2025 and December 31, 2024, respectively.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

($ in thousands)

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

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

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Nature of the Business

National Health Investors, Inc. (“NHI,” the “Company,” “we,” “us,” or “our”), established in 1991 as a Maryland corporation, is a self-managed real estate investment trust (“REIT”) specializing in sale-leaseback, joint venture, and mortgage and mezzanine financing of need-driven and discretionary senior housing and medical facility investments. We operate throughtwo reportable segments: Real Estate Investments and Senior Housing Operating Portfolio (“SHOP”).

Our Real Estate Investments segment consists of real estate investments, tenant leases, and mortgage and other notes receivable related to independent living facilities (“ILFs”), assisted living facilities (“ALFs”), entrance-fee communities (“EFCs”), senior living campuses (“SLCs”), skilled nursing facilities (“SNFs”) and hospitals (“HOSPs”). As of June 30, 2025, we had gross real estate investments of $2.7 billion in 181 real estate properties located in 32 states and leased pursuant primarily to triple-net leases to 31 tenants, consisting of 115 senior housing communities,65 SNFs andone HOSP. Our portfolio often mortgages along with other notes receivable totaled $270.4 million, excluding an allowance for expected credit losses of $17.5 million, as of June 30, 2025.

Our SHOP segment is comprised oftwo ventures that own the operations of ILFs. For this segment, as of June 30, 2025, we had gross real estate investments of $360.8 million in 15 ILFs located ineight states with a combined total of 1,732 units that are operated on behalf of us by third-party property managers pursuant to the terms of separate management agreements. The third-party property managers, or related parties of the property managers, own equity interests in the respective ventures. Units, beds and property count disclosures in these notes to the condensed consolidated financial statements are outside the scope of our independent registered accounting firm’s review.

Note 2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial statements. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation. Interim results of operations are not necessarily indicative of the results that may be achieved for a full year. The condensed consolidated financial statements and related notes do not include all information and notes required by GAAP for annual reports. These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024, included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”).

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, joint ventures and subsidiaries in which we have a controlling interest. We have variable interest entities (“VIEs” or “VIE”), which we consolidate when control of such entities can be achieved through means other than voting rights when we are deemed to be the primary beneficiary of such entities. All intercompany transactions and balances are eliminated in consolidation.

Our consolidated assets and liabilities includetwo consolidated ventures comprising our SHOP activities, each formed with a separate partner - Merrill Gardens, L.L.C. (“Merrill”) and DSHI NHI Holiday LLC (the “Discovery member”), a related party of Discovery Senior Living (“Discovery”). We consider both ventures to be VIEs as the members of each, as a group, lack the characteristics of a controlling financial interest. We are deemed to be the primary beneficiary of each VIE because we have the ability to control the activities that most significantly impact each VIE’s economic performance and the obligation to absorb losses or the right to receive benefits. Reference Notes 5 and 16 for further discussion of our SHOP ventures.

We also consolidatetwo real estate partnerships formed with our partners, Discovery Senior Housing Investor XXIV, LLC, a related party of Discovery, and LCS Timber Ridge LLC (“LCS”), to invest in senior housing facilities. We consider both partnerships to be VIEs, as either the members, as a group, lack the characteristics of a controlling financial interest or the total equity at risk is insufficient to finance activities without additional subordinated financial support. We direct the activities that most significantly impact economic performance of these partnerships and the obligation to absorb losses or the right to receive benefits, subject to limited protective rights extended to our partners for specified business decisions. Because of our control of these partnerships, we include their assets, liabilities, noncontrolling interests and operations in our condensed consolidated financial statements. Reference Note 16 for further discussion of these consolidated real estate partnerships.

We use the equity method of accounting when we own an interest in an entity over which we can exert significant influence, but cannot control the entity’s operations. We discontinue equity method accounting if our investment in an entity, including our net advances to the entity, is reduced to zero unless we have guaranteed obligations of the entity or are otherwise committed to provide further financial support for the entity. Reference Note 6 for further discussion of our equity method investment.

We have concluded that the Company is not the primary beneficiary for certain investments where we lack either directly, or through related parties, the power to direct the activities that most significantly impact their economic performance. Reference Note 16 for further discussion of our unconsolidated VIEs.

Noncontrolling Interests

Contingently redeemable noncontrolling interests are recorded at their initial carrying values upon issuance and are subsequently adjusted to reflect their share of gains or losses, contributions, and distributions attributable to the noncontrolling interests. In periods where they are or will become probable of redemption, an adjustment to the redemption value of the noncontrolling interests is also recognized through capital in excess of par value on our condensed consolidated balance sheets and included in our computation of earnings per share. As of June 30, 2025 and December 31, 2024, the Merrill SHOP venture noncontrolling interest was classified as mezzanine equity on our condensed consolidated balance sheets, as further discussed in Note 10.

The noncontrolling interests associated with ourtwo consolidated real estate partnerships and our Discovery member SHOP venture meets the conditions to be classified as equity on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents consist of all highly liquid investments with original maturities of three months or less. Our restricted cash includes amounts required to be held on deposit or subject to an agreement, including those with a qualified intermediary subject to an exchange agreement pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) or in accordance with agency agreements governing our mortgages. Restricted cash is included in other assets, net, on our condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash from our condensed consolidated statements of cash flows to the amounts presented on our condensed consolidated balance sheets ($ in thousands):

Concentrations of Credit Risks

Our credit risks primarily relate to cash and cash equivalents and investments in mortgage and other notes receivable. Cash and cash equivalents are primarily held in bank accounts and overnight investments. We maintain our bank deposit accounts with large financial institutions in amounts that may exceed federally insured limits. We have not experienced any losses in such accounts. Our mortgage and other notes receivable consist primarily of secured loans on healthcare facilities.

Our financial instruments, principally our investments in mortgage and other notes receivable, are subject to the possibility of loss as a result of the failure of other parties to perform according to their contractual obligations which may make the instruments less valuable. We obtain collateral in the form of mortgage liens and other protective rights for mortgage and other notes receivable and continually monitor these rights in order to reduce such possibilities of loss. We evaluate the need to provide for reserves for potential losses on our financial instruments based on management’s periodic review of our portfolio on an instrument-by-instrument basis.

We evaluate the recoverability of the carrying amounts of our long-lived assets when events or circumstances, including significant physical changes, significant adverse changes in general economic conditions or significant deterioration of the underlying cash flows of the long-lived assets, indicate that the carrying amounts of a long-lived assets may not be recoverable. We assess whether an impairment charge is needed by comparing the future estimated undiscounted cash flows of the identified asset to its carrying amount. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the identified asset exceeds its estimated fair value. Impairment charges are included in loan and realty (gains) losses, net, in our condensed consolidated statements of income.

Revenue Recognition

Rental Income - Our operating leases with tenants typically provide for rent escalators. Base rental income is recognized using the straight-line method over the term of the lease to the extent that lease payments are considered collectable from tenants and the lease provides for specific contractual escalators. Under certain leases, we may receive additional contingent rent, which is calculated as a percentage of the increase in revenues of the tenant over a base year or base quarter. We recognize contingent rent annually or quarterly based on the actual revenues of the tenant once the target threshold has been achieved. Lease payments that are considered contingent rent are excluded from our schedule of future minimum lease payments. Reference Note 3 for additional information.

We review our operating lease receivables for collectability on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in which the tenant operates and economic conditions in the area where the property is located. In the event that collectability of substantially all lease payments with respect to any tenant is not probable, a direct write-off of the receivable is made as an adjustment to rental income and any future rental revenue is recognized only when the tenant makes a rental payment. Reference Note 3 for further discussion.

Resident Fees and Services - Resident fees and services revenue associated with our SHOP activities is recognized as the related performance obligations are satisfied and include resident room charges, community fees and other resident charges.

Residency agreements are generally short-term (30 days toone year) and entitle residents to certain room and care services for a monthly fee billed in advance. Revenue for certain related services is billed monthly in arrears. We have elected the lessor practical expedient within Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 842, Leases, not to separate the lease and non-lease components within our residency agreements as the timing and pattern of transfer of the underlying services to the resident are the same. We have determined that the non-lease component is the predominant component within the contract, and therefore recognizes revenue under ASC 606, Revenue Recognition from Contracts with Customers.

Interest Income from Mortgage and Other Notes Receivable -Interest income is recognized based on the interest rates and principal amounts outstanding on the notes receivable. We identify a mortgage or other note receivable that is non-performing and place it on non-accrual status based on various criteria including timeliness of required payments, compliance with other provisions under the related note agreement, and an evaluation of the borrower’s current financial condition for indicators that it is probable it cannot pay its contractual amounts. A non-performing loan is returned to accrual status at such time as the note becomes contractually current and management believesall future principal and interest will be received according to the contractual terms of the note. As of June 30, 2025, we hadtwo mezzanine loans totaling $13.3 million that are designated as non-performing loans. Reference Note 4 for additional information.

Income Taxes

We intend at all times to qualify as a REIT under Internal Revenue Code Sections 856 through 860. Accordingly, we will generally not be subject to U.S. federal income tax, provided that we continue to qualify as a REIT. A failure to qualify to the applicable REIT qualification rules and regulations would have a material adverse impact on our consolidated financial position, results of operations and cash flows.

Certain activities that we undertake may be conducted by subsidiary entities that have elected to be treated as taxable REIT subsidiaries (“TRS”). TRSs are subject to federal, state, and local income taxes. Accordingly, a provision for income taxes is made in our condensed consolidated financial statements, when applicable.

Segments

We operate our business through two reportable segments: Real Estate Investments and SHOP. In our Real Estate Investments segment, we invest in (i) senior housing and healthcare real estate and lease those properties to healthcare operating companies under primarily triple-net leases that obligate tenants to pay all property-related expenses and (ii) mortgage and other notes receivable throughout the United States. As of June 30, 2025, our SHOP segment is comprised of the operations of 15 ILFs located ineight states that are operated on behalf of us by third-party property managers pursuant to the terms of separate management agreements. Reference Notes 5 and 15 for additional information on our segments.

There were no transfers of assets or liabilities between our segments during the three and six months ended June 30, 2025 and 2024. When a real estate property is transferred fromone segment to another, the operating results associated with the property, including leasing arrangements, are included with the operating results of the original segment until the date of transfer. Operating results generated from the real estate property after the transfer date are included in the new segment.

Forward Equity Sales

We have, and may continue to, enter into forward equity sales agreements relating to shares of our common stock, either through our at-the-market (“ATM”) equity program or through underwritten public offerings. These agreements may be physically settled in our common stock, settled in cash or net share settled at our election. The forward sale price that we will receive upon physical settlement of forward equity sale agreement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread adjustment, and (ii) scheduled dividends during the term of the forward equity sale agreement. To the extent our forward equity sales agreements do not meet all the criteria to qualify for equity treatment on our consolidated balance sheet under ASC 815, Derivatives and Hedging, we recognize the change in the fair value of the derivative in our earnings. We evaluated our forward equity sales agreements and concluded they meet the conditions to be classified as equity on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.

Shares issuable under a forward equity sale agreement are reflected in our diluted earnings per share calculations for the applicable periods using the treasury stock method. Under this method, the number of our common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward equity sale agreement over the number of common shares that could be purchased by us in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the weighted average forward price during the reporting period).

Earnings Per Share

Our unvested restricted stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be participating securities. Therefore, we apply the two-class method to calculate basic and diluted earnings per share. Under the two-class method, we allocate net income attributable to stockholders to common stockholders and holders of unvested restricted stock awards by using the weighted-average shares of each class outstanding for quarter-to-date and year-to-date periods, based on their respective participation rights to dividends declared and undistributed earnings. Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the effect of dilutive securities.

Recent Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments to the existing guidance that further enhance income tax disclosures, primarily through standardization of income tax rate reconciliation categories and disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public entities to enhance transparency of income statement disclosures, on an interim and annual basis, by providing additional disaggregated information related to certain costs and expenses. This guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides public entities with a practical expedient in estimating credit losses to current accounts receivable and contract assets arising from transactions accounted for under ASC 606. This guidance is effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.

Note 3. Investment Activity

Asset Acquisitions

During the six months ended June 30, 2025, we completed the following real estate acquisitions within our Real Estate Investments segment ($ in thousands):

1 This property was acquired in a deed in lieu of foreclosure transaction with Senior Living Management to satisfy the repayment of its $10.0 million mortgage with us. See “Cash Basis Tenants” below.

In January 2025, we acquired a 108-unit assisted living and memory care community in Montrose, Colorado. The acquisition price was $21.2 million, including $0.2 million in closing costs. The property is leased pursuant to a 10-year triple-net lease, which includestwo five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%.

In March 2025, we acquired a 120-unit assisted living and memory care community in Bergen County, New Jersey. The acquisition price was $46.3 million, including $0.3 million in closing costs. The property is leased pursuant to a 15-year triple-net lease, which includestwo five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%. The lease includes a $0.8 million capital improvement commitment, which will be added to the respective lease base, if funded.

In April 2025, we acquired a portfolio ofsix memory care communities located in Nebraska for a total purchase price of $63.5 million, including $0.3 million in closing costs. The portfolio of properties is leased pursuant to a 15-year triple-net master lease, which includestwo five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%.

Third Quarter 2025 Activity

Effective August 1, 2025, we entered into a lease termination agreement for our triple-net master lease with related parties of Discovery for a portfolio ofsix senior housing properties held in the consolidated real estate partnership with a related party of Discovery, which requires the Discovery tenant to pay us approximately $3.3 million. We recorded a $9.0 million write off of the related straight-line rent receivable in the third quarter of 2025. Additionally, on August 1, 2025, we purchased the remaining 2.0% noncontrolling equity interest in the real estate partnership for a nominal amount.

Concurrently with the activities above, we transitioned this portfolio from our Real Estate Investments segment into our SHOP segment. Reference Note 5 for additional information. The aggregate net carrying value of these real estate properties was $125.7 million on our condensed consolidated balance sheet as of June 30, 2025. We recognized rental income of $1.2 million and $2.8 million during the three and six months ended June 30, 2025, respectively, and $1.5 million and $3.1 million during the three and six months ended June 30, 2024, respectively, in our condensed consolidated statements of income related to this triple-net master lease.

Also, effective August 1, 2025, we terminated a triple-net lease with an affiliate of Discovery for an ILF in Tulsa, Oklahoma. We recorded a $3.2 million write off of the related straight-line rent receivable in the third quarter of 2025. Concurrently with the termination, we transitioned this property from our Real Estate Investments segment to the existing Discovery member SHOP venture in our SHOP segment. Reference Note 5 for additional information. As of June 30, 2025, the net carrying value of this property was $28.0 million on our condensed consolidated balance sheet. We recognized rental income of $0.7 million and $1.4 million during the three and six months ended June 30, 2025, respectively, and $0.7 million and $1.4 million during the three and six months ended June 30, 2024, respectively, in our condensed consolidated statements of income related to this triple-net lease.

During the three and six months ended June 30, 2025, we did not recognize any impairment charges. During each of the three and six months ended June 30, 2024, we recognized an impairment charge of $0.7 million onone property in our Real Estate Investments segment, which was reclassified to assets held for sale in the second quarter of 2024. This property was subsequently sold in the fourth quarter of 2024.

We reduce the carrying value of an impaired real estate property to its estimated fair value or, with respect to properties classified as assets held for sale, to its estimated fair value less cost to sell. To estimate the fair value of a property, we utilize a market approach which considers binding agreements for sales of similar properties (Level 1 inputs), non-binding offers to purchase the property from unrelated third parties, broker quotes of estimated fair value (Level 3 inputs), and / or third-party valuations of the property (Level 3 inputs).

Tenant Purchase and Sale Agreement

We lease a senior living community that is subject to an outstanding purchase and sale agreement for the tenant to acquire the property for approximately $39.0 million. The purchase and sale agreement, as amended, expires in October 2025. The property was classified as a held and used asset on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. During each of the three and six months ended June 30, 2025 and 2024, we recognized $0.7 million and $1.4 million, respectively, of rental income related to the existing triple-net lease at this property, which expires in July 2027. The property will be reclassified to assets held for sale when the sale becomes probable, including when the tenant demonstrates its ability to obtain sufficient financing to close on the sale of the property within the terms of the purchase and sale agreement. As of June 30, 2025, the net carrying value of this real estate property was $18.8 million on our condensed consolidated balance sheet.

Tenant Concentrations

The following table presents information related to concentrations of tenants, or affiliates of tenants, in our Real Estate Investments segment that exceed 10% of our consolidated revenues, excluding $2.6 million for our corporate office, a credit loss reserve of $17.5 million and $360.8 million in real estate assets in the SHOP segment ($ in thousands):

1 Amounts include interest income from mortgage and other notes receivable and rental income from real estate properties classified as assets held for sale.

2 There are no tenant concentration in revenues from resident fees and services because the related agreements are with individual residents.

As of June 30, 2025, our real estate properties in South Carolina represented 11.0% of real estate properties, net, on our condensed consolidated balance sheet. There were no other states that had a real estate investment concentration of 10% or greater as of this date.

Senior Living

As of June 30, 2025, we leasedten retirement communities to Senior Living. We recognized straight-line rent revenue of $(0.4) million and $(0.5) million from Senior Living for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, we leased 38 facilities to Bickford under four master leases. Bickford has been on the cash basis of revenue recognition since the second quarter of 2022 based upon information we obtained from Bickford regarding its financial condition that has raised substantial doubt as to its ability to continue as a going concern. During the three and six months ended June 30, 2025, Bickford repaid $1.2 million and $2.5 million, respectively, of its outstanding rent deferrals, which primarily related to past due payments during the COVID-19 pandemic. During the three and six months ended June 30, 2024, Bickford repaid $1.3 million and $2.8 million, respectively, of its outstanding rent deferrals. As of June 30, 2025, Bickford’s outstanding rent deferrals totaled $10.4 million.

NHC

As of June 30, 2025, we leased three ILFs and 32 SNFs to NHC, a publicly held company, under a master lease. Four of these properties are subleased to other third parties for whom the lease payments are guaranteed to us by NHC. We recognized straight-line rent revenue of $0.3 million and $0.1 million from NHC for the six months ended June 30, 2025 and 2024, respectively.

Under the terms of the master lease with NHC, rent escalates by 4.0% of the increase, if any, in each of the facility’s annual revenue over a base year and is referred to as “percentage rent.”

The following table summarizes our percentage rental income from NHC ($ in thousands):

1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to us by March 31 st of the following year.

One of the members of our board of directors is also a member of NHC’s board of directors.

Cash Basis Tenants

We hadtwo tenants, including Bickford, on the cash basis of accounting for revenue recognition during the three and six months ended June 30, 2025 for their leasing arrangements with us based on our assessment of each tenant’s ability to satisfy its contractual obligations under the terms of the respective lease. During the three and six months ended June 30, 2024, we hadthree tenants, including Bickford, on the cash basis of accounting for revenue recognition related to their leasing arrangements with us.

Lease payments received from cash basis tenants were as follows ($ in thousands):

Senior Living Management (“SLM”) was a cash basis tenant from 2022 until January 1, 2025 when the remainingtwo properties leased to SLM were transitioned to a new operator who had been serving as the interim manager of the properties. Concurrently with this transaction, we executed a 15-year triple-net master lease with the new operator, which includestwo five-year extension options. This master lease has approximately $1.1 million in initial annual contractual lease payments with fixed annual escalators of 2.0%.

In February 2025, we acquired an assisted living facility in Oviedo, Florida upon the execution of a deed in lieu of foreclosure agreement in settlement of a $10.0 million non-performing mortgage due from SLM. We recorded the acquired real estate property at its estimated fair value of $8.6 million, which represented the net carrying value of the mortgage at the closing of the deed in lieu of foreclosure transaction. Concurrently, we executed a new lease of the acquired property with the operator who was serving as the interim manager of the property. This lease has approximately $0.7 million in annual contractual lease payments.

Tenant Purchase Options

Certain of our leases contain purchase options allowing tenants to acquire the leased properties at a fixed base price, a fixed base price plus a specified share in any appreciation of the property or a fixed minimum internal rate of return on our investment. As of June 30, 2025, tenants had purchase options onfour of our properties, representing an aggregate net carrying value of $76.0 million, which have individual exercise dates between 2028 and 2031. Rental income from these properties with tenant purchase options totaled $2.5 million and $5.0 million for the three and six months ended June 30, 2025, respectively, and $2.0 million and $3.8 million for the three and six months ended June 30, 2024, respectively.

We cannot reasonably estimate at this time the probability that any purchase options will be exercised in the future. Consideration to be received from the exercise of any tenant purchase option is expected to exceed the respective net carrying values of the properties at the time of sale.

Future Minimum Lease Payments

The fixed amounts of future minimum lease payments due to us under our existing tenant leases as of June 30, 2025 were as follows($ in thousands):

Variable Lease Payments

Most of our leases contain annual rent escalators. Some of our leases contain rent escalators that are determined annually based on a variable index or other factors that are indeterminable at the inception of the lease.

The following table summarizes our rental income based on fixed and variable rent escalators($ in thousands):

Note 4. Mortgage and Other Notes Receivable

As of June 30, 2025, mortgage notes receivable totaled $169.4 million, each of which are secured by real estate properties and other assets of the borrowers and related to 16 facilities. Other notes receivable totaled $101.0 million, substantially all of which are guaranteed by significant parties to the notes or by cross-collateralization of properties with the same owner. As of December 31, 2024, our investments in mortgage notes receivable totaled $175.8 million and other notes receivable totaled $113.4 million. These amounts, as stated above, exclude credit loss reserves of $17.5 million and $20.2 million as of June 30, 2025 and December 31, 2024, respectively.

Non-Performing Notes

As of June 30, 2025, we hadtwo loans designated as non-performing notes consisting of a mezzanine loan with a principal balance of $12.0 million due from affiliates of SLM and an unsecured loan due from Bickford with a principal balance of $1.3 million. As of December 31, 2024, we hadthree loans designated as non-performing notes consisting of $14.5 million of principal due under the SLM mezzanine loan, $1.4 million of principal due under the Bickford loan and a mortgage due from SLM with a principal balance of $10.0 million.

Interest income recognized on a cash basis from these non-performing notes was $0.1 million for the six months ended June 30, 2025 and $0.5 million and $0.9 million for the three and six months ended June 30, 2024, respectively. The credit loss reserves related to non-performing notes totaled $13.3 million and $16.1 million as of June 30, 2025 and December 31, 2024, respectively.

SLM

In February 2025, we acquired an assisted living facility in Oviedo, Florida upon the execution of a deed in lieu of foreclosure agreement in settlement of the $10.0 million non-performing mortgage due from SLM. We recorded the acquired real estate property at its estimated fair value of $8.6 million, which represented the net carrying value of the mortgage at the time of closing of the deed in lieu of foreclosure transaction. Reference Note 3 for additional information on the concurrent transactions.

In May 2025, we received $2.5 million in partial repayment of the non-performing mezzanine loan due from SLM as described above. This partial repayment resulted in a reduction of the credit loss reserve on this loan and the related credit loss expense of $1.3 million in each of the three and six months ended June 30, 2025.

Vizion Health Loan Amendment

In March 2025, we amended a mezzanine loan agreement with affiliates of Vizion Health providing for additional funding of $5.4 million. The outstanding principal balance of the loan was $17.7 million as of June 30, 2025. The amendment to the loan agreement provides for an annual interest rate of 9.2% as of June 30, 2025 and a maturity date in May 2028.

Construction Loan

In May 2025, we entered into a construction loan agreement to fund up to $28.0 million for the development of an 84-unit assisted living and memory care facility in Wyoming, Michigan to be operated by Encore Senior Living. The loan agreement provides for an annual interest rate of 9.0% and a maturity date in April 2030. As of June 30, 2025, no amounts have been drawn on this loan.

Montecito Medical Real Estate Loan

We have a $50.0 million mezzanine loan and security agreement with Montecito Medical Real Estate for a fund that invests in medical real estate, including medical office buildings, throughout the United States. In the first quarter of 2025, $6.2 million of principal was repaid upon the sale ofone of the underlying properties. As of June 30, 2025, $9.4 million of remaining principal was outstanding on the loan, which is associated with five medical office buildings with a combined purchase price of approximately $56.7 million. For the three and six months ended June 30, 2025, we recognized interest income of $0.2 million and $0.7 million, respectively, related to this loan. For the three and six months ended June 30, 2024, we recognized interest income of $0.5 million and $1.0 million, respectively.

Bickford Construction and Mortgage Loans

As of June 30, 2025, we hadone fully funded construction loan with Bickford that had a principal balance of $14.7 million. This construction loan is secured by a first mortgage lien on substantially all of the related real and personal property as well as a pledge of any and all leases or agreements which may grant a right of use to the property. The loan provides for an annual interest rate of 9.0% and a maturity date in July 2026. The loan agreement contains usual and customary covenants and requires the borrower to pay property insurance and taxes. We hold a fair value purchase option under the loan agreement to purchase the property upon stabilization of the underlying operations.

As of June 30, 2025, we held a $12.0 million second mortgage as a component of the purchase price consideration in connection with the sale ofsix properties to Bickford in 2021. This second mortgage bears a 10.0% annual interest rate and matures in April 2026. We did not include this note receivable in the determination of the gain recognized upon the sale of this portfolio. Therefore, this note receivable is not reflected in mortgage and other notes receivable on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. For each of the three and six months ended June 30, 2025 and 2024, we recognized interest income of $0.3 million and $0.6 million, respectively. During each of the three and six months ended June 30, 2025 and 2024, Bickford repaid $0.1 million and $0.2 million, respectively, of principal on this note receivable. These payments have been recognized in gains on sales of real estate properties, net, on our condensed consolidated statements of income.

Senior Living Loans

We have provided a $15.0 million revolving line of credit to Senior Living whose borrowings under the revolver are to be used for working capital needs and to finance construction projects within its portfolio, including building additional units at existing facilities. The revolver matures in December 2031, which is also when the Senior Living leases mature. As of June 30, 2025, the outstanding balance on the revolver was $14.0 million and bore an annual interest rate of 8.0%.

Credit Loss Reserves

Our principal measures of credit quality, except for construction loans, are debt service coverage for amortizing loans and interest or fixed charge coverage for non-amortizing loans (collectively, “Coverage”). A Coverage ratio provides a measure of the borrower’s ability to make scheduled principal and interest payments. The Coverage ratios presented in the table below have been calculated utilizing the most recent date for which data is available, March 31, 2025, using EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) and the requisite debt service, interest service or fixed charges, as defined in the applicable loan agreement. We categorize Coverage into three levels: (i) more than 1.5x, (ii) between 1.0x and 1.5x, and (iii) less than 1.0x. We update our calculations of Coverage on a quarterly basis. Coverage is not a meaningful credit quality indicator for construction mortgages as these developments are typically not generating any operating income, or they have insufficient operating income because occupancy levels necessary to stabilize the properties have not yet been achieved. We measure credit quality for these mortgages by considering the construction and stabilization timelines and the financial condition of the borrower, as well as economic and market conditions.

We consider the guidance in ASC 310-20, Receivables - Nonrefundable Fees and Other Costs, when determining whether a modification, extension or renewal constitutes a current period origination. The following table summarizes the credit quality indicators related to the principal amounts due to us from mortgage and other notes receivable as of June 30, 2025 and is disaggregated based on the year of loan origination ($ in thousands):

Due to the continuing challenges in financial markets and the potential impact on the collectability of our mortgage and other notes receivable, we forecasted a 20% increase in the probability of a default and a 20% increase in the amount of estimated loss from a default on all loans, other than those designated as non-performing notes, resulting in an effective adjustment of 7.8% as of June 30, 2025. The methodology for estimating credit loss reserves for our non-performing notes incorporates considerations of the sufficiency of the underlying collateral, current conditions and forecasts of future economic conditions that may impact the collectability of these loans, including qualitative factors, which may differ from conditions existing in the historical periods.

A summary of the changes in our credit loss reserves for the six months ended June 30, 2025 is presented in the table below ($ in thousands):

Note 5. Senior Housing Operating Portfolio

As of June 30, 2025 and December 31, 2024, our SHOP segment was comprised oftwo consolidated ventures that collectively own the operations of 15 ILFs. These ventures are structured to comply with REIT requirements and utilize our TRS for activities that would otherwise be non-qualifying for REIT purposes. The properties owned by each of our SHOP ventures are operated by third-party property managers in exchange for a management fee. The ventures were capitalized with preferred and common equity interests, with the Company owning 100% of the preferred equity and a controlling common equity interest in each venture. The property managers, or related parties of these property managers, own a non-controlling common equity interest in their respective ventures.

Merrill Managed Portfolio

We havesix ILFs located in California and Washington in our consolidated venture with Merrill, which owns a 20.0% common equity interest in the venture. The operating agreement for the venture provides for contingent distributions to the members based on the attainment of certain yields on investment calculated on an annual basis.

The properties in the venture are managed by Merrill pursuant to a management agreement with an initial term through March 2032 that automatically renews on an annual basis thereafter unless terminated by either party with notice. The management agreement entitles Merrill to a base management fee of 5.0% of net revenue and a real estate services fee of 5.0% of real estate costs incurred during any calendar year that exceed $1,000 times the number of units at each facility. The noncontrolling interest associated with the venture was determined to be contingently redeemable and is classified in mezzanine equity on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, as further discussed in Note 10.

Discovery Managed Portfolio

We have nine ILFs located in Arkansas, Georgia, Ohio, Oklahoma, New Jersey and South Carolina in a consolidated venture with the Discovery member, which owns a 2.0% common equity interest in the venture. The operating agreement for the venture provides for contingent distributions to the members based on the attainment of certain yields on investment calculated on an annual basis. The noncontrolling interest associated with the venture is classified as equity on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.

The properties in the venture are managed by separate related parties of Discovery pursuant to management agreements, each with an initial term through March 2032 that automatically renews on an annual basis thereafter unless terminated by either party to the agreements with notice. The management agreements entitle the property managers to a base management fee of 5.0% of net revenue.

Effective August 1, 2025, an ILF located in Tulsa, Oklahoma was added to this SHOP venture upon the termination of the triple-net lease with an affiliate of Discovery. Reference Note 3 for additional information.

Sinceri Managed Portfolio

Effective August 1, 2025, we executed management agreements with affiliates of Sinceri Senior Living (“Sinceri”) forfive ALFs andone ILF concurrently with the termination of the triple-net master lease with a related party of Discovery. Reference Note 3 for further discussion. Thefive ALFs are structured to comply with the requirements of the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) and the ILF utilizes the TRS for activities that would otherwise be non-qualifying for REIT purposes. Sinceri will receive a base management fee of 5.0% of net revenues received in exchange for its services as the property manager of this portfolio. Sinceri will also be eligible for an annual incentive management fee equal to a percentage of net revenues, which percentage depends on the amount by which the actual net operating income of the facilities exceeds certain thresholds set forth in the management agreements, as well as a capital event fee in the event that the portfolio is sold to a third party.

Note 6. Equity Method Investment

Concurrently with the acquisition of a continuing care retirement community (“CCRC”) from LCS-Westminster Partnership III, LLP in January 2020 (the “Timber Ridge CCRC”), we invested $0.9 million in the operating company, Timber Ridge OpCo, LLC (“Timber Ridge OpCo”), representing a 25.0% equity interest. This investment is held by our TRS to be compliant with the provisions of RIDEA. As part of our initial investment, we provided Timber Ridge OpCo with a revolving credit facility that has a maximum borrowing capacity of $5.0 million. No amounts have been drawn on this revolver.

We account for our investment in Timber Ridge OpCo under the equity method of accounting and decrease the carrying value of our investment for operating losses of the entity and distributions made to us for cumulative amounts up to and including our basis plus any guaranteed or implied commitments to fund operations. Our guaranteed and implied commitments are currently limited to the $5.0 million revolving credit facility and a $2.5 million lease incentive distribution received in February 2023. As of June 30, 2025, we have recognized our share of Timber Ridge OpCo’s operating losses in excess of our initial investment plus guaranteed and implied commitments. These cumulative losses are included in accounts payable and accrued expenses on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. Excess unrecognized equity method losses for this investment for each of the three and six months ended June 30, 2025 and 2024 were $0.6 million and $1.2 million, respectively. Cumulative unrecognized losses for this investment were $15.4 million through June 30, 2025. We recognized gains from equity method investment of $1.5 million and $1.9 million during the three and six months ended June 30, 2025, respectively, and $0.2 million and $0.4 million during the three and six months ended June 30, 2024, respectively, in our condensed consolidated statements of income, which consisted of cash distributions received from this investment in these periods.

The Timber Ridge OpCo property is subject to early resident mortgages secured by a Deed of Trust and Indenture of Trust (the “Deed and Indenture”). As part of our acquisition, NHI-LCS JV I, LLC (“Timber Ridge PropCo”) acquired the Timber Ridge CCRC property and a subordination agreement was entered into pursuant to which the trustee acknowledged and confirmed that the security interests created under the Deed and Indenture were subordinate to any security interests granted in connection with an $81.0 million loan made by NHI to Timber Ridge PropCo, which is eliminated upon consolidation. In addition, under the terms of the resident loan assumption agreements, during the term of theseven-year lease to Timber Ridge OpCo, which includestwo five-year extension options, Timber Ridge OpCo is to indemnify Timber Ridge PropCo for any repayment by Timber Ridge PropCo of the early resident mortgage liabilities under the guarantee. As a result of the subordination agreement and the resident loan assumption agreements, no liability has been recorded as of June 30, 2025 and December 31, 2024. The balance secured by the Deed and Indenture was $8.0 million as of June 30, 2025.

Note 7. Other Assets

Other assets, net, consist of the following ($ in thousands):

In the first quarter of 2025, we recognized $1.2 million of transaction costs related to an acquisition in our SHOP segment that did not materialize. We had $0.6 million of these costs capitalized in other assets, net, on our condensed consolidated balance sheet as of December 31, 2024.

Note 8. Debt

Debt consists of the following ($ in thousands):

A summary of the aggregate principal maturities of our outstanding debt as of June 30, 2025 follows ($ in thousands):

Revolving Credit Facility and Bank Term Loan

We have a $700.0 million unsecured revolving credit facility (the “Credit Facility”), which was amended and restated in October 2024 to extend the maturity date from March 2026 to October 2028, which may be further extended by us pursuant to (i) one or both of thetwo six-month extension options or (ii)one 12-month extension option. Borrowings under the Credit Facility bear interest, at our election, at one of the following (a) Term Secured Overnight Financing Rate (“SOFR”) (plus a credit spread adjustment) plus a margin ranging from 0.725% to 1.40%, (b) Daily SOFR (plus a credit spread adjustment) plus a margin ranging from 0.725% to 1.40% or (c) the base rate plus a margin ranging from 0.00% to 0.40%. In each election, the actual margin is determined according to our credit ratings. The base rate means, for any day, a fluctuating rate per annum equal to the highest of (x) the agent’s prime rate, (y) the federal funds rate on such day plus 0.50% or (z) the adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%. In addition, the Credit Facility requires a facility fee equal to 0.125% to 0.30%, based on our credit rating on the $700.0 million committed capacity, without regard to usage.

As of June 30, 2025, we had $322.0 million available to draw on the Credit Facility, subject to usual and customary covenants. Among other stipulations, the credit agreement requires that we maintain certain financial ratios within limits set by our creditors. As of June 30, 2025, we were in compliance with these ratios.

We have a $200.0 million unsecured term loan (the “2025 Term Loan”) that bears interest at a variable rate which is SOFR-based with a margin determined according to our credit ratings plus a 0.10% credit spread adjustment. In April 2025, we exercisedone of ourtwo six-month options to extend the maturity date to December 2025.

Concurrently with the amendment and restatement of the Credit Facility, we amended the 2025 Term Loan to, among other things, modify the representations, covenants, financial covenants, and events of default to align with the same provisions in the Credit Facility.

Pinnacle Bank is a participating member of our banking group. A member of our board of directors, who became chairman of our board of directors effective in January 2025, is also the chairman of the board of directors of Pinnacle Financial Partners, Inc., the holding company for Pinnacle Bank. Our local banking transactions are conducted primarily through Pinnacle Bank.

2031 Senior Notes

In January 2021, we issued $400.0 million in aggregate principal amount of 3.00% unsecured senior notes that mature in February 2031 and require semi-annual interest payments (the “2031 Senior Notes”). The 2031 Senior Notes were sold at an issue price of 99.196% of face value before the underwriters’ discount. The 2031 Senior Notes are subject to affirmative and negative covenants, including financial covenants with which we were in compliance as of June 30, 2025.

Private Placement Notes

Our unsecured private placement notes outstanding as of June 30, 2025, which require interest only payments up to the respective maturity dates, are summarized below ($ in thousands):

Covenants pertaining to the private placement notes are generally conformed with those governing our Credit Facility, except for specific debt-coverage ratios that are more restrictive. Our private placement notes include a provision that increases the fixed annual interest rate if any rating agency lowers the credit rating on our senior unsecured debt below investment grade and our compliance leverage increases to 50.0% or more.

Fannie Mae Term Loans

In the second quarter of 2025, we repaid all of our outstanding Fannie Mae term loans, which totaled $75.7 million.

Interest Expense

A summary of the components of interest expense follows ($in thousands):

Note 9. Commitments, Contingencies and Uncertainties

In the normal course of business, we enter into a variety of commitments, typically consisting of funding revolving credit arrangements, construction and mezzanine loans to our operators and commitments for the funding of construction projects for expansion or renovation of our existing real estate properties under lease. In our leasing operations, we may offer our tenants and the sellers of properties we acquire a variety of inducements that originate contractually as contingencies, but which may become commitments upon the satisfaction of the contingent event. Contingent payments made by us to these other parties are included in the respective lease base when funded.

As of June 30, 2025, we had working capital and mortgage, construction, revolving credit arrangements and mezzanine loan commitments from eight operators or borrowers totaling $179.3 million, of which $106.6 million has been funded toward these commitments as of this date. The loan funded amounts, disclosed herein, do not reflect the effects of discounts or commitment fees.

As of June 30, 2025, we had an aggregate of $23.4 million of development commitments withsix tenants for renovation projects of which we had funded $7.5 million toward these commitments.

As of June 30, 2025, we had an aggregate of $12.9 million in remaining contingent lease inducement commitments related tothree operators which are generally based on the respective facility operating performance over a specified period and may or may not be met by the respective tenants.

We recognize a credit loss liability for unfunded loan commitments that is estimated using the same methodology as the one used for our funded mortgage and other notes receivable and based on the estimated amount that we expect to fund. We applied the same market adjustments to this liability as of June 30, 2025. Reference Note 4 for further discussion.

The liabilities for expected credit losses on our unfunded loan commitments are reflected in accounts payable and accrued expenses on our condensed consolidated balance sheets. A summary of the changes in the liability for the six months ended June 30, 2025 follows ($ in thousands):

Litigation

Our facilities are subject to claims and potential lawsuits in the ordinary course of business. Such claims may include, among other things, professional liability and general liability claims, as well as regulatory proceedings related to our SHOP segment. Our property managers, tenants and borrowers have indemnified, and are obligated to continue to indemnify, us against all liabilities arising from operations at the facilities and are further obligated to indemnify us against environmental or title issues affecting the real estate underlying the facilities. While there may be lawsuits pending against us and certain of the owners or tenants of our facilities, management believes that the ultimate resolution of all such pending proceedings will have no material adverse effect on our financial condition, results of operations or cash flows.

Note 10. Redeemable Noncontrolling Interest

The interest held by Merrill in the SHOP venture with us was classified as a redeemable noncontrolling interest in the mezzanine section between liabilities and equity on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. Certain provisions within the operating agreement of the Merrill SHOP venture provide Merrill with put rights upon certain contingent events that are not solely within our control as the majority equity interest owner; and therefore, Merrill’s noncontrolling interest was determined to be contingently redeemable. As of June 30, 2025, this noncontrolling interest is not currently redeemable and we concluded a contingent redemption event is not probable to occur. Consequently, the noncontrolling interest will not be subsequently remeasured to its redemption amount until such contingent event and the related redemption are probable to occur. We will continue to reflect the attribution of gains or losses to the redeemable noncontrolling interest in each period.

The following table presents the change in redeemable noncontrolling interest for the six months ended June 30, 2025 ($ in thousands):

Note 11. Equity and Dividends

Forward Equity Sales Agreements

In the first quarter of 2025, we settled the remaining 1.0 million shares of common stock subject to our August 2024 forward equity sale agreement at a forward price of $68.21 per common share for aggregate proceeds of $65.5 million.

ATM Equity Program

We maintain an ATM equity program which allows us to sell our common stock directly into the market. This program is governed by an ATM equity offering sale agreement which includes a forward sales provision that allows us to sell shares of our common stock to forward purchasers at a predetermined price at a future date. Pursuant to this agreement, we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common stock.

In March 2025, we entered into ATM forward sales agreements with a financial institution to sell shares of our common stock which mature in the first quarter of 2026. Pursuant to these agreements, we sold 0.2 million shares on a forward basis at a weighted average price of $74.39 per common share, net of sales agent fees, which totaled $15.5 million. We did not receive any proceeds from the sale of shares of our common stock to the forward purchasers at the time of the sale.

In the second quarter of 2025, we settled 0.8 million shares of common stock, representing full settlement of the December 2024 and partial settlement of the March 2025 ATM forward sales agreements at a weighted average forward price of $74.71 per common share for aggregate proceeds of $58.0 million.

In June 2025, we entered into ATM forward sales agreements with a financial institution to sell shares of our common stock which mature in the second quarter of 2026. We sold 1.3 million shares on a forward basis at a weighted average price of $71.41 per common share, net of sales agent fees, which totaled $91.8 million. We did not receive any proceeds from the sale of shares of our common stock to the forward purchasers at the time of the sale.

As of June 30, 2025, we had 1.4 million remaining shares of common stock available under ATM forward sales agreements representing aggregate net proceeds of $102.3 million at a weighted average price of $71.03 per common share.

No shares were sold under the ATM equity program during each of the three and six months ended June 30, 2024.

Dividends

The following table summarizes dividends declared by our board of directors or paid by us for the periods indicated:

On August 5, 2025, our board of directors declared a $0.92 per common share dividend payable on October 31, 2025 to common stockholders of record as of September 30, 2025.

Note 12. Share-Based Compensation

Our outstanding stock incentive awards have been granted undertwo incentive plans – the 2012 Stock Incentive Plan and the 2019 Stock Incentive Plan, as amended and restated (the “2019 Plan”).

In February 2025, we issued 29,500 restricted stock awards under the 2019 Plan to executive officers with a grant date fair value of $73.34 per share based on the fair market value of our common stock on the grant date. The restricted stock awards vest over five years, with 20% vesting on each anniversary of the grant date beginning with the grant date, and are subject to aone-year post-vesting hold. The restricted stock awards have a non-forfeitable right to dividends or dividend equivalents during the vesting period. During the six months ended June 30, 2025,7,200 restricted stock awards vested. As of June 30, 2025, we had 54,100 unvested restricted stock awards outstanding.

During the six months ended June 30, 2025, we granted options to purchase 567,000 shares of our common stock under the 2019 Plan, which had a weighted average grant date fair value of $9.34 per share.

The fair value of options granted was estimated at the grant dates using the Black-Scholes option-pricing model and the following weighted average assumptions:

The following table summarizes our stock options activity:

As of June 30, 2025, the intrinsic values of our stock options outstanding and exercisable were $7.3 million and $6.0 million, respectively.

Share-based compensation expense, net of any forfeitures, is included in general and administrative costs in our condensed consolidated statements of income and summarized below ($ in thousands):

As of June 30, 2025, we had unrecognized share-based compensation expense of $5.1 million that is expected to be recognized over the following periods: remainder of 2025 - $2.0 million, 2026 - $2.0 million, 2027 - $0.7 million, 2028 - $0.3 million and thereafter - $0.1 million.

Note 13. Earnings Per Share

The following table presents the calculations of basic and diluted earnings per share(in thousands, except share and per share amounts):

Note 14. Fair Value of Financial Instruments

A summary of the carrying amounts and fair values of financial instruments that are not reported at their fair values on our condensed consolidated balance sheets are as follows ($in thousands):

Fixed Rate Debt -Fixed rate debt is classified as a Level 2 measurement and the fair values of these debt instruments are based on quoted prices for similar instruments or calculated utilizing model derived valuations in which significant inputs are observable in active markets.

Variable Rate Debt -Variable rate debt is classified as a Level 2 measurement and the fair values of our borrowings under our Credit Facility and term loan are estimated at their notional amounts due to the predominance of floating interest rates, which generally reflect market conditions.

Mortgages and Other Notes Receivable -Mortgage and other notes receivable are classified as Level 3 measurements and the fair values are estimated based on credit risk and discount rates that are not observable in the marketplace.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses on our condensed consolidated balance sheets approximate their fair values due to the short-term nature of these financial instruments that are classified as Level 1 measurements as of June 30, 2025 and December 31, 2024.

Note 15. Segment Reporting

We evaluate our business and make resource allocations on ourtwo operating segments: Real Estate Investments and SHOP. In our Real Estate Investments segment, we invest in senior housing and healthcare real estate assets through acquisition and financing of primarily single-tenant properties. Properties acquired are leased primarily under triple-net leases and we are not involved in the management of the properties. Our Real Estate Investments segment includes leases, mortgage and other note investments in ILFs, ALFs, EFCs, SLCs, SNFs and HOSPs. Our SHOP segment includes multi-tenant ILFs. The SHOP properties and related operations are controlled by us and operated by property managers in exchange for a management fee. Reference Note 5 for additional information on our SHOP segment activities.

Our President and Chief Executive Officer serves as our Chief Operating Decision Maker (“CODM”). Our CODM reviews financial and other performance information quarterly based upon segment net operating income (“NOI”). We define NOI as total revenues, less tenant reimbursements and property operating expenses. Our CODM evaluates NOI to make decisions about resource allocations and to assess our property level performance. For both segments, the CODM considers revenue and operating expenses on a comparative basis, both sequentially and year-over-year, and evaluates budget to actual variances on a quarterly basis when making decisions regarding allocations of resources to the segments. In addition, for the SHOP segment, the CODM reviews key performance indicators, including revenues and operating expenses per occupied unit or available unit and revenues and related functional expenses by resident. There were no intersegment transactions during the six months ended June 30, 2025 and 2024. Capital expenditures for the six months ended June 30, 2025 and 2024 were $141.8 million and $35.0 million, respectively, for our Real Estate Investments segment and $2.5 million and $3.7 million, respectively, for our SHOP segment.

Non-segment revenue consists primarily of other income. Non-segment assets primarily consist of corporate assets, including cash and cash equivalents and corporate offices and equipment, among others. Non-property specific revenues and expenses are not allocated to our operating segments in determining NOI.

The accounting policies of our segments are the same as those described in the significant accounting policies included in Note 2 in these condensed consolidated financial statements and in Note 2 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations of our acquisitions, as described in Note 3, are included in our condensed consolidated statements of income beginning on the respective acquisition date and are included in the applicable operating segment on the same basis. In the tables below, we recasted prior period segment disclosures to conform with the current period presentation to reflect our segment expense disclosures in greater detail as required by ASU 2023-07 - Segment Reporting (TOPIC 280): Improvements to Reportable Segment Disclosures, which we adopted effective December 31, 2024.

Information related to our reportable segments is presented in the tables below ($ in thousands):

Note 16. Variable Interest Entities

Consolidated Variable Interest Entities

SHOP

The assets of our SHOP ventures primarily consist of real estate properties, cash and cash equivalents, and accounts receivable from resident fees and services. The obligations of the SHOP ventures primarily consist of accounts payable and accrued expenses for operating expenses of the ILFs and capital expenditures related to the properties. Aggregate assets of the consolidated SHOP ventures that can be used only to settle obligations of each respective SHOP venture primarily include $258.5 million and $261.6 million of real estate properties, net, $7.2 million and $6.5 million of cash and cash equivalents, $0.6 million and $0.8 million of accounts receivable and $1.5 million and $1.5 million of other assets, net, as of June 30, 2025 and December 31, 2024, respectively. Liabilities of the consolidated SHOP ventures for which creditors do not have recourse to the general credit of the Company were $4.4 million and $5.7 million as of June 30, 2025 and December 31, 2024, respectively. Reference Notes 5 and 10 for additional information on our SHOP ventures.

Real Estate Partnerships

The aggregate assets of thetwo consolidated real estate partnerships that can be used only to settle obligations of each respective partnership as of June 30, 2025 and December 31, 2024 include $240.3 million and $244.3 million of real estate properties, net, $9.7 million and $10.0 million of straight-line rent receivable, $2.9 million and $3.2 million of cash and cash equivalents and $4.0 million and $5.3 million of other assets, net, respectively. Liabilities of these partnerships for which creditors do not have recourse to the general credit of the Company are not material.

Unconsolidated Variable Interest Entities

The table below presents information related to our unconsolidated VIEs as of June 30, 2025. For additional information on the nature of these relationships, including our sources of exposure, reference the notes to our condensed consolidated financial statements as cross-referenced below ($ in thousands):

*Formerly referred to as Watermark Retirement

1 Note, straight-line rent receivable and interest receivable

2 Loan commitment, equity method investment, straight-line rent receivable and unamortized lease incentive

3 Straight-line rent receivable and unamortized lease incentive

4 Representstwo mezzanine loans originating from the sales of real estate properties

We are not obligated to provide support beyond our stated commitments to these tenants and borrowers whom we classify as VIEs, and accordingly, our maximum exposure to loss as a result of these relationships is limited to the amount of our commitments, as shown above and discussed in the notes. Economic loss on a lease, in excess of what is presented in the table above, if any, would be limited to that resulting from any period of non-payment of rent before we are able to take effective remedial action, as well as any costs incurred in transitioning the lease to a new tenant. The potential extent of such loss would be dependent upon individual facts and circumstances, and therefore is not included in the table above.

In the future, we may be deemed the primary beneficiary of the operations if the tenants or borrowers do not have adequate liquidity to accept the risks and rewards as the tenants and operators of the properties and we may be required to consolidate the financial position and results of operations of the tenants or borrowers into our condensed consolidated financial statements.