UNIVERSAL HEALTH REALTY INCOME TRUST

Previous wording

We are a real estate investment trust (“REIT”) that commenced operations in 1986. We invest in healthcare and human-service related facilities currently including acute care hospitals, behavioral health care hospitals, specialty facilities, free-standing emergency departments, childcare centers and medical/office buildings. As of June 30, 2025, we have seventy-six real estate investments or commitments located in twenty-one states consisting of:

Current wording

We are a real estate investment trust (“REIT”) that commenced operations in 1986. We invest in healthcare and human-service related facilities currently including acute care hospitals, behavioral health care hospitals, specialty facilities, free-standing emergency departments, childcare centers and medical/office buildings. As of September 30, 2025, we have seventy-seven real estate investments or commitments located in twenty-one states consisting of:

Previous wording

sixty medical/office buildings, including four owned by unconsolidated limited liability companies (“LLCs”)/limited liability partnerships (“LPs”);

Current wording

sixty-one medical/office buildings, including four owned by unconsolidated limited liability companies (“LLCs”)/limited liability partnerships (“LPs”);

Previous wording

A substantial portion of our revenues are dependent upon one operator, UHS, which comprised approximately 40% of our consolidated revenues during each of the three and six-month periods ended June 30, 2025, and 41% during each of the three and six-month periods ended June 30, 2024. We cannot assure you that subsidiaries of UHS will renew the leases on the hospital facilities and free-standing emergency departments, upon the scheduled expirations of the existing lease terms. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital facilities and FEDs, and do not enter into a substitution arrangement upon expiration of the lease terms or otherwise, our future revenues and results of operations could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to these leases.

Current wording

A substantial portion of our revenues are dependent upon one operator, UHS, which comprised approximately 39% and 40% of our consolidated revenues during the three-month periods ended September 30, 2025, and 2024, respectively, and approximately 40% and 41% during the nine-month periods ended September 30, 2025, and 2024, respectively. We cannot assure you that subsidiaries of UHS will renew the leases on the hospital facilities and free-standing emergency departments, upon the scheduled expirations of the existing lease terms. In addition, if subsidiaries of UHS exercise their options to purchase the respective leased hospital facilities and FEDs, and do not enter into a substitution arrangement upon expiration of the lease terms or otherwise, our future revenues and results of operations could decrease if we were unable to earn a favorable rate of return on the sale proceeds received, as compared to the rental revenue currently earned pursuant to these leases.

Previous wording

Legislation adopted on July 4, 2025 (commonly known as the One Big Beautiful Bill Act) attaches work and community service requirements to eligibility for Medicaid benefits that will have the effect of limiting Medicaid enrollment and expenditure. That legislation also places limits on provider fees used to increase federal Medicaid funding to states. The legislation prohibits states not previously having expanded Medicaid eligibility to 138% of federal poverty level from increasing the rate of current provider fees which fund certain state supplemental payments or increasing the base of the fee to a class or items of services that the fee did not previously cover. That current provider fee threshold will remain at 6%. For states having expanded Medicaid eligibility under the ACA, the provider fee threshold will be reduced by 0.5% annually between federal fiscal years 2028 and 2032 with the resulting threshold ultimately becoming 3.5%. The legislation also eliminates certain insurance exchange premium tax credits beyond 2025 and insurance exchange enrollment is expected to be adversely impacted. All of these factors may be expected to reduce the revenues of the operators of our properties, and likely increase the level of uncompensated care provided by the operators of our hospital facilities, including UHS. As a result, our results of operations may be unfavorably impacted.

Current wording

Legislation adopted on July 4, 2025 (commonly known as the One Big Beautiful Bill Act) attaches work and community service requirements to eligibility for Medicaid benefits that will have the effect of limiting Medicaid enrollment and expenditure. That legislation also places limits on provider fees used to increase federal Medicaid funding to states. The legislation prohibits states not previously having expanded Medicaid eligibility to 138% of federal poverty level from increasing the rate of current provider fees which fund certain state supplemental payments or increasing the base of the fee to a class or items of services that the fee did not previously cover. That current provider fee threshold will remain at 6%. For states having expanded Medicaid eligibility under the ACA, the provider fee threshold will be reduced by 0.5% annually between federal fiscal years 2028 and 2032 with the resulting threshold ultimately becoming 3.5%. The legislation also eliminates certain insurance exchange premium tax credits beyond 2025 and insurance exchange enrollment is expected to be adversely impacted. Extension of the tax credits is currently the subject of United States Congressional debate as part of the federal budget negotiation, and we cannot predict whether these subsidies will ultimately be adopted in federal fiscal year 2026. All of these factors may be expected to reduce the revenues of the operators of our properties, and likely increase the level of uncompensated care provided by the operators of our hospital facilities, including UHS. As a result, our results of operations may be unfavorably impacted.

Previous wording

During the past few years, our tenants have experienced inflationary pressures, primarily in personnel and certain other costs. In addition, certain of our tenants have experienced staffing shortages that has, at various times, required the hiring of expensive temporary personnel and/or enhanced wages and benefits to recruit and retain nurses and other clinical staff and support personnel. The impact of inflation and/or staffing shortages, which had a material unfavorable impact on the operating results of certain of our tenants during 2022, moderated to a certain degree since 2023. However, the extent of any future impacts from inflation on our tenants’ businesses and results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, expenses of our tenants, and our direct operating expenses that are not passed on to our tenants, could increase faster than anticipated and may require utilization of our and our tenants’ capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which our tenants operate, their payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. This may impact their ability and willingness to make rental payments.

Current wording

During the past few years, our tenants have experienced inflationary pressures, primarily in personnel and certain other costs. In addition, certain of our tenants have experienced staffing shortages that has, at various times, required the hiring of expensive temporary personnel and/or enhanced wages and benefits to recruit and retain nurses and other clinical staff and support personnel. The impact of inflation and/or staffing shortages, which had a material unfavorable impact on the operating results of certain of our tenants in the past, have moderated to a certain degree more recently. However, the extent of any future impacts from inflation on our tenants’ businesses and results of operations will be dependent upon how long the elevated inflation levels persist and the extent to which the rate of inflation further increases, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, expenses of our tenants, and our direct operating expenses that are not passed on to our tenants, could increase faster than anticipated and may require utilization of our and our tenants’ capital resources sooner than expected. Further, given the complexities of the reimbursement landscape in which our tenants operate, their payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. This may impact their ability and willingness to make rental payments.

Previous wording

The outcome and effects of known and unknown litigation, government investigations, and liabilities and other claims asserted against us, UHS or the other operators of our facilities. From time to time, UHS and its subsidiaries are subject to legal actions, purported shareholder class actions, shareholder derivative cases, governmental investigations and regulatory actions and the effects of adverse publicity relating to such matters. Since UHS comprised approximately 40% of our consolidated revenues during each of the three and six months ended June 30, 2025, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain and review the disclosures contained in the Legal Proceedings section of Universal Health Services, Inc.’s Forms 10-Q and 10-K, as publicly filed with the Securities and Exchange Commission. Those filings are the sole responsibility of UHS and are not incorporated by reference herein.

Current wording

The outcome and effects of known and unknown litigation, government investigations, and liabilities and other claims asserted against us, UHS or the other operators of our facilities. From time to time, UHS and its subsidiaries are subject to legal actions, purported shareholder class actions, shareholder derivative cases, governmental investigations and regulatory actions and the effects of adverse publicity relating to such matters. Since UHS comprised approximately 39% of our consolidated revenues during the three-month period ended September 30, 2025 and approximately 40% of our consolidated revenues for the nine-month period ended September 30, 2025, and since a subsidiary of UHS is our Advisor, you are encouraged to obtain and review the disclosures contained in the Legal Proceedings section of Universal Health Services, Inc.’s Forms 10-Q and 10-K, as publicly filed with the Securities and Exchange Commission. Those filings are the sole responsibility of UHS and are not incorporated by reference herein.

Previous wording

The United States has recently enacted and proposed to enact significant new tariffs, which could adversely impact our and our tenants’ business, financial condition and results of operations as a result of the increased costs on our and their operations and supply chains due to tariffs.

Current wording

The United States has recently enacted and proposed to enact significant new tariffs, which could adversely impact our tenants’ business, financial condition and results of operations as a result of the increased costs on our and their operations and supply chains due to tariffs.

Previous wording

There are additional legislative changes that are likely to result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the “ACA") as part of the Tax Cuts and Jobs Act. The Biden administration had issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the ACA or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for the Centers for Medicare and Medicaid Services to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through an ACA exchange, which the IRA continued through 2025, has increased insurance exchange enrollment. However, the Trump administration has already taken steps to undo these Biden-era initiatives, including adopting legislation eliminating certain insurance exchange premium tax credits.

Current wording

There are additional legislative changes that are likely to result in major changes in the health care delivery system on a national or state level. For example, Congress has reduced to $0 the penalty for failing to maintain health coverage that was part of the original Patient Protection and Affordable Care Act, as amended by the Health and Education Reconciliation Act (collectively, the “ACA") as part of the Tax Cuts and Jobs Act. The Biden administration had issued executive orders implementing a special enrollment period permitting individuals to enroll in health plans outside of the annual open enrollment period and reexamining policies that may undermine the ACA or the Medicaid program. The Inflation Reduction Act of 2022 (“IRA”) was passed on August 16, 2022, which among other things, allows for the Centers for Medicare and Medicaid Services to negotiate prices for certain single-source drugs reimbursed under Medicare Part B and Part D. The American Rescue Plan Act’s expansion of subsidies to purchase coverage through an ACA exchange, which the IRA continued through 2025, had increased insurance exchange enrollment. However, the Trump administration has already taken steps to undo these Biden-era initiatives, including adopting legislation eliminating certain insurance exchange premium tax credits. Extension of tax credits is currently the subject of United States Congressional debate as part of the federal budget negotiation, and we cannot predict whether these subsidies will ultimately be adopted in federal fiscal year 2026.

Previous wording

The Full-Year Continuing Appropriations and Extensions Act, 2025 extended fiscal year 2025 appropriations to federal agencies for continuing projects and activities through September 30, 2025. We cannot predict whether or not there will be future legislation averting a federal government shutdown, however, the operating results and results of operations of certain of our tenants, and therefore potentially ours, could be materially unfavorably impacted by a federal government shutdown.

Current wording

The Full-Year Continuing Appropriations and Extensions Act, 2025 extended fiscal year 2025 appropriations to federal agencies for continuing projects and activities through September 30, 2025. In the past several years political disputes concerning authorization of a federal budget have led to shutdowns of substantial portions of the federal government and other federal budget authorization delays have occurred. Currently, the United States Congress has failed to approve a federal budget for federal fiscal year 2026 and a federal shutdown began on October 1, 2025. Federal budget delays and federal government shutdowns are unpredictable and may occur in the future. We cannot predict whether or not there will be future legislation halting a federal government shutdown, however, the operating results and results of operations of certain of our tenants, and therefore potentially ours, could be materially unfavorably impacted by the federal government shutdown.

Previous wording

During the three-month period ended June 30, 2025, net income was $4.5 million, as compared to $5.3 million during the second quarter of 2024. The $784,000 decrease was attributable to:

Current wording

During the three-month period ended September 30, 2025, net income was $4.0 million, as compared to $4.0 million during the third quarter of 2024. Our net income during the third quarter of 2025, as compared to the third quarter of 2024, included the following:

Previous wording

a decrease of $84,000 resulting from an aggregate net decrease in the income generated at various properties.

Current wording

a decrease of $256,000 resulting from an aggregate net decrease in the income generated at various properties, including approximately $900,000 of nonrecurring depreciation expense recorded during the third quarter of 2025.

Previous wording

During the six-month period ended June 30, 2025, net income was $9.3 million, as compared to $10.6 million during the corresponding six-month period of 2024. The $1.3 million decrease was attributable to:

Current wording

During the nine-month period ended September 30, 2025, net income was $13.3 million, as compared to $14.6 million during the corresponding nine-month period of 2024. The $1.3 million decrease was attributable to:

Previous wording

a decrease of $486,000 resulting from an aggregate net decrease in the income generated at various properties, and;

Current wording

a decrease of $730,000 resulting from an aggregate net decrease in the income generated at various properties, including the above-mentioned nonrecurring depreciation expense of approximately $900,000 recorded during the third quarter of 2025;

Previous wording

a decrease of $563,000 resulting from a property tax reduction at our property located in Chicago, Illinois, recorded during the second quarter of 2024;

Current wording

a decrease of $563,000 resulting from a property tax reduction at our property located in Chicago, Illinois, recorded during the first nine months of 2024;

Previous wording

a decrease of $259,000 resulting from an increase in interest expense due primarily to an increase in our average borrowings outstanding pursuant to our credit agreement.

Current wording

a decrease of $282,000 resulting from an increase in interest expense due primarily to an increase in our average borrowings outstanding pursuant to our credit agreement.

Previous wording

Our other operating expenses include expenses related to the consolidated MOBs as well as the vacant land and the vacant specialty facility (as discussed herein). Other operating expenses incurred in connection with these properties totaled $6.7 million during the second quarter of 2025 and $6.0 million during the second quarter of 2024. Other operating expenses amounted to $13.1 million and $12.8 million during the six-month periods ended June 30, 2025 and 2024, respectively. Our operating expenses during the three and six-month periods ended June 30, 2024 include a property tax reduction of approximately $563,000, which related primarily to prior periods, recorded in connection with our property located in Chicago, Illinois. A large portion of the expenses associated with our MOBs are passed on directly to the tenants either directly as tenant reimbursements of common area maintenance expenses or included in base rental amounts. Tenant reimbursements for operating expenses are accrued as revenue in the same period during which the related expenses are incurred and are included as lease revenue in our condensed consolidated statements of income.

Current wording

Other operating expenses amounted to $19.8 million and $19.5 million during the nine-month periods ended September 30, 2025 and 2024, respectively. Our operating expenses during the nine-month periods ended September 30, 2024 include a property tax reduction of approximately $563,000, which related primarily to prior periods, recorded in connection with our property located in Chicago, Illinois. A large portion of the expenses associated with our MOBs are passed on directly to the tenants either directly as tenant reimbursements of common area maintenance expenses or included in base rental amounts. Tenant reimbursements for operating expenses are accrued as revenue in the same period during which the related expenses are incurred and are included as lease revenue in our condensed consolidated statements of income.

Previous wording

Below is a reconciliation of our reported net income to FFO for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):

Current wording

Below is a reconciliation of our reported net income to FFO for the three and nine-month periods ended September 30, 2025 and 2024 (in thousands):

Previous wording

Our FFO decreased $1.1 million to $23.7 million during the first six months of 2025, as compared to $24.8 million during the first six months of 2024. The net decrease was primarily due to the decrease in net income, as discussed above, partially offset by a $233,000 increase in depreciation and amortization expense.

Current wording

Our FFO decreased by $166,000 to $35.9 million during the first nine months of 2025, as compared to $36.1 million during the first nine months of 2024. The net decrease was primarily due to the $1.3 million decrease in net income, as discussed above, partially offset by a $1.1 million increase in depreciation and amortization expense, which includes the approximately $900,000 of nonrecurring depreciation expense recorded during the third quarter of 2025.

Previous wording

As reflected in the schedule below, interest expense was $4.7 million and $4.6 million during the three-month periods ended June 30, 2025 and 2024, respectively, and $9.4 million and $9.1 million during the six-month periods ended June 30, 2025 and 2024, respectively (amounts in thousands):

Current wording

As reflected in the schedule below, interest expense was $4.8 million during each of the three-month periods ended September 30, 2025 and 2024, and $14.2 million and $13.9 million during the nine-month periods ended September 30, 2025 and 2024, respectively (amounts in thousands):

Previous wording

Please see below in Quantitative and Qualitative Disclosures About Market Risk-Financial Instrumentsfor disclosure regarding our various interest rate swap agreements. Two interest rate swap agreements, with a combined aggregated notional amount of $85 million, expired in September, 2024 (consisting of a $35 million notional amount with a fixed interest rate of 1.4975% and a $50 million notional amount with a fixed interest rate of 1.144%). In October, 2024, those agreements were replaced with an interest rate swap agreement on a total notional amount of $85 million with a fixed interest rate of 3.2725%. During the three and six-month periods ended June 30, 2025 and 2024, net interest was paid to us from the counterparties pursuant to the interest rate swaps that were active during each period.

Current wording

Please see below in Quantitative and Qualitative Disclosures About Market Risk-Financial Instrumentsfor disclosure regarding our various interest rate swap agreements. Two interest rate swap agreements, with a combined aggregated notional amount of $85 million, expired in September, 2024 (consisting of a $35 million notional amount with a fixed interest rate of 1.4975% and a $50 million notional amount with a fixed interest rate of 1.144%). In October, 2024, those agreements were replaced with an interest rate swap agreement on a total notional amount of $85 million with a fixed interest rate of 3.2725%. During the three and nine-month periods ended September 30, 2025 and 2024, net interest was paid to us from the counterparties pursuant to the interest rate swaps that were active during each period.

Previous wording

Interest expense increased by $259,000 during the six-month period ended June 30, 2025, as compared to the comparable period of 2024, due primarily to: (i) a $1.7 million increase due to a net decrease in interest rate swap income due to the interest rate swap agreement transitions mentioned in footnote (a) above; (ii) a $1.3 million decrease in the interest expense pursuant to our credit agreement resulting primarily from a decrease in our average effective cost of borrowings (to 5.93% during the first six months of 2025 as compared to 6.94% during the comparable period of 2024), partially offset by an increase in our average outstanding borrowings (to

Current wording

Interest expense increased by $23,000 during the three-month period ended September 30, 2025, as compared to the comparable period of 2024, due primarily to: (i) a $723,000 increase due to a net decrease in interest rate swap income due to the interest rate swap agreement transitions mentioned in footnote (a) above; (ii) a $691,000 decrease in the interest expense pursuant to our credit agreement resulting primarily from a decrease in our average effective cost of borrowings (to 5.93% during the third quarter of 2025 as compared to 6.93% during the comparable quarter of 2024), partially offset by an increase in our average outstanding borrowings (to $349.9 million during the third quarter of 2025 as compared to $339.6 million during the comparable quarter of 2024); (iii) a $14,000 decrease in mortgage interest expense, and; (iv) an increase of $5,000 in other interest.

Previous wording

Interest expense increased by $137,000 during the three-month period ended June 30, 2025, as compared to the comparable period of 2024, due primarily to: (i) an $860,000 increase due to a net decrease in interest rate swap income due to the interest rate swap agreement transitions mentioned in footnote (a) above; (ii) a $707,000 decrease in the interest expense pursuant to our credit agreement resulting primarily from a decrease in our average effective cost of borrowings (to 5.93% during the second quarter of 2025 as compared to 6.92% during the comparable quarter of 2024), partially offset by an increase in our average outstanding borrowings (to $345.3 million during the second quarter of 2025 as compared to $337.9 million during the comparable quarter of 2024), and; (iii) a $16,000 decrease in mortgage interest expense (due primarily to repayment, utilizing borrowings under our credit agreement, of a $12.2 million fixed rate mortgage loan that matured during the second quarter of 2024).

Current wording

Interest expense increased by $282,000 during the nine-month period ended September 30, 2025, as compared to the comparable period of 2024, due primarily to: (i) a $2.5 million increase due to a net decrease in interest rate swap income due to the interest rate swap agreement transitions mentioned in footnote (a.) above; (ii) a $2.0 million decrease in the interest expense pursuant to our credit agreement resulting primarily from a decrease in our average effective cost of borrowings (to 5.93% during the first nine months of 2025 as compared to 6.94% during the comparable period of 2024), partially offset by an increase in our average outstanding borrowings (to $346.6 million during the first nine months of 2025 as compared to $334.9 million during the comparable period of 2024); (iii) a $169,000 decrease in mortgage interest expense (due primarily to repayment, utilizing borrowings under our credit agreement, of a $12.2 million fixed rate mortgage loan that matured during the second quarter of 2024), and; (iv) an increase of $9,000 in other interest expense.

Previous wording

Net cash provided by operating activities was $25.3 million during the six-month period ended June 30, 2025 as compared to $23.9 million during the comparable period of 2024. The $1.4 million net increase was attributable to:

Current wording

Net cash provided by operating activities was $35.5 million during the nine-month period ended September 30, 2025 as compared to $33.8 million during the comparable period of 2024. The $1.7 million net increase was attributable to:

Previous wording

a favorable change of $2.3 million in accrued expenses and other liabilities, due primarily to the timing of accrued expense disbursements;

Current wording

a favorable change of $1.2 million in accrued expenses and other liabilities, due primarily to the timing of accrued expense disbursements;

Previous wording

an unfavorable change of $300,000 in leasing costs paid;

Current wording

an unfavorable change of $279,000 in leasing costs paid;

Previous wording

an unfavorable change of $1.1 million due to a decrease in net income plus/minus the adjustments to reconcile net income to net cash provided by operating activities (depreciation and amortization, amortization related to above/below market leases, amortization of deferred financing costs and stock-based compensation expense), as discussed above;

Current wording

an unfavorable change of $139,000 due to a decrease in net income plus/minus the adjustments to reconcile net income to net cash provided by operating activities (depreciation and amortization, amortization related to above/below market leases, amortization of deferred financing costs and stock-based compensation expense), as discussed above, and;

Previous wording

other combined net favorable changes of $337,000.

Current wording

other combined net favorable changes of $374,000.

Previous wording

Net cash used in investing activities was $10.7 million during the first six months of 2025 as compared to $9.7 million during the first six months of 2024.

Current wording

Net cash used in investing activities was $12.4 million during the first nine months of 2025 as compared to $11.2 million during the first nine months of 2024.

Previous wording

During the six-month period ended June 30, 2025 we funded: (i) $6.8 million in equity investments in unconsolidated LLCs (consisting primarily of our $6.5 million pro rata share of a $6.8 million third-party construction loan that was fully repaid in May, 2025); (ii) $3.7 million in additions to real estate investments, including tenant improvements at various MOBs, and; (iii) a $335,000 net advance made to a third-party partner of an unconsolidated LLC that is scheduled to be repaid to us, with interest, during the third quarter of 2025. In addition, during the six months ended June 30, 2025, we received $167,000 of cash in excess of income from LLCs.

Current wording

During the nine-month period ended September 30, 2025 we funded: (i) $6.8 million in equity investments in unconsolidated LLCs (consisting primarily of our $6.5 million pro rata share of a $6.8 million third-party construction loan that was fully repaid in May, 2025); (ii) $5.6 million in additions to real estate investments, including tenant improvements at various MOBs, and; (iii) a $327,000 net advance made to a third-party partner of an unconsolidated LLC that is scheduled to be repaid to us, with interest, during the fourth quarter of 2025. In addition, during the nine months ended September 30, 2025, we received $303,000 of cash in excess of income from LLCs.

Previous wording

During the six-month period ended June 30, 2024 we funded: (i) $5.9 million in equity investments in unconsolidated LLCs; (ii) $4.3 million in additions to real estate investments including construction costs related to the Sierra Medical Plaza I medical office building located in Reno, Nevada, that was substantially completed during the first quarter of 2023, as well as tenant improvements at various MOBs, and; (iii) $128,000 in an advance made to a third-party partner of an unconsolidated LLC, which was repaid in July, 2024, with interest. In addition, during the six months ended June 30, 2024, we received $688,000 of cash in excess of income from LLCs.

Current wording

During the nine-month period ended September 30, 2024 we funded: (i) $5.9 million in equity investments in unconsolidated LLCs, and; (ii) $6.0 million in additions to real estate investments, including tenant improvements at various MOBs. In addition, during the nine months ended September 30, 2024, we received $765,000 of cash in excess of income from LLCs.

Previous wording

Net cash used in financing activities was $15.2 million during the six months ended June 30, 2025, as compared to $16.8 million during the six months ended June 30, 2024.

Current wording

Net cash used in financing activities was $23.2 million during the nine months ended September 30, 2025, as compared to $24.4 million during the nine months ended September 30, 2024.

Previous wording

During the six-month period ended June 30, 2025, we paid: (i) $649,000 on mortgage notes payable that are non-recourse to us, and; (ii) $20.5 million of dividends, including $100,000 of previously accrued dividends. Additionally, during the six months ended June 30, 2025, we received: (i) $5.9 million of net borrowings pursuant to our Credit Agreement, and; (ii) $75,000 of net cash from the issuance of shares of beneficial interest.

Current wording

During the nine-month period ended September 30, 2025, we paid: (i) $30.7 million of dividends, including $100,000 of dividends previously accrued, and; (ii) $794,000 on mortgage notes payable that are non-recourse to us. Additionally, during the nine months ended September 30, 2025, we received: (i) $8.2 million of net borrowings pursuant to our Credit Agreement, and; (ii) $115,000 of net cash from the issuance of shares of beneficial interest.

Previous wording

During the six-month period ended June 30, 2024, we paid: (i) $12.9 million on mortgage notes payable that are non-recourse to us, including a $12.2 million repayment of a fixed rate mortgage loan that matured during the second quarter of 2024; (ii) $49,000 of financing costs related to the revolving credit agreement; (iii) $20.2 million of dividends, including $78,000 of previously accrued dividends, and; (iv) $10,000, of net cash paid related to the issuance of shares of beneficial interest. Additionally, during the six months ended June 30, 2024, we received $16.3 million of net borrowings on our revolving credit agreement.

Current wording

During the nine-month period ended September 30, 2024, we paid: (i) $13.2 million on mortgage notes payable that are non-recourse to us, including a $12.2 million repayment of a fixed rate mortgage loan that matured during the second quarter of 2024; (ii) $2.1 million of financing costs related to the Credit Agreement, and; (iii) $30.2 million of dividends, including $85,000 of previously accrued dividends. Additionally, during the nine months ended September 30, 2024, we received (i) $21.2 million of net borrowings pursuant to our Credit Agreement, and; (ii) $17,000, of net cash from the issuance of shares of beneficial interest.

Previous wording

Additional cash flow and dividends paid information for the six-month periods ended June 30, 2025 and 2024:

Current wording

Additional cash flow and dividends paid information for the nine-month periods ended September 30, 2025 and 2024:

Previous wording

As indicated on our condensed consolidated statement of cash flows, we generated net cash provided by operating activities of $25.3 million and $23.9 million during the six-month periods ended June 30, 2025 and 2024, respectively. As also indicated on our statement of cash flows, non-cash expenses including depreciation and amortization expense, amortization related to above/below market leases, amortization of deferred financing costs and stock-based compensation expense, as well as changes in certain assets and liabilities, are the primary differences between our net income and net cash provided by operating activities during each period.

Current wording

As indicated on our condensed consolidated statement of cash flows, we generated net cash provided by operating activities of $35.5 million and $33.8 million during the nine-month periods ended September 30, 2025 and 2024, respectively. As also indicated on our statement of cash flows, non-cash expenses including depreciation and amortization expense, amortization related to above/below market leases, amortization of deferred financing costs and stock-based compensation expense, as well as changes in certain assets and liabilities, are the primary differences between our net income and net cash provided by operating activities during each period.

Previous wording

We declared and paid dividends of $20.5 million and $20.2 million during the six-month periods ended June 30, 2025 and 2024, respectively. During the first six months of 2025, the $25.3 million of net cash provided by operating activities was approximately $4.8 million greater than the $20.5 million of dividends paid during the first six months of 2025. During the first six months of 2024, the $23.9 million of net cash provided by operating activities was approximately $3.7 million greater than the $20.2 million of dividends paid during the first six months of 2024.

Current wording

We declared and paid dividends of $30.7 million and $30.2 million during the nine-month periods ended September 30, 2025 and 2024, respectively. During the first nine months of 2025, the $35.5 million of net cash provided by operating activities was approximately $4.8 million greater than the $30.7 million of dividends paid during the first nine months of 2025. During the first nine months of 2024, the $33.8 million of net cash provided by operating activities was approximately $3.5 million greater than the $30.2 million of dividends paid during the first nine months of 2024.

Previous wording

As indicated in the cash flows from investing activities and cash flows from financing activities sections of the statements of cash flows, there were various other sources and uses of cash during the six months ended June 30, 2025 and 2024. From time to time, various other sources and uses of cash may include items such as investments and advances made to/from LLCs, additions to real estate investments, acquisitions/divestiture of properties, net borrowings/repayments of debt, and proceeds generated from the issuance of equity. Therefore, in any given period, the funding source for our dividend payments is not wholly dependent on the operating cash flow generated by our properties. Rather, our dividends as well as our capital reinvestments into our existing properties, acquisitions of real property and other investments are funded based upon the aggregate net cash inflows or outflows from all sources and uses of cash from the properties we own either in whole or through LLCs, as outlined above.

Current wording

As indicated in the cash flows from investing activities and cash flows from financing activities sections of the statements of cash flows, there were various other sources and uses of cash during the nine months ended September 30, 2025 and 2024. From time to time, various other sources and uses of cash may include items such as investments and advances made to/from LLCs, additions to real estate investments, acquisitions/divestiture of properties, net borrowings/repayments of debt, and proceeds generated from the issuance of equity. Therefore, in any given period, the funding source for our dividend payments is not wholly dependent on the operating cash flow generated by our properties. Rather, our dividends as well as our capital reinvestments into our existing properties, acquisitions of real property and other investments are funded based upon the aggregate net cash inflows or outflows from all sources and uses of cash from the properties we own either in whole or through LLCs, as outlined above.

Previous wording

We expect to finance all capital expenditures and acquisitions and pay dividends utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our $425 million Credit Agreement (which had $70.2 million of available borrowing capacity, net of outstanding borrowings as of June 30, 2025); (ii) borrowings under or refinancing of existing third-party debt pursuant to mortgage loan agreements entered into by our consolidated and unconsolidated LLCs/LPs; (iii) the issuance of other long-term debt, and/or; (iv) the issuance of equity. In April, 2024 we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission pursuant to which we may offer up to $100 million of securities pursuant to supplemental prospectuses which we may file from time to time.

Current wording

We expect to finance all capital expenditures and acquisitions and pay dividends utilizing internally generated and additional funds. Additional funds may be obtained through: (i) borrowings under our $425 million Credit Agreement (which had $67.9 million of available borrowing capacity, net of outstanding borrowings as of September 30, 2025); (ii) borrowings under or refinancing of existing third-party debt pursuant to mortgage loan agreements entered into by our consolidated and unconsolidated LLCs/LPs; (iii) the issuance of other long-term debt, and/or; (iv) the issuance of equity. In April, 2024 we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission pursuant to which we may offer up to $100 million of securities pursuant to supplemental prospectuses which we may file from time to time.

Previous wording

At June 30, 2025, we had $354.8 million of outstanding borrowings pursuant to the terms of our $425 million Credit Agreement and $70.2 million of available borrowing capacity. At December 31, 2024, we had $348.9 million of outstanding borrowings pursuant to the terms of our Credit Agreement in effect at that time, and $76.1 million of available borrowing capacity. There are no compensating balance requirements.

Current wording

At September 30, 2025, we had $357.1 million of outstanding borrowings pursuant to the terms of our $425 million Credit Agreement and $67.9 million of available borrowing capacity. At December 31, 2024, we had $348.9 million of outstanding borrowings pursuant to the terms of our Credit Agreement in effect at that time, and $76.1 million of available borrowing capacity. There are no compensating balance requirements.

Previous wording

In our consolidated statements of cash flows, we report cash flows pursuant to our Credit Agreement on a net basis. Aggregate borrowings under our Credit Agreement were $19.6 million and $25.2 million during the quarters ended June 30, 2025 and 2024, respectively, and aggregate repayments were $14.3 million and $15.9 million during the quarters ended June 30, 2025 and 2024, respectively. Aggregate borrowings under our Credit Agreement were $32.6 million and $47.0 million during the six-months ended June 30, 2025 and 2024, respectively, and aggregate repayments were $26.7 million and $30.7 million during the six-months ended June 30, 2025 and 2024, respectively.

Current wording

In our consolidated statements of cash flows, we report cash flows pursuant to our Credit Agreement on a net basis. Aggregate borrowings under our Credit Agreement were $14.9 million and $17.2 million during the quarters ended September 30, 2025 and 2024, respectively, and aggregate repayments were $12.7 million and $12.4 million during the quarters ended September 30, 2025 and 2024, respectively. Aggregate borrowings under our Credit Agreement were $47.5 million and $64.2 million during the nine-months ended September 30, 2025 and 2024, respectively, and aggregate repayments were $39.4 million and $43.0 million during the nine-months ended September 30, 2025 and 2024, respectively.