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Community Healthcare Trust Inc

For the period ended Sep 30, 2026. Filed Nov 3, 2026.

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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Sep 30, 2026 · Filed Nov 3, 2026

CHCT$14.84+0.9%Stored close · as of Nov 9, 2026

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Notes to Condensed Consolidated Financial Statements

September 30, 2026

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Overview

Community Healthcare Trust Incorporated (the ‘‘Company’’, ‘‘we’’, ‘‘our’’) was organized in the State of Maryland on March 28, 2014. The Company is a fully-integrated healthcare real estate company that owns and acquires real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers. As of September 30, 2026, the Company had gross investments of approximately $1.2 billion in 196 real estate properties (includingone property with sales-type leases with a gross investment totaling approximately $8.1 million andtwo properties classified as assets held for sale with an aggregate net investment totaling approximately $21.7 million). The properties are located in 36 states, totaling approximately 4.5 million square feet in the aggregate, with a weighted average remaining lease term of approximately 7.1 years. Excluding the real estate assets held for sale the properties were approximately 90.1% leased. Any references to square footage, property count, or occupancy percentages, and any amounts derived from these values in these notes to the Condensed Consolidated Financial Statements, are outside the scope of our independent registered public accounting firm's review.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2026. All intercompany accounts and transactions have been eliminated.

Use of Estimates in the Condensed Consolidated Financial Statements

Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying notes, including among others, estimates related to impairment assessments, purchase price allocations, allowances for accounts and interest receivables, and valuation of financial instruments. Actual results may materially differ from those estimates.

Segment Reporting

The Company invests in healthcare-related real estate properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers throughout the U.S. The Company operates and manages its business asone reportable operating segment. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company's CODM is the Chief Executive Officer who reviews total consolidated assets and consolidated net income and assesses the performance of the Company's portfolio and makes operating decisions accordingly. There are no significant segment expenses which require disclosure other than the expenses presented on the Condensed Consolidated Statements of Operations.

Cash and Cash Equivalents

Cash and cash equivalents may include short-term investments with original maturities of three months or less when purchased. The carrying amounts approximate fair value due to the short-term maturity of these investments.

Accounting Pronouncements Not Yet Adopted

ASU 2024-03, Disaggregation of Income Statement Expenses, will require entities to provide enhanced disclosures related to certain expense categories included in income statement captions. ASU 2024-03 aims to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the income statement. The new standard does not change the requirements for the presentation of expenses on the face of the income statement. Entities will be required to disaggregate, in a tabular format, expense captions presented on the face of the income statement, including but not limited to employee compensation, intangible asset amortization, and depreciation and amortization within a footnote to its Consolidated Financial Statements. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 though early adoption is permitted. While the adoption is not expected to have a material impact on our financial statements, it is expected to result in incremental disclosures within the footnotes to our Consolidated Financial Statements.

ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, provides clarity on the current interim reporting requirements and the applicability of ASC 270. The new guidance creates a comprehensive list of interim disclosures required under GAAP and incorporates a disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the last annual reporting period. Some examples that may require disclosure under this new principle include changes in (i) accounting principles or estimates, (ii) status of long-term contracts, (iii) capitalization, such as new borrowings or financing modifications, and (iv) reporting entity resulting from business combinations or disposals. The amendments are effective for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact the adoption of this standard may have on its interim Condensed Consolidated Financial Statements.

NOTE 2. REAL ESTATE INVESTMENTS

As of September 30, 2026, we had gross investments of approximately $1.2 billion in 196 real estate properties (includingone property with sales-type leases with a gross investment totaling approximately $8.1 million andtwo properties classified as assets held for sale with a net real estate investment totaling approximately $21.7 million). The Company's investments are diversified by property type, geographic location, and tenant as shown in the following tables:

Property Type# of PropertiesGross Investment(in thousands)
Medical Office Building92$482,113
Inpatient Rehabilitation Hospitals11260,819
Acute Inpatient Behavioral11173,769
Specialty Centers35111,619
Physician Clinics32106,436
Surgical Centers and Hospitals647,097
Behavioral Specialty Facilities745,720
Long-term Acute Care Hospitals221,484
Total196$1,249,057
State# of PropertiesGross Investment(in thousands)
Florida26$188,240
Texas15165,819
Illinois19141,423
Ohio25116,686
Pennsylvania1568,688
All Others96568,201
Total196$1,249,057
Primary Tenant# of PropertiesGross Investment(in thousands)
US HealthVest3$77,964
PAM Health255,035
All Others (less than 4%)1911,116,058
Total196$1,249,057

NOTE 3. REAL ESTATE LEASES

Lessor Accounting

The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases with expiration dates through 2046. The Company’s leases generally require the lessee to pay minimum rent, with fixed rent renewal terms or increases based on a Consumer Price Index and may also include additional rent, which may include the reimbursement of certain taxes (including property taxes), insurance, maintenance and other operating costs associated with the leased property. Some leases also allow the lessee to renew or extend their lease term or in some cases terminate their lease, based on conditions provided in the lease.

Future minimum lease payments under the non-cancelable operating leases due to the Company for the years ending December 31, as of September 30, 2026, are as follows (in thousands):

2026 (three months ending December 31)$28,645
2027111,165
2028103,668
202992,291
203085,895
2031 and thereafter473,698
$895,362

Rental income is recognized as earned over the life of the lease agreement on a straight-line basis when collection of rental payments over the term of the lease is probable. Straight-line rent increased rental income by approximately $0.8 million and $2.2 million for the three and nine months ended September 30, 2026, respectively, and by $0.9 million and $2.7 million for the three and nine months ended September 30, 2025, respectively.

Purchase Option Provisions

Certain of the Company's leases provide the lessee with a purchase option or a right of first refusal to purchase the leased property. The purchase option provisions generally allow the lessee to purchase the leased property at fair value or at an amount greater than the Company's gross investment in the leased property at the time of the purchase. The Company had an aggregate gross investment of approximately $38.2 million in 11 real estate properties with purchase options outstanding at September 30, 2026 that had not been exercised.

Sales-type Leases

The Company hasone property withtwo sales-type leases with a net investment totaling approximately $7.7 million included in other assets, net on the Company's Condensed Consolidated Balance Sheets. Future lease payments due to the Company under these leases for the years ending December 31, as of September 30, 2026, are as follows (in thousands):

2026 (three months ending December 31)$219
2027888
2028909
2029932
2030954
2031 and thereafter8,664
Total undiscounted lease receivable12,566
Discount(4,858)
Lease receivable$7,708

The Company recognized interest income of approximately $0.2 million during each of the three months ended September 30, 2026 and 2025, and recognized approximately $0.5 million and $0.4 million, respectively, for the nine months ended September 30, 2026 and 2025, which is included in other operating interest on the Company's Condensed Consolidated Statements of Operations.

Lessee Accounting

At September 30, 2026, the Company was obligated, as the lessee, under four non-prepaid ground leases accounted for as operating leases with expiration dates, including renewal options, through 2076, andtwo non-prepaid ground leases accounted for as finance leases with expiration dates, including renewal options, through 2109. Any rental increases related to the Company's ground leases are generally either stated or based on the Consumer Price Index. The Company's future lease payments under these non-prepaid ground leases were as follows (in thousands):

Operating · Financing
2026 (three months ending December 31)$11$39
202745154
202846154
202947154
203048154
2031 and thereafter1,0076,493
Total undiscounted lease payments1,2047,148
Discount(465)(3,914)
Lease liabilities$739$3,234

The following table discloses other information regarding the ground leases.

Three Months EndedSeptember 30,
20262025
Operating leases:
Weighted-average remaining lease term in years (including renewal options)31.833.0
Weighted-average discount rate4.1%4.0%
Financing leases:
Weighted-average remaining lease term in years (including renewal options)37.238.1
Weighted-average discount rate4.3%4.3%

NOTE 4. REAL ESTATE ACQUISITION, DISPOSITION, AND ASSETS HELD FOR SALE

Acquisition

During the first quarter of 2026, the Company acquiredone real estate property as detailed in the table below. The property is 100% leased to a tenant with a lease expiration in 2044. Amounts reflected in revenues and net income for the property for the nine months ended September 30, 2026 were approximately $1.9 million and $1.6 million, respectively, and transaction costs totaling approximately $19,000 were capitalized relating to the property acquisition.

The following table summarizes our property acquisitions for the nine months ended September 30, 2026:

LocationProperty Type (1)Number of PropertiesDateAcquiredPurchase PriceCash ConsiderationReal EstateOther (2)Square Footage
(000's) · (000's) · (000's) · (000's)
Pinellas Park, FLIRF12/19/2026$28,500$28,514$28,519$(5)37,151
$28,500$28,514$28,519$(5)37,151
(1) IRF - Inpatient Rehabilitation Facility
(2) May include items including, but not limited to, other assets, liabilities assumed, and security deposits.

The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the property acquisitions for the nine months ended September 30, 2026:

Estimated Fair ValueWeighted Average Useful Life
(In thousands)(In years)
Land and land improvements$7,87722.0
Buildings and building improvements20,64250.0
Accounts payable, accrued liabilities and other liabilities acquired(5)
Total cash consideration$28,514

Asset Dispositions and Assets Held for Sale

As part of the Company's capital recycling program, the Company has sold the following properties during 2026:

During the third quarter of 2026, the Company sold a property, received net proceeds of approximately $0.1 million, and recorded a $0.7 million loss on sale.

During the second quarter of 2026, the Company sold a property, received net proceeds of approximately $0.4 million, and recorded a $46,000 gain on sale.

During the first quarter of 2026, the Company sold a property, received net proceeds of approximately $5.2 million, and recorded a $46,000 loss on sale. The property was classified as held for sale at December 31, 2025. During the first quarter of 2026, the Company also received net cash proceeds of approximately $0.7 million for a property disposed of during the fourth quarter of 2025.

The Company also hadtwo properties classified as assets held for sale at September 30, 2026 andone property held for sale at December 31, 2025. During the third quarter of 2026, the Company recognized an impairment of approximately $0.4 million related to a property held for sale at September 30, 2026, based on the estimated fair value less costs to sell.

The table below reflects the assets classified as held for sale for each of those periods.

(Dollars in thousands)September 30, 2026December 31, 2025
Balance Sheet data:
Land$3,213$1,047
Building, improvements, and lease intangibles21,1236,604
24,3367,651
Accumulated depreciation(2,660)(2,386)
Real estate assets held for sale, net$21,676$5,265
Other assets, net$912$—
Assets held for sale, net$22,588$5,265

NOTE 5. DEBT, NET

The table below details the Company's debt as of September 30, 2026 and December 31, 2025.

Balance as of
(Dollars in thousands)September 30, 2026December 31, 2025Maturity Dates
Credit Facility:
Revolving Credit Facility$284,000$258,00010/2029
A-4 Term Loan, net124,834124,7493/2028
A-5 Term Loan, net149,548149,4503/2030
$558,382$532,199

Credit Facility

The Company's third amended and restated credit agreement, as amended on October 16, 2024 (the "Credit Facility") is by and among Community Healthcare Trust Incorporated, as borrower, the several banks and financial institutions party thereto as lenders, and Truist Bank, as administrative agent. The Credit Facility provides for a $400.0 million revolving credit facility (the "Revolving Credit Facility") and $275.0 million in term loans (the "Term Loans"). The Revolving Credit Facility matures on October 16, 2029. The Term Loans include a term loan facility in the aggregate principal amount of $125.0 million (the "A-4 Term Loan"), which matures on March 19, 2028, and a term loan facility in the aggregate principal amount of $150.0 million (the "A-5 Term Loan"), which matures on March 14, 2030. Loans under the Credit Facility are interest only with principal amounts due as of each facility's applicable maturity date. The Company's material subsidiaries are guarantors of the obligations under the Credit Facility.

Amounts outstanding under the Revolving Credit Facility bear interest at a floating rate based on the Company's option, on either: (i) adjusted term SOFR or adjusted daily simple SOFR plus 1.15% to 1.75%, plus a simple SOFR adjustment equal to 0.10% per annum, or (ii) a base rate plus 0.15% to 0.75% in each case, depending upon the Company’s leverage ratio. In addition, the Company is obligated to pay an annual fee equal to 0.20% of the amount of the unused portion of the Revolving Credit Facility if amounts borrowed are greater than 33.3% of the borrowing capacity under the Revolving Credit Facility and 0.25% of the unused portion of the Revolving Credit Facility if amounts borrowed are less than or equal to 33.3% of the borrowing capacity under the Revolving Credit Facility. At September 30, 2026, the Company had $284.0 million outstanding under the Revolving Credit Facility with a borrowing capacity remaining of $116.0 million and a floating rate of approximately 5.6%.

Amounts outstanding under the Term Loans will bear interest at a floating rate that is based, at the Company's option, on either (i) adjusted term SOFR or adjusted daily SOFR plus 1.65% to 2.30%, plus a simple SOFR adjustment equal to 0.10% per annum, or (ii) a base rate plus 0.65% to 1.30%, in each case, depending upon the Company’s leverage ratio.

The Company has entered into interest rate swaps to fix certain interest rates on the Credit Facility. At September 30, 2026, the Company had fixed the $275.0 million outstanding under the Term Loans, which had an aggregate fixed weighted average interest rate under the swaps of approximately 4.7%. On March 29, 2026, the swaps that had previously fixed $75.0 million of the Revolving Credit Facility matured. The fixed rate of those matured swaps was 3.8%. See Note 6 – Derivative Financial Instruments for more details on the interest rate swaps.

The Company’s ability to borrow under the Credit Facility is subject to its ongoing compliance with a number of customary affirmative and negative covenants, including limitations with respect to liens, indebtedness, distributions, mergers, consolidations, investments, restricted payments and asset sales, as well as financial maintenance covenants. The Company was in compliance with its financial covenants under its Credit Facility as of September 30, 2026.

NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of September 30, 2026, the Company hadtwelve outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk for notional amounts totaling $275.0 million, which mature between 2028 and 2030. Three previously outstanding interest rate swaps for notional amounts totaling $75.0 million matured on March 29, 2026. See Note 5 – Debt, net.

Tabular Disclosure of Fair Value of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025.

Asset Derivatives Fair Value atLiability Derivatives Fair Value at
(Dollars in thousands)September 30, 2026December 31, 2025Balance Sheet ClassificationSeptember 30, 2026December 31, 2025Balance Sheet Classification
Interest rate swaps$13,028$6,691Other assets, net$—$—Other liabilities, net

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

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s Credit Facility. During the next twelve months, the Company estimates that an additional $5.7 million will be reclassified from AOCI as a decrease to interest expense on the Term Loans.

Tabular Disclosure of the Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2026 and 2025.

Three Months EndedSeptember 30,Nine Months EndedSeptember 30,
(Dollars in thousands)2026202520262025
Amount of unrealized gain (loss) recognized in OCI on derivative$4,931$308$9,425$(4,568)
Amount of gain reclassified from AOCI into interest expense$(950)$(1,861)$(3,088)$(5,495)
Total interest expense presented in the Condensed Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded$7,515$7,075$21,742$20,019

Tabular Disclosures of Offsetting Derivatives

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of September 30, 2026 and December 31, 2025. As of September 30, 2026 and December 31, 2025 the Company did not have any derivatives in a liability position, therefore we do not present offsetting of derivative liabilities to be reconciled to the tabular disclosure of fair value.

Offsetting of Derivative Assets (as of September 30, 2026)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)Gross Amounts of Recognized AssetsGross Amounts Offset in the Condensed Consolidated Balance SheetNet Amounts of Assets in the Condensed Consolidated Balance SheetsFinancial InstrumentsCash Collateral ReceivedNet Amount
Derivatives$13,028$—$13,028$—$—$13,028
Offsetting of Derivative Assets (as of December 31, 2025)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)Gross Amounts of Recognized AssetsGross Amounts Offset in the Condensed Consolidated Balance SheetNet Amounts of Assets in the Condensed Consolidated Balance SheetsFinancial InstrumentsCash Collateral ReceivedNet Amount
Derivatives$6,691$—$6,691$—$—$6,691

Credit-risk-related Contingent Features

As of September 30, 2026, the Company had no derivatives in a net liability position. As of September 30, 2026, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company terminated these interest rate swaps or breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.

NOTE 7. STOCKHOLDERS' EQUITY

Common Stock

The following table provides a reconciliation of the beginning and ending common stock balances for the nine months ended September 30, 2026 and for the year ended December 31, 2025:

(In thousands)Nine Months EndedSeptember 30, 2026Year Ended December 31, 2025
Balance, beginning of period28,47128,242
Vested RSUs2228
Restricted stock issued, net of withheld shares and forfeitures246201
Balance, end of period28,73928,471

ATM Program

The Company has an at-the-market offering program ("ATM Program") with Piper Sandler & Co., Piper Sandler Financial Products II Inc., Evercore Group L.L.C., Fifth Third Securities, Inc., Huntington Securities, Inc., Janney Montgomery Scott LLC, KeyBanc Capital Markets Inc., Regions Securities LLC, Truist Bank, and Truist Securities, Inc. in their capacities as Sales Agents, Forward Purchasers and/or Forward Sellers (each, an “Agent”, and, collectively, the “Agents”).

Under the ATM Program, the Company may issue and sell shares of its common stock, having an aggregate gross sales price of up to $300.0 million, exclusive of shares of common stock sold under its prior agreements with our Agents. The shares of common stock may be sold from time to time through or to one or more of the Agents, as may be determined by the Company in its sole discretion, subject to the terms and conditions of the third amended and restated sales agency agreement and applicable law. In addition, the Company may enter into one or more forward sales agreements under the ATM Program.

The Company did not issue any shares under the ATM Program during the nine months ended September 30, 2026. As of September 30, 2026, the Company had $300.0 million remaining that may be issued under the ATM Program.

NOTE 8. NET INCOME (LOSS) PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income (loss) per common share for the three and nine months ended September 30, 2026 and 2025, respectively. Net income (loss) available to common stockholders excludes dividends paid on participating securities which include restricted stock and time-based RSUs. Dividends accrue but are not paid on unvested performance-based RSUs.

Three Months EndedSeptember 30,Nine Months EndedSeptember 30,
(In thousands, except per share data)2026202520262025
Net income (loss)$3,068$1,640$7,980$(9,326)
Participating securities' share in earnings(564)(750)(2,124)(2,278)
Net income (loss), less participating securities' share in earnings$2,504$890$5,856$(11,604)
Weighted average Common Shares outstanding
Weighted average Common Shares outstanding28,69428,43028,61928,373
Unvested restricted shares(1,624)(1,496)(1,593)(1,549)
Weighted average Common Shares outstanding –Basic & Diluted27,07026,93427,02626,824
Net Income (Loss) Per Common Share - Basic & Diluted$0.09$0.03$0.22$(0.43)

NOTE 9. STOCK INCENTIVE PLAN

Restricted Stock Awards

A summary of restricted stock award activity for the three and nine months ended September 30, 2026 and 2025 is included in the table below, as well as compensation expense recognized from the amortization of the value of shares over the applicable amortization periods.

Three Months EndedSeptember 30, · Nine Months EndedSeptember 30,
(Dollars and shares in thousands) · 2026 · 2025 · 2026 · 2025
Stock-based awards, beginning of period1,6081,4551,5181,560
Stock in lieu of compensation6064143153
Stock awards3944142158
Total stock granted99108285311
Vested shares(57)(43)(152)(349)
Forfeited shares(3)(2)(4)(4)
Stock-based awards, end of period1,6471,5181,6471,518
Amortization expense (1)$1,594$2,081$6,212$11,285
______________
(1) Amortization expense for the nine months ended September 30, 2025 included accelerated amortization totaling $4.4 million related to the termination of a former executive officer.

Restricted Stock Issuances

During the first quarter of 2026, pursuant to the 2024 Incentive Plan and the Fourth Amended and Restated Alignment of Interest Program, the Company granted 101,305 shares of restricted common stock to its employees, in lieu of salary, that will cliff vest between three andeight years. Of the shares granted,60,456 shares of restricted stock were granted in lieu of compensation from the program pool and 40,849 shares of restricted stock were awards granted from the plan pool. Also, during the first quarter of 2026, pursuant to the Second Amended and Restated Non-Executive Officer Incentive Program, the Company granted 18,103 shares of restricted stock to certain employees that will cliff vest infive years.

During the second quarter of 2026, pursuant to the 2024 Incentive Plan and the Fourth Amended and Restated Alignment of Interest Program, the Company granted an aggregate of 66,165 shares of restricted stock to its Board of Directors, in lieu of fees and compensation, which will cliff vest inthree years. Of the shares granted,21,908 shares of restricted stock were granted in lieu of compensation from the program pool and 44,257 shares of restricted stock were awarded based on the restriction period elected from the plan pool.

During the third quarter of 2026, pursuant to the 2024 Incentive Plan and the Fourth Amended and Restated Alignment of Interest Program, the Company granted an aggregate of 99,145 shares of restricted stock to its employees, in lieu of bonus compensation, which will cliff vest between three andeight years. Of the shares granted,60,796 shares of restricted stock were granted in lieu of compensation from the program pool and 38,349 shares of restricted stock were awarded based on the restriction period elected from the plan pool.

Restricted Stock Units

A summary of the Company's restricted stock unit (RSU) activity during the three and nine months ended September 30, 2026 and 2025, respectively, is included in the table below, as well as compensation expense recognized from the amortization of the value of RSUs over the applicable amortization periods.

Three Months Ended September 30, · Nine Months Ended September 30,
(Dollars and RSUs in thousands) · 2026 · 2025 · 2026 · 2025
Restricted Stock Units, beginning of period9795205123
Absolute TSR Performance-based RSUs granted (1)29362936
Relative TSR Performance-based RSUs granted (1)29352935
Time-based RSUs granted (2)34393439
Total RSUs granted9211092110
Vested RSUs——(22)(28)
Forfeited RSUs(3)——(86)—
Restricted Stock Units, end of period189205189205
Amortization expense(4)$309$384$1,180$1,012
______________
(1) The number of performance-based RSUs granted were based on target levels. These RSUs will vest or be forfeited based on the performance level achieved at the end of the respective three-year performance period on June 30, 2028 and 2029.
(2) The number of time-based RSUs granted were based on target levels and vest ratably on June 30 of each year of the respective three-year periods ending June 30, 2028 and 2029, provided the recipient remains continuously employed by the Company on each such date.
(3) RSUs with a three-year performance period ended June 30, 2026 did not meet required performance levels and were forfeited.
(4) Amortization expense of RSUs for the nine months ended September 30, 2025 includes accelerated amortization totaling $0.2 million related to the termination of a former executive officer.

Restricted Stock Unit Issuances

During the third quarter of 2026, pursuant to the 2024 Incentive Plan, the Company granted performance-based and time-based RSUs to its executive officers. These RSUs are forward-looking with athree-year performance period beginning July 1, 2026. The performance-based RSUs were valued by independent specialists utilizing a Monte Carlo simulation to calculate the grant date fair values of $19.04 per share for the Absolute TSR RSUs and $22.05 per share for the Relative TSR RSUs. The grant date value of the time-based RSUs was based on the Company's stock price on the grant date of $18.56.

NOTE 10. OTHER ASSETS, NET

Other assets, net on the Company's Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 are detailed in the table below.

Balance as of
(Dollars in thousands)September 30, 2026December 31, 2025
Straight-line rent receivables, net$24,275$22,987
Fair value of interest rate swaps13,0286,691
Sales-type lessor receivables7,7087,894
Leasing commissions, net6,9435,253
Deferred financing costs, net2,3642,947
Financing lease right-of-use assets2,3242,368
Prepaid assets2,0041,547
Mortgage note receivable2,0002,000
Accounts and interest receivables, net1,5592,585
Notes receivable, net of credit loss reserve1,3801,830
Above-market intangible assets, net9951,307
Operating lease right of use assets644667
Other8811,163
Total other assets, net$66,105$59,239

The Company's notes and mortgage note receivable included the following at September 30, 2026 and December 31, 2025:

At September 30, 2026 and December 31, 2025, notes receivable included a $17.0 million term loan and a $2.7 million revolving credit facility secured by assets and ownership interests ofsix geriatric behavioral hospitals and affiliated companies all of which are co-borrowers on the loans. The notes and interest receivables on these notes are fully reserved. At September 30, 2026, the Company had an unfunded commitment of $5.8 million on the revolving credit facility, however, any additional amounts requested by the borrower require Company management approval.

At September 30, 2026 and December 31, 2025, notes receivable included a revolving credit facility with a borrower totaling $1.4 million and $1.8 million, respectively. The outstanding balance of the revolving credit facility will be repaid in monthly installments of $50,000 through the maturity date of April 1, 2027 with a balloon payment due at maturity. Therevolving credit facility bears interest at 9% per annum, as well as a 3% per annum non-cash interest charge that is due and payable upon the earlier of the repayment or maturity of the note.

At September 30, 2026 and December 31, 2025, the Company had a $2.0 million mortgage note receivable with a developer which is secured by the land, improvements, and personal property. The mortgage loan, which bears interest at 10% per annum, will be interest only until the principal is due at the earlier of the sale of the property, or August 15, 2027.

The Company identified the borrowers of these notes as variable interest entities ("VIEs"), but management determined that the Company was not the primary beneficiary of the VIEs because we lack either directly or through related parties any material decision-making rights or control of the entities that impact the borrowers' economic performance. We are not obligated to provide support beyond our stated commitment to the borrowers, and accordingly our maximum exposure to loss as a result of this relationship is limited to the amount of our outstanding notes receivable.

The VIEs that we have identified at September 30, 2026 are summarized in the table below.

ClassificationCarrying Amount (in thousands)Maximum Exposure to Loss(in thousands)
Note receivable (revolving credit facility)$1,380$1,380
Note receivable (mortgage note)$2,000$2,000

NOTE 11. OTHER LIABILITIES, NET

Other liabilities, net on the Company's Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 are detailed in the table below.

Balance as of
(Dollars in thousands)September 30, 2026December 31, 2025
Prepaid rent$5,476$6,034
Security deposits2,6692,596
Below-market lease intangibles, net1,1491,583
Financing lease liability3,2343,246
Operating lease liability739750
Other4137
Total other liabilities, net$13,308$14,246

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate the fair value.

Cash and cash equivalents - The carrying amount approximated the fair value. The fair value estimates were determined using level 1 inputs.

Notes and mortgage note receivable - The fair value was estimated using cash flow analyses which are based on an assumed market rate of interest or at a rate consistent with the rates on notes carried by the Company and were classified as level 2 inputs in the hierarchy.

Notes receivable, net of credit loss - The fair value of these notes, net of credit loss, was estimated based on its estimated value of the underlying collateral on the notes and are classified as level 3 in the hierarchy.

Borrowings under our Credit Facility - The carrying amount approximated the fair value because the borrowings were based on variable market interest rates. The fair value estimates were determined using level 2 inputs.

Derivative financial instruments (Interest rate swaps) - The fair value was estimated using discounted cash flow techniques. These techniques incorporate primarily level 2 inputs. The market inputs were utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps were observable in active markets and were classified as level 2 inputs in the hierarchy.

The table below details the fair values and carrying values for our notes and mortgage note receivable, and interest rate swaps at September 30, 2026 and December 31, 2025.

September 30, 2026December 31, 2025
(Dollars in thousands)Carrying ValueFair ValueCarrying ValueFair Value
Notes and mortgage note receivable, level 2$3,380$3,410$3,830$3,964
Notes receivable, net of credit loss, level 3(1)(2)$—$—$—$—
Interest rate swap asset$13,028$13,028$6,691$6,691
___________________
(1) These notes were fully reserved as of June 30, 2025 and the fair value measurement of these notes moved from utilizing Level 2 inputs to utilizing Level 3 inputs, based on its estimated value of the underlying collateral.
(2) Calculated utilizing Level 3 inputs at September 30, 2026 and December 31, 2025. See the table below for Level 3 activity for the nine months ended September 30, 2026 and the year ended December 31, 2025.
Level 3 Inputs
Notes Receivable:September 30, 2026December 31, 2025
Beginning fair value$—$10,547
Payments—(1,875)
Credit loss reserve—(8,672)
Ending fair value$—$—

NOTE 13. COMMITMENTS AND CONTINGENCIES

Tenant Improvements

The Company may provide tenant improvement allowances in new or renewal leases for the purpose of refurbishing or renovating tenant space. The Company may also assume tenant improvement obligations included in leases acquired in its real estate acquisitions. As of September 30, 2026, the Company had approximately $28.7 million in commitments for tenant improvements, of which $1.7 million primarily relates tothree redevelopment projects of buildings into different healthcare uses, backed by long-term leases.

Capital Improvements

The Company has entered into contracts with various vendors for various capital improvement projects related to its portfolio. As of September 30, 2026, the Company had approximately $4.4 million in commitments for capital improvement projects, of which $1.9 million primarily relates tothree redevelopment projects of buildings into different healthcare uses, backed by long-term leases.

Legal Proceedings

The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company's Consolidated Financial Statements.

NOTE 14. SUBSEQUENT EVENTS

Dividend Declared

On November 3, 2026, the Company’s Board of Directors declared a quarterly common stock dividend in the amount of $0.33 per share. The dividend is payable on November 25, 2026 to stockholders of record on November 13, 2026.

Dispositions

As part of the Company's capital recycling program, the Company sold two properties subsequent to September 30, 2026:

On October 15, 2026, the Company sold an inpatient rehabilitation facility in Ohio for net proceeds of approximately $31.4 million. The property was included in assets held for sale at September 30, 2026. The proceeds from the sale are generally expected to fund acquisitions through like-kind exchange under

Section 1031 of the United States Internal Revenue Code. The Company expects to recognize a gain on sale of approximately $9.1 million.

On October 1, 2026, the Company sold a vacant property in Alabama for net proceeds of approximately $0.2 million. In the third quarter of 2026, the Company recognized an impairment on this property that was classified as held for sale at the lower of the net book value and fair value less estimated cost to sell of approximately $0.4 million, based on a contract to sell the property.

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