NHI National Health Investors Inc - 10-K

ITEM 1A. RISK FACTORS

There are many significant factors that could materially adversely impact our financial condition, results of operations, cash flows, distributions and stock price. The following are risks we believe are material to our stockholders. There may be additional risks and uncertainties that we have not presently identified or have not deemed material. Some of the following risk factors constitute forward-looking statements. Please refer to “Cautionary Statement Regarding Forward-Looking Statements” at the beginning of this Annual Report.

Risks Related to Our Business and Operations

We depend on the operating success of our tenants, managers and borrowers and if their financial condition or business prospects deteriorate, our business, financial condition and results of operations could be adversely affected.

We rely on our tenants, managers and borrowers and their ability to perform their obligations to us under leases, management agreements and loan arrangements. Any of our tenants, managers or borrowers may experience a weakening in their overall financial condition as a result of deteriorating operating performance, changes in industry or market conditions, such as rising or elevated interest rates or inflation, increases in operating and borrowing costs, including labor costs, or other factors. If the financial condition of any of our tenants, managers or borrowers deteriorates, they may be unable or unwilling to make payments or perform their obligations to us in a timely manner, if at all.

Our operators’ revenues are also driven by occupancy rates. Periods of weak economic growth in the U.S. that affect housing sales, investment returns and personal incomes, as well as with an oversupply of senior housing real estate, may adversely affect senior housing occupancy rates. In addition, our operators are experiencing increasing cost pressures. Labor and other operating costs have continued to rise, and historically low unemployment levels have contributed to significant wage pressure.

To the extent any decrease in revenues and/or any increase in operating expenses of our operators results in a property not generating enough cash to make scheduled payments to us, our revenues, net income and funds from operations would be adversely affected. Such events and circumstances would cause us to evaluate whether there was an impairment of the real estate or mortgage loan that should be charged to earnings. Such impairment would be measured as the amount by which the carrying amount of the asset exceeded its fair value. Consequently, we might be unable to maintain or increase our current dividends and the market price of our stock may decline.

We are exposed to the risk that our tenants, managers and borrowers may become subject to bankruptcy or insolvency proceedings.

The insolvency or bankruptcy of our tenants, managers and borrowers may adversely affect our business, results of operations and financial condition. Although our lease agreements provide us the right to evict a tenant/operator and demand immediate payment of rent and exercise other remedies, and our mortgage loans provide us the right to terminate any funding obligations, demand immediate repayment of principal and unpaid interest, foreclose on the collateral and exercise other remedies, in the event our counterparty has filed for bankruptcy or reorganization, the bankruptcy laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant or borrower in bankruptcy may be able to limit or delay our ability to collect unpaid rent in the case of a lease or to receive unpaid principal and/or interest in the case of a mortgage loan and to exercise other rights and remedies. For example, a tenant may reject its lease with us in a bankruptcy proceeding. In such a case, our claim against the tenant for unpaid and future rents would be limited by the statutory cap of the U.S. Bankruptcy Code. This statutory cap could be substantially less than the remaining rent owed under the lease, and any claim we have for unpaid rent might not be paid in full. In addition, a tenant may assert in a bankruptcy proceeding that its lease should be re-characterized as a financing agreement. If such a claim is successful, our rights and remedies as a lender, compared to a landlord, are generally more limited. We may be required to fund certain expenses, such as real estate taxes, maintenance and capital improvements, to preserve the value of a property, avoid the imposition of liens on a property and/or transition a property to a new tenant or borrower. In some instances, we have terminated our lease with a tenant and leased the facility to another tenant. In certain of those situations, we provided working capital loans to, and limited indemnification of, the new tenant. If we cannot transition a leased facility to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Should such events occur, our revenues and operating cash flows may be adversely affected.

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A small number of tenants in our portfolio account for a significant percentage of the rental income we expect to generate from our portfolio, and the failure of any of these tenants to meet their obligations to us could materially and adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.

Successful performance of our real estate investments is materially dependent on the financial stability of our tenants and operators. For the year ended December 31, 2025, approximately 36.9% of our total revenues were generated from three tenants, including 14.7% from Senior Living Communities, LLC (“Senior Living”), 11.5% from Bickford Senior Living (“Bickford”) and 10.7% from National HealthCare Corporation (“NHC”). We have been recognizing rental income from Bickford using the cash basis of accounting for revenue recognition since 2022 based upon information obtained from Bickford regarding its financial condition. Payment or other tenant defaults, the failure of tenants to meet their other obligations to us or a decline in the operating performance by any of these tenants or other tenants and operators could materially and adversely affect our business, financial condition and results of operations, and our ability to pay expected dividends to our stockholders. In the event of a tenant default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing of the related property. Further, we may not be able to re-lease the property for the rent for a similar rental rate, or at all, or lease terminations may cause us to sell the property at a loss. The realization of any of the foregoing risks could have a material adverse effect on our business and financial condition.

We have rights to terminate our management agreements with managers, in whole or with respect to specific properties under certain circumstances, and we may be unable to replace managers if our management agreements are terminated or not renewed.

We are a party to the management agreements with the managers utilized in our SHOP segment pursuant to which the managers operate the properties providing comprehensive property management, accounting and other services at the respective properties. Although we have the right to terminate any of our management agreements, whether upon the occurrence of certain events or for no cause, there is no assurance that we would be able to timely source a replacement or that any replacement manager would be effective. Any transition to a new manager may require regulatory approval and potentially the approval of the holders of any liens on the property. The failure to replace a manager on a timely or successful basis, as well as the failure to receive required approvals, could have an adverse effect on the properties and our revenue.

Actual or perceived risks associated with pandemics, epidemics or outbreaks have had, and may in the future, have a material adverse effect on our operators’ business and results of operations.

The business and results of operations of the operators of our properties and our business and results of operations are subject to health and economic effects of public health conditions. If a pandemic, epidemic, outbreak of infectious disease or other public health crisis were to affect the markets in which our properties are located, our business could be adversely affected. Revenues for the tenants and operators of our properties are significantly impacted by occupancy rates. A public health crisis may diminish the public trust in senior housing properties or medical facilities, especially those that have treated or house consumers affected by contagious diseases, which may result in a decline in consumers seeking services offered through our properties. Consumer volumes and occupancy rates may also decline as a result of economic circumstances surrounding a public health crisis, particularly if the volume of uninsured and underinsured consumers increases. The business of the operators of our properties and our business may be more vulnerable to the effects of a public health crisis because most of our properties are designed for elderly consumers, a population that may experience complex medical conditions or socioeconomic factors. Due to the physical proximity required to offer many of the services provided by the operators of our properties, our operators may encounter difficulties attending to consumers due to social distancing policies or infection control protocols and face heightened workforce challenges. In addition, actions our operators take to address contagious diseases may materially increase their operating costs, including those related to enhanced health and safety precautions and increased retention and recruitment labor costs, among other measures. A decrease in occupancy rates or increase in costs is likely to have a material adverse effect on the ability of our tenants and operators to meet their financial and other contractual obligations to us, including the payment of rent, as well as on our results of operations. In some cases, we have had to, and we may in the future have to, write off unpaid rental payments, incur lease accounting charges due to uncollectible rental payments and/or restructure our tenants’ long-term rent obligations. Furthermore, infections of contagious diseases at our facilities could lead to material increases in litigation costs for which our operators, or possibly we, may be liable.

The measures that federal, state and local governments, agencies and health authorities implement to address an epidemic, pandemic, outbreak of infectious disease or other public health crisis may be insufficient to offset any downturn in business of our tenants and operators, may increase operating costs for our tenants, managers and borrowers or may otherwise disrupt or affect the operation of our properties. The rapid development, fluid nature and other factors related to an epidemic, pandemic, outbreak of infectious disease or other public health crisis make it difficult to predict the potential impact of such a crisis on NHI or its operators. Nevertheless, a public health crisis, and the public and government responses to such future public health crisis, could have a material, adverse effect on our business.

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A member of our Board of Directors is also the chairman of the board of directors of NHC, and his interests may differ from those of our stockholders.

One of the members of our Board of Directors is also the chairperson of NHC’s board of directors. This director may have conflicting interests with holders of our common stock with respect to the NHC properties. During the year ended December 31, 2025, our revenues from NHC represented 10.7% of our total revenues. With respect to all decisions by our Board of Directors related to the NHC properties, the director who is also a member of NHC’s board of directors is recused and does not participate in our board discussions or vote related to such matters. Such director has announced his resignation to be effective as of our 2026 annual meeting of stockholders. However, this relationship could influence our Board of Directors’ decisions with respect to the properties leased to and operated by NHC. As of December 31, 2025, NHC owned 1,630,642 shares of our common stock.

We are exposed to risks related to government regulations and payors, principally Medicare and Medicaid, and the effect of changes to laws, regulations and reimbursement rates on the businesses of our tenants, managers and borrowers.

Our tenants, managers and borrowers are subject to complex federal, state and local laws and regulations relating to governmental healthcare programs. Reference “Part I, Item 1. Business - Government Regulations” in this Annual Report. Regulation of the healthcare industry generally has intensified over time both in the number and type of regulations and in the efforts to enforce those regulations. Federal, state and local laws and regulations affecting the healthcare industry include those relating to, among other things, licensure; certification and enrollment with government programs; facility operations; addition or expansion of services or facilities; services and equipment; allowable costs; the preparation and filing of cost reports; privacy and security of health-related and other personal information; prices for services; quality of medical equipment and services; necessity and adequacy of medical care; patient rights; billing and coding for services and properly handling overpayments; maintenance of adequate records; relationships with physicians and other referral sources and referral recipients; debt collection; communications with patients and consumers; interoperability; and information blocking. If our tenants, managers or borrowers fail to comply with applicable laws and regulations, they may be subject to liabilities and other consequences including civil penalties, loss of facility licensure, exclusion from participation in the Medicare, Medicaid and other government healthcare programs, civil lawsuits and criminal penalties. We generally hold the applicable healthcare licenses and enroll in applicable government healthcare programs on behalf of the RIDEA properties in our SHOP segment, and that subjects us to potential liability under some healthcare laws and regulations. In addition, different interpretations or enforcement of, or changes to, applicable laws and regulations in the future could subject current or past practices to allegations of illegality or impropriety or could require our tenants, managers and borrowers to make changes to their facilities, equipment, personnel, services, and operating expenses. If the operations, cash flows or financial condition of our tenants, operators, or affiliates of our tenants and operators, and our borrowers are materially adversely impacted by current or future government regulation, our revenues and operations may be adversely affected as well. In addition, if an operator, borrower or tenant defaults on its lease or loan with us, our ability to replace the operator or tenant may be delayed by federal, state, or local approval processes.

The businesses of our tenants, managers and borrowers are also affected by government and private payor reimbursement rates and policies. Payments from government programs and private payors are subject to statutory and regulatory changes, retroactive rate adjustments, recovery of program overpayments or set-offs, administrative rulings, policy interpretations, payment or other delays by fiscal intermediaries, government funding restrictions (at a program level or with respect to specific facilities) and interruption or delays in payments due to delays or issues implementing reimbursement-related rules and any ongoing governmental investigations and audits at specific facilities. In recent years, legislative and regulatory changes have resulted in limitations and reductions in payments for certain services under government programs. For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit, resulting in a uniform payment reduction across all Medicare programs of 2% per fiscal year that extends through the first seven months of 2032. State budgetary pressures have resulted, and will likely continue to result, in reduced spending or reduced spending growth for Medicaid programs in many states, including measures such as tightening patient eligibility requirements, reducing coverage, and enrolling Medicaid recipients in managed care programs. In addition, legislation and administrative actions at the federal level may impact the funding for, or structure of, Medicaid programs and may shape administration of Medicaid programs at the state level. CMS may implement or oversee changes affecting reimbursement, including through new or modified demonstration projects, such as those authorized pursuant to waivers under the Social Security Act.

Any reductions in Medicare or Medicaid reimbursement could have an adverse effect on the financial operations of our tenants, managers and borrowers who operate SNFs. Further, reductions in payments under government healthcare programs may negatively impact payments from private payors, as some private payors rely on government payment systems to determine payment rates. There can be no assurance that adequate reimbursement levels will continue to be available for services provided by any facility operator, whether the facility receives reimbursement from Medicare, Medicaid or private payor sources. Significant limits on the scope of services reimbursed and on reimbursement rates and fees could have a material adverse effect on an operator’s liquidity, financial condition and results of operations, which could adversely affect the ability of an operator to meet its obligations to us.

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More generally, the legislative and regulatory environment for healthcare products and services is dynamic, and Congress and certain state legislatures have considered or enacted a large number of laws and regulations intended to make major changes in the healthcare system, including laws that affect how healthcare services are delivered and reimbursed. Recent government initiatives and proposals relevant to our properties include those focused on transparency of SNF ownership. For example, a final rule issued by CMS in November 2023 requires Medicare-enrolled SNFs and Medicaid-enrolled nursing homes to disclose additional information about owners, operators, and management, including whether they are a REIT or private equity company. This information will be publicly available. This rule may result in increased scrutiny of REITs, private equity companies, and similar entities involved in owning or operating SNFs and nursing homes. Other industry participants, such as private payors, may also introduce financial or delivery system reforms. There is uncertainty with regard to whether, when and what health reform initiatives will be adopted in the future and the impact of such reform efforts on providers and other healthcare industry participants, including our tenants, managers and borrowers.

We are exposed to the risk that the cash flows of our tenants, managers and borrowers may be adversely affected by increased liability claims and liability insurance costs.

ALF and SNF operators have experienced substantial increases in both the number and size of patient care liability claims in recent years. As a result, general and professional liability costs have increased and may continue to increase. Nationwide, long-term care liability insurance rates are increasing because of large jury awards in states like Texas and Florida. Both Texas and Florida have adopted SNF liability laws that modify or limit tort damages. Despite some of these reforms, the long-term care industry overall continues to experience very high general and professional liability costs. Insurance companies have responded to this claims crisis by severely restricting their capacity to write long-term care general and professional liability policies. No assurance can be given that the climate for long-term care general and professional liability insurance will improve in either of the foregoing states or any other states where the facilities operators conduct business. Insurance companies may continue to reduce or stop writing general and professional liability policies for ALFs and SNFs. Thus, general and professional liability insurance coverage may be restricted, very costly or not available. Increased general and professional liability costs may adversely affect our tenants’ or operators’ future operations, cash flows and financial condition and may have a material adverse effect on the tenants’ or operators’ ability to meet their obligations to us.

Significant legal or regulatory proceedings could adversely affect the liquidity, financial condition and results of operations of our tenants, managers and borrowers.

From time to time, we or our tenants, managers or borrowers may be subject to lawsuits, investigations, claims and other legal or regulatory proceedings arising out of our or their alleged actions or inactions. These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims, class action claims, employment-related claims, as well as regulatory proceedings, including proceedings related to our SHOP segment, where we are typically the holder of the applicable healthcare license.

In our SHOP segment, we are generally responsible for all liabilities of the properties, other than those arising out of certain limited actions by our managers, such as those caused by gross negligence, fraud or willful misconduct. As a result, we are exposed to professional and general liability claims, employment-related claims, and the costs of defending and resolving such matters, some of which may not be insured or may only be partially insured due to limited coverage or cost constraints. If a manager within our SHOP segment fails to comply with applicable laws or regulations, we could be held responsible, which could subject us to civil, criminal and administrative penalties.

In our Real Estate Investments segment, our tenants and borrowers generally operate the facilities and are responsible for all related liabilities, including those arising from professional, general, or employment-related claims. Under the terms of our leases and loan agreements, these tenants and borrowers are obligated to indemnify and defend us against liabilities related to their operations.

We cannot assure you that any contractual obligations to indemnify, defend and hold us harmless from the liabilities described above will be satisfied by third parties, or that any amounts held in escrow for such purpose will be sufficient.

An unfavorable resolution of any such lawsuit, investigation, claim or other legal or regulatory proceeding could materially and adversely affect our or our tenants’, managers’ or borrowers’ liquidity, financial condition and results of operations, and may not be protected by sufficient or any insurance coverage.

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We are exposed to the risk that we may not be fully indemnified by our tenants, managers and borrowers against future litigation.

Our facility leases and loans require that the tenants, managers or borrowers that are a party to the respective agreement name us as an additional insured party on their insurance policies covering professional liability or personal injury claims. We also require our tenants and borrowers to indemnify and hold us harmless for all claims arising from or incidental to the occupancy and use of our properties. However, claims could exceed the applicable policy limits, the insurance company could fail or other coverage may not be available. We cannot give any assurance that these protective measures will eliminate any risk to us related to future litigation, the costs of which could have a material adverse impact on us.

We depend on the success of property development and construction activities, which may fail to achieve the operating results we expect.

When we decide to invest in the renovation of an existing property or in the development of a new property, we make assumptions about the future potential cash flows of that property. We estimate our return based on expected occupancy rates, rental rates and future capital costs. If our projections prove to be inaccurate due to increased capital costs, lower occupancy rates or other factors, our investment in that property may not generate the cash flow we expected. Construction and development projects involve risks such as (i) development of a project could be abandoned after expending significant resources resulting in loss of deposits or failure to recover expenses already incurred; (ii) development and construction costs of a project could exceed original estimates due to increased interest rates and higher material costs; (iii) project delays could result in increases in construction costs and debt service expenses as a result of a variety of factors that are beyond our control, including natural disasters, labor conditions, material shortages, and regulatory hurdles; and (iv) financing for a project could be unavailable on favorable terms or at all. Recently developed properties may take longer than expected to achieve stabilized operating levels, if ever. In addition, international trade disputes, including threatened or implemented tariffs imposed by the U.S. and threatened or implemented tariffs imposed by foreign countries in retaliation, could result in inflationary pressures that directly impact costs, such as costs for steel, lumber and other materials applicable to our development and construction projects. Trade disputes could also adversely impact global supply chains which could further increase costs or delay delivery of key inventories and supplies. Tariffs and trade restrictions can be announced with little or no advance notice, and we may not be able to effectively mitigate all adverse impacts from such measures. To the extent such facilities experience such increases in cost or delays in construction or financing, or otherwise fail to reach stabilized operating levels or achieve stabilization later than expected, it could materially adversely affect our tenants’ abilities to make payments to us under their leases and thus adversely affect our business and results of operations.

We are exposed to the risk that the illiquidity of real estate investments could impede our ability to respond to adverse changes in the performance of our properties.

Real estate investments are relatively illiquid and, therefore, our ability to quickly sell or exchange any of our properties in response to changes in economic and other conditions, including rising interest rates, may be limited. All of our properties are "special purpose" properties that cannot be readily converted to general residential, retail or office use. Facilities that participate in Medicare or Medicaid must meet extensive program requirements, including physical plant and operational requirements. Transfers of operations of these facilities are subject to regulatory approvals not required for transfers of other types of real estate. Thus, if the operation of any of our properties becomes unprofitable due to competition, age of improvements or other factors such that our tenant or borrower becomes unable to meet its obligations on the lease or mortgage loan, the liquidation value of the property may be less than the net carrying value or the amount owed on any related mortgage loan, because the property may not be readily adaptable to other uses. The sale of the property or the replacement of an operator that has defaulted on its lease or mortgage loan could also be delayed by the approval process of any federal, state or local agency necessary for the transfer of the property or the replacement of the operator with a new operator licensed to manage the facility. No assurances can be given that we will recognize full value for any property that we are required to sell for liquidity reasons. Should such events occur, our results of operations and cash flows could be adversely affected.

Our investments are concentrated in healthcare properties .

We acquire, develop, and make investments in healthcare real estate. In addition, we selectively make investments in healthcare operators. A downturn in the healthcare property sector could have a greater adverse effect on our business and financial condition than if we had investments in multiple industries and sectors. A downturn in the healthcare property sector also could adversely impact the ability of our operators to meet their obligations to us and maintain residents and occupancy rates. Additionally, a downturn in the healthcare property sector could adversely affect the value of our properties and our ability to sell properties at prices or on terms acceptable to us.

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We are subject to risks related to our investment with Life Care Services for Timber Ridge, an entrance fee CCRC, associated with Type A benefits offered to the residents of the CCRC and related accounting requirements.

In January 2020, we entered into an investment with Life Care Services (“LCS”) which consists of two parts, NHI-LCS JV I, LLC (“Timber Ridge PropCo”), which owns the real estate and is owned 80.0% by NHI and 20.0% by LCS, and Timber Ridge OpCo, LLC (“Timber Ridge OpCo”), which operates the property and is owned 25.0% by NHI’s TRS and 75.0% by LCS.

As part of acquisition of the real estate in January 2020, Timber Ridge PropCo accepted the property subject to trust liens previously granted to residents of Timber Ridge. These liens secure certain mortgage loans previously made by residents of Timber Ridge to prior owner-operators pursuant to a deed of trust and indenture (the “Deed and Indenture”). This practice was discontinued at Timber Ridge in 2008, prior to our investment. However, certain resident loans remain outstanding and continue to be secured by a lien on the property. The trustee for all of the residents who made “old” loans in accordance with the resident agreements entered into a subordination agreement concurrent with Timber Ridge PropCo’s acquisition of the property, 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 the loan made by NHI to Timber Ridge PropCo. As a result of periodic settlements of resident loans in the ordinary course of operations, the balance secured by the Deed and Indenture as of December 31, 2025 was $7.7 million. By terms of the resident loan assumption agreement, during the term of the lease (seven years with two five-year renewal options), Timber Ridge OpCo is to indemnify Timber Ridge PropCo for any repayment by Timber Ridge PropCo of these liabilities under the guarantee. We cannot give any assurance that these protective measures will eliminate any risk to us related to claims under the Deed and Indenture.

As a result of the RIDEA structure, we have an investment in the operations of Timber Ridge, which is a Class A quality, Type A CCRC. As a Type A CCRC, the entrance fee is divided into a refundable and non-refundable portion depending upon the resident’s chosen contract program. The refundable portion of the upfront entrance fee is recorded as a liability on the financial statements of Timber Ridge OpCo. The non-refundable portion of the upfront entrance fee is recorded as deferred revenue and amortized over the actuarial life of the resident. We believe the structure of our investment does not require that Timber Ridge OpCo’s financial statements be consolidated into NHI, but if we are unable to properly maintain that structure or become required for any reason to consolidate Timber Ridge OpCo’s financial statements into ours, the results would have a material adverse impact on our financial results.

Risks related to our joint venture investments could adversely affect our financial condition and results of operations.

We have entered into, and may in the future enter into, joint ventures and similar arrangements with third parties, including investments in unconsolidated entities. These investments involve risks that may not be present with wholly owned investments, including our lack of exclusive control over major decisions, reliance on our partners’ financial condition and performance, and the potential for disputes with our partners.

In some of our joint ventures, including our investment in Timber Ridge OpCo, certain major decisions regarding management, financing, capital expenditures or disposition of assets may require partner approval. Our partners may have interests, objectives or financial constraints that differ from ours, which could delay or prevent actions we believe are in our best interests. In addition, our partners may become insolvent, fail to fund required capital contributions or otherwise fail to meet their obligations, which could limit the joint venture’s ability to operate effectively and may require us to contribute additional capital or expose us to liabilities under guarantees or other commitments.

Disputes with joint venture partners could result in litigation or arbitration, increased expenses, management distraction and disruptions to operations. Certain joint venture arrangements may also include buy-sell provisions, put or call rights or forced sale mechanisms that could require us to sell our interest, acquire our partner’s interest or sell the underlying asset at a time or on terms that are unfavorable to us, and our ability to fund or transfer such interests may be limited.

In addition, we may be exposed to operational risks that may increase our costs or adversely affect our ability to increase revenues. For example, our investment in Timber Ridge OpCo is subject to risks applicable to operating healthcare businesses, including fluctuations in resident occupancy rates, operating expenses, and economic conditions; competition; certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; litigation; federal, state and local taxes and regulations; costs associated with government investigations and enforcement actions; the availability and increases in cost of labor; and other risks applicable to any operating business. Any one or a combination of these factors could adversely affect the performance of a joint venture and our results of operations.

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Inflation and increased interest rates may adversely affect our business, financial condition and results of operations.

Inflation and interest rates continue to remain at elevated levels compared to years prior to 2022. In addition, President Trump’s administration has announced various policies which may impact inflation, including the implementation of tariffs on U.S. imports and immigration enforcement, as well as other policies, which could increase inflation. High inflation and interest rates could have an adverse impact on our variable rate debt, our ability to borrow money, and general and administrative expenses, as these costs could increase at a rate higher than our rental income and other revenue. Increases in the costs of owning and operating our properties due to inflation could reduce our net operating income and the value of an investment in us to the extent such increases are not reimbursed or paid by our tenants. If we are materially impacted by increasing inflation because, for example, inflationary increases in costs are not sufficiently offset by the contractual rent increases and operating expense reimbursement provisions or escalations in the leases with our tenants, our results of operations could be adversely affected. In addition, due to high interest rates, we may experience restrictions in our liquidity based on certain financial covenant requirements, our inability to refinance maturing debt in part or in full as it comes due and higher debt service costs and reduced yields relative to cost of debt. If we are unable to find alternative credit arrangements or other funding in a high interest environment, our financial results may be negatively impacted.

In addition, inflation, both real and anticipated, as well as any resulting governmental policies, have affected and could continue to adversely affect the costs of labor, goods and services for our operators. Increased operating costs could have an adverse impact on our operators and the operating results of our SHOP segment if increases in operating expenses exceed increases in revenue, which may adversely affect our operators’ ability to pay rent and make loan payments to us. An increase in our operators’ expenses and a failure of their revenues to increase at least with inflation could adversely affect our operators’ and our financial condition and our results of operations.

Adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance by financial institutions, could adversely affect our business, financial condition, results of operations or our prospects.

The funds in our accounts are held in banks or other financial institutions. Our cash held in non-interest bearing and interest-bearing accounts may periodically exceed any applicable Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Should events, including limited liquidity, defaults, non-performance or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, our liquidity may be adversely affected.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on terms favorable to us in connection with a potential business combination, or at all, and could have material adverse impacts on our business, financial condition, results of operations or our prospects.

Adverse geopolitical developments could have a material adverse impact on our business.

Currently, there are several geopolitical concerns that could, indirectly, have an adverse impact on our business, such as armed conflicts in various regions of the world, including, but not limited to, the Russia/Ukraine conflict and the conflicts in the Middle East. The conditions, and the responses thereto, such as sanctions imposed by the United States and other western democracies, and any expansion thereof is likely to have unpredictable and wide-ranging effects on the domestic and global financial markets, which could have an adverse effect on our business and results of operations. Already, these conditions have led to market volatility and an increasing number and frequency of cybersecurity threats. So far, we have not experienced any direct impact from the conflict and, as our business is conducted exclusively in the United States, we are less vulnerable than companies with international operations. We will continue to monitor the situation carefully and, if necessary, take action to protect our business, operations, and financial condition.

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We are exposed to operational risks with respect to our SHOP structured communities.

Our SHOP structured communities expose us to various operational risks that may increase our costs or adversely affect our ability to generate revenues. As the owner of a property under a SHOP structure, we are ultimately responsible for all operational risks and other liabilities of the property, other than those arising out of certain actions by our manager, such as gross negligence or willful misconduct. Operational risks include, and our revenues therefore depend on, among other things (i) occupancy rates; (ii) rental rates charged to residents; (iii) our operators’ reputations and ability to attract and retain residents; (iv) general economic conditions and market factors that impact seniors including those exacerbated by public health conditions; (v) competition from other senior housing providers; (vi) compliance with federal, state, and local laws and regulations and industry standards, including but not limited to licensure requirements, where applicable; (vii) litigation involving our properties or residents; (viii) the availability and cost of general and professional liability insurance coverage or increases in insurance policy deductibles; and (ix) the ability to control operating expenses, which have increased, and may continue to increase. In addition, the success of our SHOP structured communities will depend largely on our ability to establish and maintain good relationships with our managers. Although the SHOP structure gives us certain oversight approval rights ( e.g ., budgets, material contracts, etc.) and the right to review operational and financial reporting information, we have outsourced to our third-party managers the day-to-day operations of the communities. Therefore, we depend on our managers to operate these communities in a manner that complies with applicable law, minimizes legal risk and maximizes the value of our investment. Failure by our managers to adequately manage these risks could have a material adverse effect on our business, results of operations and financial condition.

From time to time, disputes may arise between us and our managers regarding their performance or compliance with the terms of the agreements we have entered into with them, which in turn could adversely affect our results of operations. We will generally attempt to resolve any such disputes through discussions and negotiations; however, if we are unable to reach satisfactory results through discussions and negotiations, we may choose to terminate the applicable agreement, litigate the dispute or submit the matter to third-party dispute resolution, the outcome of which may be unfavorable to us.

A cybersecurity incident or other form of data breach involving Company information could cause a loss of confidential consumer and other personal information, give rise to remediation and other expenses, expose us to liability under privacy and security and consumer protection laws, subject us to federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business.

Our business, like that of other REITs, involves the receipt, storage and transmission of information about our Company, our tenants, managers and borrowers, and our employees, some of which is entrusted to third-party service providers and vendors. We also work with third-party service providers and vendors to provide technology, systems and services that we use in connection with the receipt, storage and transmission of this information. As a matter of course, we may store or process the personal data of employees and other persons as required to provide our services and such personal data or other data may be hosted or exchanged with our partners and other third-party providers. The secure maintenance of this information and technology is critical to our business operations.

As with all companies that utilize information systems, our information systems, and those of our third-party service providers and vendors, may be vulnerable to continually evolving cybersecurity risks. We employ industry standard administrative, technical and physical safeguards designed to protect the integrity and security of personal data we collect or process. We have implemented and regularly review and update processes and procedures designed to protect against unauthorized access to or use of secured data and to prevent data loss. Unauthorized parties may attempt to gain access to these systems or our information through fraud or deception of our associates, ransomware, malware, and other malicious software, third-party service providers or vendors. Hardware, software or applications we obtain from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. The methods used to obtain unauthorized access, disable, misappropriate, manipulate, or degrade service or sabotage systems are also constantly changing and evolving and may be difficult to anticipate or detect for long periods of time. The ever-evolving threats mean we and our third-party service providers and vendors must continually evaluate and adapt our respective systems and processes, and there is no guarantee that these systems and processes will be adequate to safeguard against all data security breaches or misuses of data. Furthermore, because threat actors may leverage new and evolving technologies, including AI, which may not be immediately recognized, we may experience security or data breaches that remain undetected for an extended time. Despite the security measures we have in place, and any additional measures we may implement in the future, our facilities and systems, and those of our third-party service providers and vendors, could be vulnerable to damage and service interruptions from a variety of sources including telecommunications or network failures, cyber attacks and security breaches and incidents (including data theft, computer viruses, ransomware and other malicious software), human error, fires, natural disasters, power losses, fraud, military or political conflicts, terrorist attacks and other geopolitical unrest.

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Any significant failure of or interruption in the availability of our information systems, compromise or breach of our data security, whether external or internal, or misuse of our data, could disrupt our operations, result in loss, misappropriation or unauthorized access of information subject to privacy laws, result in significant costs, harm our business relationships, increase our security and insurance costs and damage our reputation, any of which could have a material, adverse effect on our business. A security or data breach could also subject us to litigation and government enforcement actions, which could result in fines and other penalties. Moreover, any significant cybersecurity events could require us to devote significant management resources to address the problems created by such events, interfere with the pursuit of other important business strategies and initiatives, and cause us to incur additional expenditures, which could be material, including to investigate such events, remedy cybersecurity problems, recover lost data, prevent future compromises and adapt systems and practices in response to such events. There is no assurance that any remedial actions will meaningfully limit the success of future attempts to breach our information technology systems.

In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous at the federal and state levels, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in significant additional costs.

We are exposed to risks related to environmental laws and the costs associated with liabilities related to hazardous substances.

Under various federal and state laws, owners or operators of real property may be required to respond to the release of hazardous substances on the property and may be held liable for property damage, personal injuries or penalties that result from environmental contamination of currently or formerly owned real estate, often regardless of knowledge of or responsibility for the contamination. These laws also expose us to the possibility that we may become liable to reimburse the government for damages and costs it incurs in connection with the contamination. Generally, such liability attaches to a person based on the person’s relationship to the property. Although our tenants and operators are primarily responsible for the condition of the property they occupy, we also could be held liable to a governmental authority or to third parties for property damage, personal injuries, and investigation and clean-up costs incurred in connection with the contamination or we could be required to incur additional costs to change how the property is constructed or operated due to presence of such substances. However, we review environmental site assessments of the properties that we purchase or encumber prior to taking an interest in them. Those assessments are designed to meet the “all appropriate inquiry” standard, which qualifies us for the innocent purchaser defense if environmental liabilities arise. Notwithstanding these assessments, however, environmental liabilities, including mold, may be present in our properties and we may incur costs to remediate contamination, which could have a material adverse effect on our business or financial condition. In addition, the presence of hazardous substances or a failure to properly remediate any resulting contamination could adversely affect our ability to lease, mortgage, or sell an affected property.

We are subject to risks of damage from catastrophic weather and other natural or man-made disasters and the physical effects of climate change.

Natural and man-made disasters, including terrorist attacks and acts of nature, such as hurricanes, tornados, earthquakes, flooding and wildfires, may cause damage to our properties or business disruption to our tenants, managers and borrowers. These adverse weather and natural or man-made events could cause substantial damage or loss to our properties which could exceed applicable property insurance coverage. Such events could also have a material adverse impact on our tenants’, managers’ and borrowers’ operations and ability to meet their obligations to us. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected property, as well as anticipated future revenue from that property. Any such loss could materially and adversely affect our business and our financial condition and results of operations.

Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable. To the extent that significant changes in the climate occur in areas where our properties are located, we may experience more frequent extreme weather events which may result in physical damage to, or a decrease in demand for, properties located in these areas or affected by these conditions. In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our new development properties without a corresponding increase in revenue. Should the impact of climate change be material in nature, including destruction of our properties, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected.

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We depend on the success of our future acquisitions and investments.

We are exposed to the risk that our future acquisitions may not prove to be successful. We could encounter unanticipated difficulties and expenditures relating to any acquired properties, including contingent liabilities, and newly acquired properties might require significant attention of our management that would otherwise be devoted to our existing business. If we agree to provide construction funding to a borrower and the project is not completed, we may need to take steps to ensure completion of the project. Moreover, if we issue equity securities or incur additional debt, or both, to finance future acquisitions, it may reduce our per share financial results.

We depend on our ability to reinvest cash in real estate investments in a timely manner and on acceptable terms.

From time to time, we will have cash available from principal payments on our mortgage and other notes receivable and the sale of properties, including tenant purchase option exercises, under the terms of master leases or similar financial support arrangements. We must reinvest these proceeds, on a timely basis, in new investments or in qualified short-term investments. We compete for real estate investments with a broad variety of potential investors. This competition for attractive investments may negatively affect our ability to make timely investments on terms acceptable to us. Delays in reinvesting our cash may negatively impact revenues and the amount of distributions to stockholders.

Competition for acquisitions may result in increased prices for properties.

We may face increased competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, partnerships and others. This may mean that we are unsuccessful in a potential acquisition of a desired property at an acceptable price, or even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price.

We depend on our ability to retain our management team and other personnel and attract suitable replacements should any such personnel leave.

The management and governance of our business depend on the services of certain key personnel, including senior management. The departure of any key personnel could have an adverse effect on us and adversely affect our financial condition and results of operations. Our senior management team possesses substantial experience and expertise and has strong business relationships with our tenants and operators and other members of the business communities and industries in which we operate. As a result, the loss of these personnel could jeopardize our relationships and operations. We cannot predict the impact that any such departures could have on our ability to achieve our objectives. Furthermore, such a loss could be negatively perceived in the capital markets. Other than Mr. Mendelsohn, our Chief Executive Officer, we do not have employment agreements with any of our management team. In addition, we do not have key man insurance on any of our key employees. Our failure to retain and motivate our management team and other personnel and attract suitable replacements should any such personnel leave, could have a significant impact on our financial condition and results of operations.

We are exposed to the risk that our assets may be subject to impairment charges.

As a REIT, a significant percentage of our assets is invested in real estate. We regularly evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, operator performance and legal structure. If we determine that a significant impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset, which could have a material adverse effect on our reported results of operations in the period in which the impairment charge occurs. Such impairment charges may make it more difficult for us to meet the financial ratios in our indebtedness and may reduce the borrowing base, which may reduce the amounts of cash we would otherwise have available to pay expenses, make dividend distributions, service other indebtedness and operate our business. During the year ended December 31, 2025, we did not recognize any impairment charges.

Stockholder activism efforts could cause us to incur substantial costs, divert management’s attention and have an adverse effect on our business.

Activist investors have engaged, and may in the future engage, in proxy solicitations, advance shareholder proposals or may otherwise attempt to affect changes or acquire control over us. Responding to such investor activism can be costly and time consuming, and can divert the attention of our Board of Directors and management from the management of our business and the pursuit of our business strategies. In addition to incurring costs, perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.

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

As of December 31, 2025, we had the potential to access $480.0 million through the issuance of common stock under our at-the-market (“ATM”) equity program. In addition, we maintain an effective automatic shelf registration statement through which capital could be raised via the issuance of equity securities. Similar to other publicly traded companies, the availability of equity capital will depend, in part, on the market price of our common stock which, in turn, will depend upon various market conditions and other factors, some of which we cannot control, that may change from time to time including:

• the extent of investor interest;

• the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

• the financial performance of us and our tenants, managers and borrowers;

• investment and tenant concentrations in our investment portfolio;

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

• our credit ratings and analyst reports on us and the REIT industry in general, including recommendations, and our ability to meet our guidance estimates or analysts’ estimates;

• general economic, global and market conditions, including changes in interest rates on fixed income securities, which may lead prospective purchasers of our common stock to demand a higher annual yield from future distributions;

• our failure to maintain or increase our dividend, which is dependent, to a large part, on the increase in funds from operations, which in turn depends upon increased revenues from additional investments and rental increases; and

• other factors, such as governmental regulatory action and changes in REIT tax laws as well as changes in litigation and regulatory proceedings.

The market value of the equity securities of a REIT is generally based upon the market’s perception of the REIT’s growth potential and its current and potential future earnings and cash distributions. Our failure to meet the market’s expectation with regard to future earnings and cash distributions would likely adversely affect the market price of our common stock and, as a result, the availability of equity capital to us.

The U.S. federal income tax treatment of the cash that we might receive from cash settlement of the forward equity sales agreements is unclear and could jeopardize our ability to meet the REIT qualification requirements.

We enter into forward sales agreements from time to time and, subject to certain conditions, we have the right to elect physical, cash or net share settlement under these agreements at any time and from time to time, in part or in full. In the event that we elect to settle any forward sales agreements for cash and the settlement price is below the applicable forward sale price, we would be entitled to receive a cash payment from the relevant forward purchaser. Under Section 1032 of the Internal Revenue Code, generally, no gains and losses are recognized by a corporation in dealing in its own shares, including pursuant to a “securities futures contract”, as defined in the Internal Revenue Code by reference to the Exchange Act. Although we believe that any amount received by us in exchange for our shares of our common stock would qualify for the exemption under Section 1032 of the Internal Revenue Code, because it is not entirely clear whether a forward sales agreement qualifies as a “securities futures contract”, the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain. In the event that we recognize a significant gain from the cash settlement of a forward sales agreement, we might not be able to satisfy the gross income requirements applicable to REITs under the Internal Revenue Code. In that case, we may be able to rely upon the relief provisions under the Internal Revenue Code in order to avoid the loss of our REIT status. Even if the relief provisions apply, we will be subject to a 100% tax based upon the amount by which we fail to satisfy the particular gross income test. In the event that these relief provisions were inapplicable, we could lose our REIT status under the Internal Revenue Code.

Our use of artificial intelligence could expose us to various risks.

We may use AI tools in our operations, including machine learning technology and generative and agentic AI technologies. The current and potential future applications of these AI tools are rapidly evolving, as are the legal and regulatory frameworks that govern them. AI could significantly disrupt the markets in which we operate and subject us to increased competition, legal and regulatory risks and compliance costs, which could have a material adverse effect on our business, financial condition and results of operations.

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Risks Related to Our Debt

We may need to refinance existing debt or incur additional debt in the future, which may not be available on terms acceptable to us.

We operate with a policy of incurring debt when, in the opinion of our Board of Directors, it is advisable. Currently, we believe that our current liquidity, availability under our unsecured credit facility, potential proceeds from our ATM equity program and our capacity to service additional debt will enable us to meet our obligations, including dividends, and continue to make investments in healthcare real estate. We have a $700.0 million unsecured revolving credit facility (the “Credit Facility”) that matures in October 2028, which may be further extended by us pursuant to (i) one or both of the two six-month extension options or (ii) one 12-month extension option. In June 2023, we entered into a two-year term loan agreement providing for a $200.0 million term loan (the “Bank Term Loan”) bearing interest at a variable rate which is Secured Overnight Financing Rate (“SOFR”) based with a margin determined according to our credit ratings. We may incur additional debt by borrowing under our Credit Facility, mortgaging properties we own and/or issuing debt securities in a public offering or in a private transaction. As of January 31, 2026, we had $1.3 billion in outstanding indebtedness and $356.0 million available to draw under the Credit Facility. Our ability to raise reasonably priced capital is not guaranteed. We may be unable to raise reasonably priced capital because of reasons related to our business or for reasons beyond our control, such as market conditions and rising interest rates. If our access to capital becomes limited, it could have an impact on our ability to refinance our debt obligations, fund dividend payments and acquire properties.

We have covenants related to our indebtedness which impose certain operational limitations and a breach of those covenants could materially adversely affect our financial condition and results of operations.

The terms of our current indebtedness are, and debt instruments that we may enter into in the future may be, subject to customary financial and operational covenants. Among other things, these provisions require us to maintain certain financial ratios and minimum net worth and impose certain limits on our ability to incur indebtedness, create liens and make investments or acquisitions. Our continued ability to incur debt and operate our business is subject to compliance with these covenants, which limit operational flexibility. Breaches of these covenants could result in a default under applicable debt instruments, even if payment obligations are satisfied. Financial and other covenants that limit our operational flexibility, as well as defaults resulting from a breach of any of these covenants in our debt instruments, could have a material adverse effect on our financial condition and results of operations.

Downgrades in our credit ratings could have a material adverse effect on our cost and availability of capital.

We plan to manage and to maintain a capital structure consistent with our current profile, but there can be no assurance that we will be able to maintain our current credit ratings. Any downgrades of ratings or changes to outlooks by any or all of the rating agencies could have a material adverse effect on our cost and availability of capital, which could in turn have a material adverse effect on our results of operations, liquidity, cash flows, the trading/redemption price of our securities and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders.

We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future investments necessary to grow our business or meet maturing commitments.

As a REIT under the Internal Revenue Code, we are required to, among other things, distribute at least 90% of our REIT taxable income (computed without regard to the dividends-paid deduction or our net capital gain or loss) each year to our stockholders. Because of this distribution requirement, we may not be able to fund, from cash retained from operations, all future capital needs, including capital needed to make investments and to satisfy or refinance maturing commitments. As a result, we rely on external sources of capital, including debt and equity financing. If we are unable to obtain necessary capital at all or only on unfavorable terms from these sources, we might not be able to make the investments needed to grow our business, or to meet our obligations and commitments as they mature, which could negatively affect the ratings of our debt and even, in extreme circumstances, affect our ability to continue operations. We may not be in a position to take advantage of future investment opportunities in the event that we are unable to access the capital markets on a timely basis or we are only able to obtain financing on unfavorable terms.

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We depend on revenues derived mainly from fixed rate investments in real estate assets, while a portion of our debt used to finance those investments bears interest at variable rates, which subjects us to interest rate risk.

Our business model assumes that we can earn a spread between the returns earned from our investments in real estate as compared to our cost of debt and/or equity capital. Interest rates remain above levels prior to 2022. We are exposed to interest rate risk in the potential for a narrowing of our spread and profitability if interest rates increase in the future. Certain of our debt obligations are floating rate obligations with interest rates that vary with the movement of the SOFR or other indexes. Our revenues are derived mainly from fixed rate investments in real estate assets. Although our leases generally contain escalating rent clauses that provide a partial hedge against interest rate fluctuations, if interest rates rise, our interest costs for our existing floating rate debt and any new debt we incur would also increase. This increasing cost of debt could reduce our profitability by increasing the cost of financing our existing portfolio and our investment activity. Rising interest rates could limit our ability to refinance existing debt upon maturity or cause us to pay higher rates upon refinancing. We manage a portion of our exposure to interest rate risk by accessing debt with staggered maturities and through the use of derivative instruments, such as interest rate swap agreements with major financial institutions. Increased interest rates may also negatively affect the market price of our common stock and increase the cost of new equity capital.

Risks Related to Our Status as a REIT

We depend on the ability to continue to qualify for taxation as a REIT for U.S. federal income tax purposes.

We intend to operate as a REIT under the Internal Revenue Code and believe we have and will continue to operate in such a manner. In addition, we currently hold an interest in a Subsidiary REIT, and may in the future own or acquire additional interests in Subsidiary REITs. Since REIT qualification requires us to meet a number of complex requirements, it is possible that we, or our Subsidiary REIT, may fail to fulfill them.

If we, or our Subsidiary REIT fail to qualify as a REIT:

• we, or our Subsidiary REIT, will not be allowed a deduction for distributions to our stockholders in computing taxable income;

• we, or our Subsidiary REIT, will be subject to corporate-level income tax on taxable income at regular corporate rates;

• we, or our Subsidiary REIT, could be subject to increased state and local income taxes;

• we, or our Subsidiary REIT, would possibly be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases; and

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

Because of all these factors, our, or our Subsidiary REIT’s, failure to qualify as a REIT could also impair our ability to expand our business and could materially adversely affect the value of our common stock. The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the federal income tax treatment of an investment in us. The federal income tax rules dealing with REITs are constantly under review by persons involved in the legislative process, the U.S. Internal Revenue Service and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. Revisions in federal tax laws and interpretations thereof could affect or cause us to change our investments and commitments and affect the tax considerations of an investment in us.

There are no assurances of our ability to pay dividends in the future.

Our ability to pay dividends may be adversely affected upon the occurrence of any of the risks described herein. Our payment of dividends is subject to compliance with restrictions contained in our credit agreements, notes and any preferred stock that our Board of Directors may from time to time designate and authorize for issuance. All dividends will be paid at the discretion of our Board of Directors and will depend upon our earnings, our financial condition, maintenance of our REIT status and such other factors as our Board of Directors may deem relevant from time to time. There are no assurances of our ability to pay dividends in the future. In addition, our dividends in the past have included, and may in the future include a return of capital.

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Complying with the REIT requirements may cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments, which could materially hinder our performance.

To qualify as a REIT for U.S. federal income tax purposes, we (and any Subsidiary REIT of ours) must continually satisfy certain tests, including tests concerning the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. To meet these tests, we may be required to forgo investments or acquisitions we might otherwise make. Thus, compliance with the REIT requirements may materially hinder our performance.

We believe that the ownership and management of assets in our SHOP structures is in compliance with the REIT requirements; however, application of the REIT rules to such assets is complex, fact dependent and subject to interpretation. There can be no assurances that the Internal Revenue Service will agree with our characterization of these assets and if the Internal Revenue Service were to successfully contend that our SHOP structures do not meet the REIT requirements, all or a portion of the rent that we receive under these structures could be non-qualifying income for purposes of the REIT gross income tests. In such event, we may be required to rely on the REIT savings provisions under the Internal Revenue Code, reorganize our SHOP structures, or take such other steps to avoid incurring non-qualifying income, any of which could be at a significant financial cost.

Our ownership of and relationship with any TRS that we have formed or will form will be limited, and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax.

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may earn income that would not be qualifying income if earned directly by its parent REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation (other than a REIT) of which a TRS directly or indirectly owns securities possessing more than 35% of the total voting power or total value of the outstanding securities of such corporation will automatically be treated as a TRS. Overall, no more than 20% (25% commencing in 2026) of the value of a REIT’s total assets may consist of stock or securities of one or more TRSs.

Rents received from a TRS in a RIDEA structure are treated as qualifying rents from real property for REIT tax purposes only if (i) they are paid pursuant to a lease of a “qualified healthcare property” and (ii) the operator qualifies as an “eligible independent contractor”, as defined in the Internal Revenue Code. If either of these requirements is not satisfied, then the rents will not be qualifying rents. The Internal Revenue Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis. Any domestic TRS that we form will pay U.S. federal, state and local income tax on its taxable income, and its after-tax net income will be available for distribution to us but is not required to be distributed to us unless necessary to maintain our REIT qualification.

Legislative, regulatory, or administrative tax changes could adversely affect us or our security holders.

The tax laws or regulations governing REITs or the administrative interpretations thereof may be amended at any time. We cannot predict if or when any new or amended law, regulation, or administrative interpretation will be adopted, promulgated, or become effective, and any such change may apply retroactively. Changes to the U.S. federal income tax laws, including the possibility of major tax legislation, could have a material and adverse effect on us or our security holders.

In connection with the passing of the OBBBA on July 4, 2025, certain changes to U.S. tax laws were approved that impact us and our shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Internal Revenue Code, (ii) increased the percentage limit under the REIT asset test applicable to TRSs from 20% to 25% for taxable years beginning after December 31, 2025 and (iii) increased the basis on which the 30% interest deduction limit under Section 163(j) of the Internal Revenue Code applies by excluding depreciation, amortization and depletion from the definition of “Adjusted Taxable Income” for taxable years beginning after December 31, 2024.

Investors are urged to consult with their tax advisors with respect to the status of any tax legislation and any other regulatory or administrative developments and proposals and their potential effect on investment in our securities.

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Risks Related to Our Organizational Structure

We have ownership limits in our charter with respect to our common stock and other classes of capital stock which may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.

Our charter, subject to certain exceptions, contains restrictions on the ownership and transfer of our common stock and preferred stock that are intended to assist us in preserving our qualification as a REIT. Our charter provides that any transfer that would cause NHI to be beneficially owned by fewer than 100 persons or would cause NHI to be “closely held” under the Internal Revenue Code would be void, which, subject to certain exceptions, results in no person or entity being allowed to own, actually or constructively, more than 9.9% of the outstanding shares of our stock. Our Board of Directors, in its sole discretion, may exempt a proposed transferee from the ownership limit. Our charter gives our Board of Directors broad powers to prohibit and rescind any attempted transfer in violation of the ownership limits. These ownership limits may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or might otherwise be in the best interests of our stockholders.

We are subject to certain provisions of Maryland law and our charter and bylaws that could hinder, delay or prevent a change in control transaction, even if the transaction involves a premium price for our common stock or our stockholders believe such transaction to be otherwise in their best interests.

The Maryland Business Combination Act provides that, unless exempted, a Maryland corporation may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, issuances of shares of stock and other specified transactions with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter, unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding stock of a Maryland corporation. Unless our Board of Directors takes action to exempt us, generally or with respect to certain transactions, from this statute in the future, the Maryland Business Combination Act will be applicable to business combinations between us and other persons. Our charter and bylaws also contain certain provisions that could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from attempting to acquire, control of us. These provisions include blank check preferred stock and the application of Maryland corporate law provisions on business combinations and control shares. Such provisions could limit the price that certain investors might be willing to pay in the future for the common stock. The foregoing matters may, together or separately, have the effect of discouraging or making more difficult an acquisition or change of control of us.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information set forth below is intended to provide readers with an understanding of our financial condition, changes in financial condition and results of operations. Our discussion and analysis are primarily based on our consolidated financial statements for the years presented and should be read together with the notes thereto contained in this Annual Report. This section generally discusses our results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the fiscal year ended December 31, 2024, which we filed with the SEC on February 25, 2025.

The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those which are discussed in “Part I, Item 1A. Risk Factors” of this Annual Report. Also, reference “Cautionary Statement Regarding Forward-Looking Statements” preceding Part I of this Annual Report.

Executive Overview

National Health Investors, Inc., established in 1991 as a Maryland corporation, is a self-managed REIT. We own, lease, operate and finance the development of high-quality real estate properties, focusing on senior housing communities and medical facilities. We operate through two reportable segments, Real Estate Investments and SHOP. Our investments in senior housing communities, also referred to as SHOs, include ILFs, ALFs, EFCs and SLCs. Our investments in medical facilities include SNFs and HOSPs.

In our Real Estate Investments segment, our revenues primarily relate to triple-net leases with third-party operators at our properties. Additionally, we recognize interest income from financing arrangements we provide to our tenants, operators, or affiliates of our tenants and operators, and other third parties primarily for construction, renovation and expansion projects, funding of working capital or corporate needs and the acquisition of real estate properties. In our SHOP segment, we own and operate senior housing communities and generate revenues from resident fees and services. We utilize third-party managers to operate these properties on our behalf and pay a management fee for their services. Our investments across both segments are funded primarily through (i) operating cash flows, (ii) debt offerings, revolving lines of credit and term loans and (iii) sales of equity securities.

Real Estate Investments Portfolio

As of December 31, 2025, our investments comprising the Real Estate Investments segment included real estate properties and financing arrangements involving 189 properties located in 32 states, excluding one property classified as assets held for sale. The aggregate gross carrying value of these owned properties was $2.7 billion, which included 110 SHOs, 65 SNFs and one HOSP leased to 31 tenants. The aggregate gross carrying value of our mortgage and other notes receivable was $218.7 million, excluding $15.4 million of credit loss reserves.

Our tenant leases are typically structured as triple-net leases and relate to single-tenant properties having an initial lease term of 10 to 15 years with one or more five-year extension options. Most of our tenant leases contain annual rent escalators, which may be fixed or variable. Lease payments due to us that are subject to a variable rent escalator are typically determined annually and calculated using a variable index, such as the consumer price index (“CPI”) or an index that is dependent on a future date and indeterminable at the inception of the lease.

Senior Housing Operating Portfolio

As of December 31, 2025, our investments included in the SHOP segment consisted of 17 ILFs, six SLCs and three ALFs located in 13 states with a combined total of 3,009 units. The aggregate gross carrying value of these properties was $634.3 million. We have structured the operations at these senior housing communities to comply with the requirements of RIDEA and to utilize our TRS for activities that would otherwise be non-qualifying for REIT purposes.

The properties are operated by third-party managers in exchange for a management fee from us, and as such, we are not directly exposed to the credit risk of the managers in the same manner or to the same extent as we are related to our triple-net tenant leases. However, we rely on the managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our communities efficiently and effectively. We also rely on the managers to set appropriate resident fees and to operate our communities in compliance with the terms of our management agreements and all applicable laws and regulations.

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Classifications of Real Estate Properties

We classify our investments in real estate properties as either SHOs or medical facilities and further classify our SHOs as either need-driven or discretionary properties based on the differing credit risk profiles represented by the underlying revenue sources.

A summary of each of these classifications follows:

Need-Driven Senior Housing

Need-driven senior housing properties include ALFs and SLCs which primarily attract private payment for services from residents who require assistance with activities of daily living. Need-driven properties are subject to regulatory oversight.

Discretionary Senior Housing

Discretionary senior housing properties include ILFs and EFCs which primarily attract private payment for services from residents who are making the lifestyle choice of living in an age-restricted, multi-family community that offers social programs, meals, housekeeping, and in some cases, access to healthcare services. Discretionary properties are subject to limited regulatory oversight. There is a correlation between demand for this type of community and the strength of the housing market.

Medical Facilities

Medical facilities within our Real Estate Investments segment receive payment for services primarily from Medicare, Medicaid and health insurance. These properties include SNFs and HOSPs that attract patients who have a need for acute or complex medical attention, preventative medicine or rehabilitation services. Medical facilities are subject to federal and state regulatory oversight and, in the case of hospitals, Joint Commission accreditation.

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Investment Portfolio Summary

The following tables summarize information related to the investment portfolios of our Real Estate Investments and SHOP segments as of and for the year ended December 31, 2025 ( $ in thousands ):

Gross

Number of

Number of

Carrying

Properties 1

Beds / Units

NOI

Total NOI

Amount 2

Real Estate Investments segment:

Real estate properties:

Senior housing - need-driven:

Assisted living facilities

Senior living campuses

Total senior housing - need-driven

Senior housing - discretionary:

Independent living facilities

Entrance fee communities

Total senior housing - discretionary

Total senior housing

Medical facilities:

Skilled nursing facilities

Hospitals

Total medical facilities

Properties transitioned to SHOP segment

Other

Total real estate properties

Mortgage and other notes receivable:

Senior housing - need-driven

Senior housing - discretionary

Skilled nursing facilities

Hospitals

Mortgage and note payoffs

Other notes

Total mortgage and other

notes receivable

Total Real Estate Investments

segment portfolio

SHOP segment:

Real estate properties:

Independent living facilities

Senior living campuses

Assisted living facilities

Total SHOP segment portfolio

Total investments portfolio

1     The total number of properties, as presented in the table above, excludes our corporate office building and one property in the Real Estate Investments segment that was classified as assets held for sale as of December 31, 2025.

2     The total gross carrying amount, as presented in the table above, excludes $2.6 million related to our corporate office and equipment, $4.8 million related to one property in the Real Estate Investments segment that was classified as assets held for sale as of December 31, 2025 and $15.4 million of credit loss reserves related to our mortgage and other notes receivable investments.

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Gross

Number of

Carrying

Properties 1

NOI 2

Total NOI

Amount 2

Portfolio summary by operator type:

Real Estate Investments segment:

Public

National chain (privately owned)

Regional

Small

Properties transitioned to SHOP segment

Mortgage and note payoffs

Other

Total Real Estate Investments segment portfolio

SHOP segment portfolio

Total investments portfolio

1     The total number of properties, as presented in the table above, excludes our corporate office building and one property in the Real Estate Investments segment that was classified as assets held for sale as of December 31, 2025.

2     The total gross carrying amount, as presented in the table above, excludes $2.6 million related to our corporate office and equipment, $4.8 million related to one property in the Real Estate Investments segment that was classified as assets held for sale as of December 31, 2025 and $15.4 million of credit loss reserves related to our mortgage and other notes receivable investments.

The following table provides a summary of the impact of acquired and transitioned properties on our SHOP segment NOI for the year ended December 31, 2025 ($ in thousands):

Gross

Number of

Number of

Carrying

Properties

Units

NOI

Amount

Properties in SHOP segment as of December 31, 2024

Acquisitions

Transitioned properties

Total SHOP segment portfolio

As of December 31, 2025, our average effective annualized NOI for the leased properties in our Real Estate Investments segment was $13,988 per unit for SLCs, $20,519 per unit for ALFs, $5,536 per unit for ILFs, $21,476 per unit for EFCs, $10,105 per bed for SNFs and $60,574 per bed for the HOSP. As of December 31, 2025, the average effective annualized NOI for our SHOP segment was $9,709 per unit.

Recent Tax Legislation

In connection with the passing of the One Big Beautiful Bill Act (the “OBBBA”) on July 4, 2025, certain changes to U.S. tax laws were approved that impact us and our stockholders. Among other changes, the OBBBA (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Internal Revenue Code, (ii) increased the percentage limit under the REIT asset test applicable to TRSs from 20% to 25% for taxable years beginning after December 31, 2025 and (iii) increased the base on which the 30% interest deduction limit under Section 163(j) of the Internal Revenue Code applies by excluding depreciation, amortization and depletion from the definition of “Adjusted Taxable Income” for taxable years beginning after December 31, 2024.

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Fiscal 2025 Investment Activity

A summary of our significant investment activity that occurred during the year ended December 31, 2025 follows:

• We funded $325.6 million of acquisitions, which included the settlement of $50.8 million of mortgage and other notes receivable as part of the consideration paid by us.

• We funded $71.1 million of mortgage and other note investments.

• We transitioned seven properties from our Real Estate Investments segment into our SHOP segment and dissolved the Discovery partnership.

• We reclassified $3.6 million of assets as held for sale on our consolidated balance sheet as of December 31, 2025 which related to one real estate property in the Real Estate Investments segment.

Asset Acquisitions

During the year ended December 31, 2025, we completed the following asset acquisitions ( $ in thousands ):

Buildings,

Building

Improvements

Number of

Asset

and Intangible

Operator / Manager

Period

Properties

Class

Land

Assets

Total

Real Estate Investments segment:

Generations, LLC

SLC

Mainstay Healthcare

ALF

Juniper Communities, LLC

ALF

Agemark Senior Living

ALF

Priority Life Care

ALF

William James Group, LLC

ALF

Senior Living

EFC

SHOP segment:

Compass Senior Living

SHO

Total asset acquisitions

In January 2025, we acquired a 108-unit SLC located in 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 with Generations, LLC, which includes two five-year extension options, an initial annual lease rate of 8.0% and fixed annual escalators of 2.0%.

In February 2025, we acquired an 88-unit ALF located in Florida upon the execution of a deed in lieu of foreclosure agreement initiated by Senior Living Management (“SLM”) to settle its $10.0 million non-performing mortgage note with us. We recognized the acquired property at its estimated fair value of $8.6 million, which equaled the net carrying value of the mortgage note. Concurrently, we executed a new lease on this acquired property with the existing operator, Mainstay Healthcare. This lease provides for approximately $0.7 million in annual contractual lease payments.

In March 2025, we acquired a 120-unit ALF located in 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 with Juniper Communities, LLC, which includes two five-year extension options, an initial annual lease rate of 8.0% and fixed annual escalators of 2.0%. The lease includes a $0.8 million development commitment which will be added to the respective lease base, if funded.

In April 2025, we acquired a portfolio of six ALFs 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 with Agemark Senior Living, which includes two five-year extension options, an initial annual lease rate of 8.0% and fixed annual escalators of 2.0%.

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In October 2025, we acquired a portfolio of four SHOs located in Oklahoma and Oregon, consisting of two SLCs and two ALFs, with a combined total of 339 units. The total purchase price of $74.3 million, including $0.5 million in closing costs, was partially funded by the cancellation of a $9.5 million mortgage note with us which had an 8.5% annual interest rate. We recognized a $2.2 million in-place lease intangible asset in connection with this acquisition. This portfolio of properties has been included in our SHOP segment and is being managed by the existing operator, Compass Senior Living, pursuant to a management agreement.

In October 2025, we acquired a 251-unit CCRC located in South Carolina from an affiliate of Senior Living. The acquisition price of $52.5 million was partially funded by the cancellation of a $32.7 million mortgage note on the property. The property is being leased back to the affiliate of Senior Living pursuant to a 15-year triple-net lease with two five-year extension options, an initial annual lease rate of 8.25% and fixed annual escalators of 2.0%. Concurrently with the acquisition, we executed a $1.5 million revolving line of credit with the affiliate of Senior Living which has an initial annual interest rate of 8.25% and matures in October 2040.

In December 2025, we acquired a 107-unit ALF located in Pennsylvania. The acquisition price was $52.1 million, including $1.1 million in closing costs. The property is leased pursuant to a five-year triple-net lease with Priority Life Care, which has an initial annual lease rate of 8.0% plus a revenue participation clause and fixed annual escalators of 2.0%.

In December 2025, we acquired a 56-unit ALF located in Alabama. The acquisition price was $7.0 million, including $0.1 million in closing costs. The property was added to our existing triple-net master lease with William James Group, LLC. As of December 31, 2025, this master lease covers four properties, has an annual lease rate of 8.25%, contains fixed annual escalators of 2.0% and matures in November 2037.

First Quarter of 2026 Acquisitions and Divestitures

In January 2026, we sold a 42-unit SLC located in Michigan for $6.7 million in net cash consideration. As of December 31, 2025, the net carrying value of this property was $4.2 million. During each of the years ended December 31, 2025, 2024 and 2023, we recognized $0.5 million of rental income related to this property.

In February 2026, we acquired a portfolio of nine ALFs located in Kentucky, South Carolina and Tennessee with a combined total of 460 units. The total purchase price was $105.5 million, including $1.0 million in closing costs. This portfolio of properties has been included in our SHOP segment and is being managed by Allegro Living Management, an affiliate of Spring Arbor Management, LLC pursuant to a management agreement.

Discovery Transitions

Effective August 1, 2025, we terminated a triple-net master lease associated with a portfolio of six SHOs, consisting of four SLCs, one ILF and one ALF, which were held in a consolidated partnership with Discovery Senior Housing Investor XXIV, LLC (the “Discovery partner”). The tenant of the triple-net master lease was a related party of Discovery Senior Living (“Discovery”). In connection with the lease termination, we received net cash consideration of $3.1 million and other non-cash consideration of $0.6 million from the tenant and wrote off the related straight-line rents receivable of $8.9 million on this lease. Each of these amounts was recognized in rental income in our consolidated statement of income for the year ended December 31, 2025. Additionally, on August 1, 2025, we entered into a dissolution agreement with the Discovery partner, which provided for the write-off of the remaining partnership liabilities against the equity in the partnership and the Discovery partner contributing its 2.0% noncontrolling common equity interest to us for nominal consideration.

Concurrently with the activities above, we transitioned the portfolio of six SHOs from our Real Estate Investments segment into our SHOP segment and entered into agreements with an affiliate of Sinceri Senior Living (“Sinceri”) to serve as the manager of the properties. As of December 31, 2025, the aggregate net carrying value of this portfolio was $124.9 million. Prior to the transition, we recognized rental income of $3.2 million , $6.1 million and $8.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, related to the triple-net master lease.

Also, effective August 1, 2025, we terminated a triple-net lease with an affiliate of Discovery for an ILF in Oklahoma. In connection with the lease termination, we received $0.8 million in cash consideration and $0.8 million in other non-cash consideration from the tenant and wrote off the related straight-line rent receivable of $3.2 million on this lease. Each of these amounts was recognized in rental income in our consolidated statement of income for the year ended December 31, 2025. Concurrently with the lease termination, we transitioned this property from our Real Estate Investments segment into our SHOP segment by contributing it to an existing consolidated partnership with DSHI NHI Holiday LLC (the “Discovery member”). As of December 31, 2025, the net carrying value of this property was $28.4 million. Prior to the transition, we recognized rental income of $1.6 million , $2.8 million and $2.9 million during the years ended December 31, 2025, 2024 and 2023, respectively. related to the triple-net lease.

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Mortgage and Other Notes Receivable

Vizion Health Loan Amendment - In March 2025, we amended a mezzanine loan agreement with affiliates of Vizion Health to provide additional funding of $5.4 million and to extend the maturity date to May 2028. The interest rate on the loan escalates on July 1 st of each year. As of December 31, 2025, the principal amount outstanding on the loan was $16.5 million and the annual interest rate was 9.4%.

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 ALF located in Michigan which will be operated by Encore Senior Living upon completion. The loan agreement provides for an annual interest rate of 9.0% and a maturity date in April 2030. As of December 31, 2025, the principal amount outstanding on this construction loan was $8.5 million.

Fellowship Carolina Marsh Mortgage Note - In November 2025, we funded a new $18.8 million mortgage note secured by a 94-unit SLC located in South Carolina. The five-year loan agreement with Fellowship Senior Living has an annual interest rate of 8.5% with an option to purchase the property upon the satisfaction of certain conditions. The loan matures in November 2030.

Silver Wave Wichita Falls Mortgage Note - In December 2025, we funded a new $11.3 million mortgage note secured by a 141-unit ILF located in Texas. The five-year loan agreement with affiliates of Silver Wave Capital has an annual interest rate of 8.75% with an option to purchase the property upon the satisfaction of certain conditions. The loan matures in December 2030.

Assets Held for Sale

As of December 31, 2025, we had assets held for sale of $3.6 million related to one real estate property in our Real Estate Investments segment. During the years ended December 31, 2025, 2024 and 2023, we recognized rental income of $0.6 million, $0.6 million and $0.4 million, respectively, related to this property. We did not have any assets held for sale as of December 31, 2024.

Tenant Purchase and Sale Agreement

We lease a SLC that is subject to a purchase and sale agreement giving the tenant the option to acquire the property for $39.0 million. The purchase and sale agreement, as amended, is subject to monthly renewals through March 2026 by the tenant upon payment of a non-refundable fee. The property was included in real estate properties, net, on our consolidated balance sheets as of December 31, 2025 and 2024. During the years ended December 31, 2025, 2024 and 2023, we recognized rental income of $2.6 million, $2.8 million and $2.8 million, respectively, 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 December 31, 2025, the net carrying value of this property was $18.4 million.

Tenant Purchase Options

Certain of our tenant leases contain a purchase option clause allowing the tenant to acquire the leased property at a fixed base price, a fixed base price plus a specified share in any appreciation of the property or a price based on a specified fixed minimum internal rate of return on our investment. As of December 31, 2025, tenants had purchase options on four of our properties, with an aggregate net carrying value of $74.7 million, which have exercise dates ranging between 2028 and 2031. Rental income from these properties with tenant purchase options was $10.0 million, $8.8 million and $7.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, we cannot reasonably estimate the probability that any of these tenant purchase options will be exercised in the future.

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Tenant Concentrations

The following table presents information related to concentrations of our tenants, or affiliates of tenants, that exceed 10% of our total revenues ( $ in thousands ):

December 31, 2025

Year Ended December 31,

Real

Mortgage

Estate

and Other

Properties 1

Notes 2

Revenues 3

Total

Revenues 3

Total

Revenues 3

Total

Senior Living

Bickford

NHC

Escrow funds received from tenants

for property operating expenses

Other

Total tenant concentrations

Resident fees and services 4

Total revenues

1     Real estate properties have been stated at their gross carrying amounts. Total real estate properties, as presented in the table above, excludes $2.6 million related to our corporate office and equipment, $4.8 million related to one property in the Real Estate Investments segment that was classified as assets held for sale as of December 31, 2025 and $634.3 million related to the properties in our SHOP segment.

2     Mortgage and other notes receivable have been stated at their gross carrying amounts. Total mortgage and other notes receivable, as presented in the table above, excludes our total credit loss reserves of $15.4 million as of December 31, 2025.

3     Revenues related to assets classified as held for sale are included in other revenues in the table above.

4     There are no concentrations in revenues from resident fees and services because the resident agreements at the senior housing communities are between us and the individual residents.

Senior Living Leases and Loans

As of December 31, 2025, we leased 11 SHOs with a combined total of 2,490 units to Senior Living. During the years ended December 31, 2025, 2024 and 2023, we recognized straight-line rent revenue of $(0.6) million, $(0.2) million and $(1.2) million, respectively, related to our leases with Senior Living.

As of December 31, 2025, we had a $15.0 million revolving line of credit with Senior Living which is available for working capital needs and to finance construction projects within Senior Living’s portfolio, including projects to build additional residential units at existing facilities. The $15.0 million revolving line of credit matures in December 2031. As of December 31, 2025, the principal amount outstanding on this revolving line of credit was $9.0 million and the annual interest rate was 8.0%. We also had a $1.5 million revolving line of credit with an affiliate of Senior Living which has not been drawn as of December 31, 2025.

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Bickford Leases and Loans

As of December 31, 2025, we leased 38 SHOs to Bickford under four master leases. In 2022, we began recognizing rental income from Bickford’s leases using the cash basis of accounting for revenue recognition based upon information we obtained from Bickford regarding its financial condition that raised substantial doubt about its ability to continue as a going concern.

We have a fully funded construction loan with Bickford that 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 other agreements which may grant a right of use to the property. Pursuant to the loan agreement, Bickford is required to pay the related property taxes and insurance. The loan agreement contains a fair market value purchase option on the property that is available to us upon stabilization of the underlying operations. As of December 31, 2025, the principal amount outstanding on the construction loan was $14.7 million and the annual interest rate was 9.0%.

We have an unsecured mezzanine loan with Bickford that is classified as a non-performing note. The loan has an annual interest rate of 9.0% and matures in May 2033. As of December 31, 2025, the principal amount outstanding on the mezzanine loan was $1.3 million, which was fully covered by the related credit loss reserve.

NHC Leases

As of December 31, 2025, we leased 32 SNFs and three ILFs to NHC, a publicly owned company, under a triple-net master lease which expires in December 2026. The master lease includes two five-year extension options in which the annual lease rate resets at the current fair market value as negotiated between the parties. We have engaged Blueprint Healthcare Real Estate Advisors, a national advisory firm focused on skilled nursing and senior housing facilities, to assist with underwriting, due diligence and market analysis with respect to the master lease renewal.

On September 8, 2025, we provided formal written notice to NHC that it is in default of the triple-net master lease as a result of NHC’s failure to remedy its non-compliance with certain non-monetary provisions of the triple-net master lease previously identified by us. NHC had 30 days to cure such default and its failure to do so entitles us to declare an event of default and to pursue any and all remedies available to us under the triple-net master lease. We are currently evaluating potential courses of action.

On October 7, 2025, NHC informed us that it was exercising its option to renew the master lease for one five-year term commencing January 1, 2027. We are currently reviewing the effectiveness and legality of NHC’s notice.

Cash Basis Tenants

During the year ended December 31, 2025, two of our tenants were on the cash basis of accounting for revenue recognition 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 leases. During the years ended December 31, 2024 and 2023, three of our tenants were on the cash basis of accounting for revenue recognition for their leasing arrangements with us.

A summary of lease payments received by us from cash basis tenants follows ( $ in thousands ):

Year Ended December 31,

Bickford

All others

Total lease payments from cash basis tenants

These lease payments from cash basis tenants included $5.9 million, $9.0 million and $2.8 million of rent deferrals granted during the COVID-19 pandemic for the years ended December 31, 2025, 2024 and 2023, respectively.

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SLM Leases

SLM was a cash basis tenant from 2022 until January 1, 2025 when the remaining two properties leased from us were transitioned to a new operator who had been serving as the interim manager at the properties. Concurrently with this transition, we executed a 15-year triple-net master lease with a new operator which includes two five-year extension options. The master lease with the new operator provides for approximately $1.1 million in initial annual contractual lease payments with fixed annual escalators of 2.0%. As of December 31, 2025, we had no properties leased to SLM.

Occupancy

The following table provides a summary of the average occupancy rates related to properties leased to Senior Living and Bickford for the periods indicated:

Number of

Properties

Senior Living 1

Senior Living

Bickford 2

1     The occupancy rates exclude a 251-unit CCRC acquired in October 2025.

2     The number of properties related to Bickford includes one property classified as assets held for sale as of December 31, 2025.

The following table provides a summary of the average occupancy rates related to properties in our SHOP segment for the periods indicated:

Number of properties at the end of the period

SHOP segment 1

Number of properties at the end of the period

Total SHOP segment

1      The occupancy rates relate to the 15 real estate properties in the SHOP portfolio as of December 31, 2024.

Tenant Monitoring

The operators of our properties in the Real Estate Investments segment report to us the results of their operations on a periodic basis, which we in turn subject to further analysis as a means of monitoring potential credit risks within our portfolio. We have identified EBITDARM, which is calculated as earnings before interest, taxes, depreciation, amortization, rent and management fees, as a primary performance measure for our tenants, based on results they have reported to us. We believe EBITDARM is useful in our most fundamental analyses, as it is a property-level measure of an operator’s success, by eliminating the effects of the operator’s method of acquiring the use of its assets (interest and rent), its non-cash expenses (depreciation and amortization), and expenses that are dependent on its level of success (income taxes), and also excluding the effect of the operator’s payment of its management fees, as typically those fees are contractually subordinate to our lease payments. For operators of our EFCs, our calculation of EBITDARM includes other cash flow adjustments typical of the industry which may include, but are not limited to, net cash flows from entrance fees, amortization of deferred entrance fees, adjustments for tenant rent obligations and management fee true-ups. The eliminations and adjustments reflect covenants in our leases and provide a comparable basis for assessing our various relationships.

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We believe that EBITDARM is a useful way to analyze the cash potential of a group of assets. From EBITDARM, we calculate a coverage ratio (EBITDARM / cash rent) measuring the ability of the operator to meet its monthly obligations. In addition to EBITDARM and the coverage ratio, we rely on a careful balance sheet analysis and other analytical procedures to help us identify potential areas of concern relative to our operators’ ability to generate sufficient liquidity to meet their obligations, including their obligations to continue to pay the amount due to us. Typical among our operators is a varying lag in reporting to us the results of their operations. Across our portfolio, however, our operators report their results, typically within either 30 or 45 days and at the latest, within 90 days of month end. For computational purposes, we exclude mortgage and other notes receivable, and development and lease-up properties that have been in operation less than 24 months. For stabilized acquisitions in the portfolio less than 24 months and renewing leases with changes in scheduled rent, we include pro forma cash rent. Same-store portfolio coverage, when presented herein, excludes properties that have transitioned operators in the past 24 months or assets subsequently sold except as noted.

The following table provides a summary of our portfolio and coverage ratios by property type on a trailing 12-month basis as of September 30, 2025 and 2024, the most recent periods available:

Real Estate Investments Portfolio 1

Senior

Medical

Ratios by property type:

Housing

SNF

Non-SNF

Total

Number of properties

Q3 2025 coverage

Q3 2025 occupancy

Q3 2024 coverage

Q3 2024 occupancy

Discretionary

Need-Driven

(Excluding

Medical

Need-

(Excluding

Senior

(Excluding

Ratios by property class:

Driven

Bickford)

Discretionary

Living)

Medical

NHC)

Number of properties

Q3 2025 coverage

Q3 2025 occupancy

Q3 2024 coverage

Q3 2024 occupancy

Senior

Ratios by customer:

Living 2

Bickford 3

NHC 4

Number of properties

Q3 2025 coverage

Q3 2025 occupancy

Q3 2024 coverage

Q3 2024 occupancy

1     The tables are based on trailing 12-month data, excluding (1) transitioned properties of cash basis tenants, (2) mortgage and other notes receivable, (3) development and lease-up properties operating less than 24 months and (4) the impact of security deposits maintained on any tenants. The tables include pro forma cash inflow from rent payments related to acquired properties that have stabilized operations and that have been in the portfolio less than 24 months.

2     Senior Living’s coverage ratios reported in the table above include the impact of our acquisition of a 251-unit CCRC in October 2025 for all periods presented. Senior Living’s coverage ratios for the other 10 properties were 1.50x and 1.56x for the trailing 12 months ended September 30, 2025 and 2024.

3     Bickford’s coverage ratios on a pro forma basis, which includes the impact of the April 2024 rent increase, were 1.72x and 1.63x for the trailing 12 months ended September 30, 2025 and 2024, respectively. Bickford’s coverage ratios on a pro forma basis, which includes the impact of the April 2024 rent increase and rent deferral repayments made by Bickford during the respective periods, were 1.49x and 1.42x for the trailing 12 months ended September 30, 2025 and 2024, respectively.

4     NHC’s coverage ratios have been reported in the table above at a consolidated level for NHC. The occupancy ratios for SNFs have been reported in the table above using data available in NHC’s public filings with the SEC.

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Fluctuations in our portfolio coverage and occupancy ratios primarily result from market and economic trends, local market competition, new or changing regulatory factors and the operational success of our tenants. In addition to the analysis above, we also evaluate and make decisions with respect to our tenants at an individual lease level. Generally, we have security deposits and/or corporate guarantees in place with many of our tenants if lease payment shortfalls materialize. In some instances, we may require a tenant to increase their security deposit with us in an amount equal to the lease payment shortfall until the required tenant lease coverage ratio is met. We monitor economic and financial conditions and also use credit enhancements, such as requiring our tenants to maintain security deposits and corporate guarantees with us, to mitigate the impact of an economic downturn on our business. The metrics presented in the tables above do not reflect the presence of these security deposits.

Critical Accounting Estimates

We prepare our consolidated financial statements in conformity with U.S. GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we reconsider and evaluate our estimates and assumptions. Management has discussed the development and selection of its critical accounting policies and estimates with the Audit Committee of our Board of Directors.

We consider an accounting estimate or assumption critical if the nature of the estimate or assumption is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and if the impact of the estimate or assumption on financial condition or operating performance is material. We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect on our consolidated results of operations, liquidity and/or financial condition.

Our significant accounting policies are discussed in Note 2 to our consolidated financial statements in this Annual Report. We believe the accounting estimates included below are the most critical for fully understanding and evaluating our financial results and require our most difficult, subjective or complex judgments.

Variable Interest Entities

Our consolidated financial statements include our wholly owned subsidiaries and partnerships that we control through voting rights or other means. We evaluate our contractual arrangements with other entities to identify those relationships in which control is achieved though means other than voting rights. A variable interest entity (“VIE”) is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

We make judgments about which entities are VIEs based on the criteria above and with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a VIE. These considerations include, but are not limited to, our power to direct the activities that most significantly impact the entity's economic performance, the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity, and our ability and the rights of other investors to participate in policy making decisions, replace the manager and/or liquidate the entity. Our ability to correctly determine the primary beneficiary of a VIE at inception of our involvement impacts the presentation of these entities in our consolidated financial statements.

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Asset Acquisitions

Our investments in real estate properties are accounted for as asset acquisitions. We allocate the purchase price to the identified tangible and intangible assets at cost based on the relative fair values of the assets as of the acquisition date. The related transaction costs are included in the purchase price allocation. Contingent consideration deemed to be probable at the acquisition date, if any, is also included in the purchase price allocation to the extent that a significant reversal in amounts recognized is not likely to occur and the uncertainty associated with the contingent consideration has been resolved.

The most significant judgments applied in our purchase price allocations are typically related to the determination of the fair values of land, buildings, building improvements and intangible assets. Our estimates of the individual fair values of the assets acquired affect the amounts of depreciation and amortization we recognize over the respective estimated useful lives of the assets or the respective remaining lease term. While we believe our assumptions are reasonable, any changes in these assumptions could have a material impact on our financial results. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use for our purchase price allocations.

Impairment of Real Estate Properties

We evaluate the recoverability of the carrying values of our real estate properties on an individual property basis. We review each property for recoverability when events or circumstances, including any significant physical changes in a property, significant adverse changes in general economic conditions or significant deterioration of the underlying cash flows of a property indicate that the carrying amount of a property may not be recoverable. When indicators of potential impairment are present, we assess whether an impairment charge is needed by comparing the future estimated undiscounted cash flows and eventual disposition 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 value of the identified asset exceeds its estimated fair value.

The most significant judgments applied in our analysis of the recoverability of the carrying values of our real estate properties relate to the determination of whether indicators of impairment exist and the determination of the future estimated undiscounted cash flows of the property. There were no material changes in the accounting methodology we used to evaluate the recoverability of our real estate properties during the year ended December 31, 2025.

Lease Classifications

Lease accounting standards require that, for purposes of lease classification, we assess whether the lease, by its terms, transfers substantially all of the fair value of the asset under lease to the tenant. This consideration will determine the accounting treatment for the alternative classifications among operating, sales-type, or direct financing types of leases. For classification purposes, we distinguish cash flows that follow under terms of the lease from those that will be derived, subsequent to the lease, from the ultimate disposition or re-deployment of the asset. From this segregation of the sources of cash flow, we are able to establish whether the lease is, in essence, a sale or financing based on it having transferred substantially all of the fair value of the leased asset. Accordingly, management’s projected residual values represent significant assumptions in our accounting for leases.

While we do not incorporate residual value guarantees in our lease provisions, the contractual structure of other provisions provides a basis for expectations of realizable value from our properties upon expiration of their lease terms. Additionally, we consider historical, demographic and market trends in developing our estimates. For each new lease, we discount our estimate of unguaranteed residual value and include this amount along with the stream of lease payments (also discounted) called for in the lease. We assess the stream of lease payments and the value deriving from eventual return of our property to establish whether the lease payments themselves comprise a return of substantially all of the fair value of the property under lease. We do not use a “bright line” in considering what constitutes “substantially all of the fair value”, but we undertake a more focused assessment when the lease payments approach 90% of the composition of all future cash flows expected from the asset. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to assess lease classifications.

Credit Loss Reserves on Mortgage and Other Notes Receivable

We evaluate the collectability of our mortgage and other notes receivable and establish reserves for expected credit losses at the inception of these investments and subsequently on a quarterly basis at the end of the period. We take into consideration criteria, such as the borrower’s timeliness of required payments, the borrower’s current financial condition and the borrower’s compliance with other covenants and terms of the loan agreement. If we conclude that a loan has become non-performing, we place it on non-accrual status in the period in which it becomes known and probable that the borrower cannot pay the contractual amounts due to us. A non-performing loan is returned to accrual status if the borrower becomes contractually current on payments and management believes all future principal and interest will be received from the tenant in accordance with the terms of the loan agreement.

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Our models for estimating the future expected credit losses on mortgages and construction loans are calculated on a collective basis for these loan types. Our models for estimating the future expected credit losses on mezzanine loans and revolving credit lines are calculated on an individual loan basis or a borrower-specific basis for these loan types. We use a combination of credit quality indicators in our models including, among others, the current payment status of the loans, the overall financial strength of the borrowers and any guarantors, historical information on any loan write-offs related to our borrowers and the nature, extent and value of underlying collateral on the loans. In addition, we adjust our models using the probability of default method related to any current economic or other conditions occurring or becoming known during the reporting period and any changes in our most recent forecasts that exist as of the end of the reporting period which impact our previous estimates of necessary credit loss reserves. For construction loans, we perform an assessment each period end of the probability that we will acquire any properties in the event of default on any of these loans and, when necessary, reduce the basis of the applicable loans by the amounts that we expect to recover when construction of the applicable properties is complete.

Our most significant judgments in determining whether credit loss reserves are necessary relate to the assumptions we apply in assessing the probability of default or a loss as a result of a default by one or more of our borrowers. We assess all the evidence available to us, including the present value of the expected future discounted cash flows from a mortgage or note, general economic conditions and trends, the duration of a fair value deficiency and other relevant factors. When an economic downturn occurs that has a duration that is expected to span a year or more, we consider projections on the expected economic recovery before we conclude that evidence of impairment exists. While we believe our assumptions are reasonable, any changes in our assumptions may have a material impact on our financial results.

Other Investment Portfolio Activity

Real Estate and Mortgage Write-downs

In addition to inflation risk and increased interest rates, our tenants and borrowers may experience periods of significant financial pressures and difficulties similar to those encountered by other healthcare providers.

As of December 31, 2025, we had two loans designated as non-performing notes consisting of an unsecured 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. These loans are fully covered by our credit loss reserves.

As of December 31, 2025, we reduced the carrying value of our mortgage and other notes receivable by a reserve for expected credit losses of $15.4 million and recognized a liability of $0.2 million for estimated credit losses on unfunded loan commitments. During the years ended December 31, 2025, 2024 and 2023, we recognized a provision for (reduction in) expected credit losses of $(3.4) million, $4.6 million and $(0.3) million, respectively.

We had no impairment charges related to long-lived assets during the year ended December 31, 2025. During the year ended December 31, 2024, we recognized an impairment charge of $0.7 million related to one property in our Real Estate Investments segment which was reclassified to assets held for sale in the second quarter of 2024 and sold in the fourth quarter of 2024. Du ring the year ended December 31, 2023 , we recognized impairment charges of $1.6 million related to four properties in our Real Estate Investments segment, which include d $0.5 million of impairment charges on three of these properties which were either sold or reclassified to assets held for sale during the year ended December 31, 2023.

We believe that the carrying amounts of our real estate properties are recoverable and that mortgage and other notes receivables, net of credit loss reserves, are realizable and supported by the value of the underlying collateral. However, it is possible that future events could require us to make additional significant adjustments to these carrying amounts.

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Results of Operations

A summary of our operating results follows ( $ in thousands ):

Year Ended

December 31,

Variance

Revenues

Rental income:

Acquisitions

Discovery transitions

All other tenant leases

Total cash rental income

Straight-line rent revenue adjustments

Escrow funds received from tenants for

property operating expenses

Amortization of lease incentives

Total rental income

Resident fees and services

Interest and other income

Senior Living Management

The Sanders Trust, LLC

Mortgage and other note payoffs

All other mortgage and notes receivable

Total interest income

Other income

Total revenues

Expenses:

Depreciation and amortization:

Acquisitions

All other assets

Total depreciation and amortization

Interest

Senior housing operating expenses

Legal

Franchise, excise and other taxes

Taxes and insurance on leased properties

Proxy contest and related expenses

Loan and realty (gains) losses, net

Other expenses

Total expenses

Gains on sales of real estate properties, net

Gains from equity method investment

Gains on forward equity sales agreements, net

Net income

Add: Net loss attributable to noncontrolling interests

Net income attributable to stockholders

Less: Net income attributable to unvested restricted

stock awards

Net income attributable to common stockholders

NM - not meaningful

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Financial highlights for the year ended December 31, 2025, compared to the year ended December 31, 2024, were as follows:

• Rental income increased $14.6 million, or 5.7%, primarily due to $19.5 million of increased rental income from real estate properties in our Real Estate Investments segment that were acquired after January 1, 2024. We had a net decrease in rental income of $11.0 million related to the seven properties transitioned into the SHOP segment on August 1, 2025 from the Real Estate Investments segment.

• Resident fees and services, less senior housing operating expenses, increased $7.0 million, or 57.2%. We had an increase of $4.4 million resulting from the seven properties transitioned into the SHOP segment on August 1, 2025 and an increase of $1.6 million related to current year acquisitions.

• Interest income from mortgage and other notes receivable increased $0.6 million, or 2.5%. New investments since January 1, 2024 were mostly offset by mortgage and other notes payoffs since January 1, 2024.

• Depreciation and amortization expense increased $9.5 million, or 13.3%, which included an $8.4 million increase as a result of acquisitions since January 1, 2024.

• Interest expense decreased $2.5 million, or 4.2%, primarily due to a decrease in interest rates on our variable rate debt.

• Legal expense increased $1.6 million primarily from $1.2 million of costs incurred in the current year related to a large SHOP transaction that did not materialize and also the costs incurred in the current period related to the concurrent transactions on August 1, 2025 to terminate leases, transition properties to the SHOP segment and dissolve the Discovery partnership.

• Proxy contest and related expenses were $1.6 million for the year ended December 31, 2025 with no comparable costs in the prior year. These expenses consisted of proxy advisory costs related to our response to a proxy campaign associated with our 2025 annual meeting of stockholders.

• Loan and realty (gains) losses, net, was a net gain of $3.4 million for the year ended December 31, 2025 compared to a net loss of $5.3 million for the year ended December 31, 2024. The net gain in the current year primarily related to a reduction in our credit loss reserves related to loans that were paid off during the current year. The net loss in the prior year primarily related to an increase in the credit loss reserve on a mezzanine loan due from SLM.

• Other expenses increased $6.1 million, or 29.6%, primarily due to higher compensation costs and increases in professional fees and other purchased services.

• Gains on sales of real estate properties, net, was $0.5 million in the year ended December 31, 2025 compared to $6.7 million in the year ended December 31, 2024. In the prior year, we sold four real estate properties in our Real Estate Investments segment.

• Gains from equity method investment were $3.7 million in the year ended December 31, 2025 compared to $0.4 million in the year ended December 31, 2024. The current period included $1.7 million of gains due to a distribution received from our equity method investment.

• Gains from forward equity sales agreements were $6.3 million in the year ended December 31, 2024 with no comparable amount in the year ended December 31, 2025. During the year ended December 31, 2024, we recognized a gain on forward equity sales agreements under our ATM equity program for the period in which these agreements did not qualify for equity treatment under GAAP.

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Liquidity and Capital Resources

At December 31, 2025, we had $496.0 million available to draw on our $700.0 million unsecured revolving credit facility (“Credit Facility”), $19.6 million in unrestricted cash and cash equivalents, the ability to access $44.5 million of undrawn net proceeds through ATM forward sales agreements and the ability to access $315.8 million through the issuance of common stock under our ATM equity program. In addition, we maintain an effective automatic shelf registration statement through which capital could be raised through the issuance of additional debt or equity securities.

Sources and Uses of Funds

Our primary sources of cash include lease payments from tenants, receipts from residents, principal and interest payments on mortgage and other notes receivable, proceeds from the sales of real estate properties, net proceeds from offerings of debt and equity securities and borrowings from our Credit Facility. Our primary uses of cash include principal and interest payments on our debt, investments in new and existing real estate properties, mortgage and other notes, dividend distributions to our stockholders, operating expenses of our SHOP segment and general corporate overhead expenses.

A summary of our sources and uses of cash, cash equivalents and restricted cash follows ( $ in thousands):

Year Ended December 31,

Variance

Cash, cash equivalents and restricted cash

at the beginning of the year

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Cash, cash equivalents and restricted cash

at the end of the year

NM Not meaningful

Operating Activities – Net cash provided by operating activities for the year ended December 31, 2025 included the impact of new tenant leases from acquisitions completed during the year, our SHOP segment operations, increased rental income due to rent escalators and interest payments on new loan investments completed during the year.

Investing Activities – Net cash used in investing activities for the year ended December 31, 2025 was primarily comprised of $365.1 million of investments in real estate properties, development projects at existing properties and mortgages and other notes, partially offset by the collection of principal amounts due on mortgage and other notes receivable during the year.

Financing Activities – Net cash provided by financing activities for the year ended December 31, 2025 included $346.2 million in proceeds received from the issuance of the 2033 Senior Notes and $181.5 million in proceeds received from the issuance of common shares, partially offset by $127.2 million of net paydown on our Credit Facility, $200.8 million of repayments on our term loan and private placement notes and $169.7 million of dividend payments to stockholders.

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Debt Obligations

As of December 31, 2025, we had $1.2 billion of outstanding indebtedness. Reference Note 8 to our consolidated financial statements included in this Annual Report for additional information on our debt. Reference “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in this Annual Report for more details on the impact of interest rate risk on our business.

Revolving Credit Facility and Bank Term Loan - We have a $700.0 million Credit Facility that matures in October 2028, which may be further extended by us pursuant to (i) one or both of the six-month extension options or (ii) one 12-month extension option. In October 2025, we amended the Credit Facility to remove the 0.10% credit spread adjustment applicable to the SOFR interest rates, which resulted in an effective decrease of 0.10% in the applicable interest rates with respect to the Credit Facility. Borrowings under the Credit Facility bear interest, at our election, at one of the following (a) Term SOFR plus a margin ranging from 0.725% to 1.400%, (b) Daily SOFR plus a margin ranging from 0.725% to 1.400% or (c) the base rate plus a margin ranging from 0.000% to 0.400%. In each election, the actual margin is determined according to our credit ratings. The base rate means, for any day, a fluctuating interest 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 1.0%. In addition, the Credit Facility requires a facility fee equal to 0.125% to 0.300%, based on our credit rating on the $700.0 million committed capacity, without regard to usage.

As of December 31, 2025, we had $496.0 million available to draw on the Credit Facility, subject to usual and customary covenants. Among other stipulations, our Credit Facility requires that we maintain certain financial ratios within limits set by our creditors. As of December 31, 2025, we were in compliance with these covenants.

We have a $200.0 million unsecured bank term loan (the “Bank Term Loan”), which was amended and restated in October 2024 to, among other things, align certain representations, covenants and events of default with the terms of the amended and restated Credit Facility. The Bank Term Loan bears interest at a variable rate which is SOFR-based with a margin determined according to our credit ratings. Concurrently with the most recent amendment of the Credit Facility in October 2025, we also amended the Bank Term Loan to remove the 0.10% credit spread adjustment applicable to the SOFR interest rates, which was also in alignment with the Credit Facility amendment.

During the year ended December 31, 2025, we repaid $75.0 million on the Bank Term Loan and exercised both six-month extension options, which extended the maturity of the Bank Term Loan to June 2026.

Pinnacle Bank is a participating member of our banking group. A member of our Board of Directors, who became the 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 corporate banking transactions are conducted primarily through Pinnacle Bank.

We have provided summary information in the table below on the current SOFR credit spread adjustments and facility fee for our Credit Facility and Bank Term Loan reflecting our ratings compliance based on the applicable margin for SOFR loans with a debt rating of BBB-/Baa3:

SOFR Credit Spread Adjustments

Credit

Credit

Bank

Debt Ratings

Facility

Facility Fee

Term Loan

BBB+/Baa1

BBB/Baa2

BBB-/Baa3

Lower than BBB-/Baa3

If our credit rating from at least two credit rating agencies is downgraded below “BBB-/Baa3”, the debt under our debt agreements will be subject to defined increases in interest rates and fees.

2031 Senior Notes - In January 2021, we issued $400.0 million in aggregate principal amount of 3.000% unsecured senior notes that mature in February 2031 (the “2031 Senior Notes”) and require semi-annual interest payments. The 2031 Senior Notes are subject to affirmative and negative covenants, including financial covenants. As of December 31, 2025 we were in compliance with these covenants.

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2033 Senior Notes - In September 2025, we issued $350.0 million in aggregate principal amount of 5.350% unsecured senior notes that mature in February 2033 (the ”2033 Senior Notes”). The 2033 Senior Notes were sold at an issue price of 98.903% of face value, before the underwriters’ discounts. Our net proceeds from the 2033 Senior Notes offering, after deducting underwriting discounts and expenses, were $342.5 million. We used the net proceeds to repay existing indebtedness. Interest on the 2033 Senior Notes is due semi-annually beginning in February 2026. The 2033 Senior Notes are subject to affirmative and negative covenants, including financial covenants. As of December 31, 2025 we were in compliance with these covenants.

Private Placement Notes - As of December 31, 2025, we had $100.0 million of principal amounts outstanding on our unsecured private placement notes. During the year ended December 31, 2025, we repaid $50.0 million of these notes upon maturity. The remainder of the private placement notes mature in January 2027 and have an annual interest rate of 4.51%.

Fannie Mae Term Loans - During the year ended December 31, 2025, we made the final repayment of $75.8 million, including accrued interest.

Debt Maturities - Reference Note 8 to the consolidated financial statements included in this Annual Report.

Credit Ratings - Moody’s Investors Services reaffirmed its credit rating and a senior unsecured debt rating of Baa3 and “Stable” outlook on NHI on September 21, 2025. Fitch Ratings reaffirmed its public issuer credit rating of BBB- and “Stable” outlook on NHI on April 16, 2025 and S&P Global reaffirmed its BBB- rating and “Stable” outlook on NHI on October 6, 2025. Our unsecured private placement notes agreements include a rate increase provision that is effective if any rating agency lowers our credit rating below investment grade and our compliance leverage increases to 50% or more. Any reduction in outlook or downgrade in our credit ratings from the rating agencies could negatively impact our costs of borrowings.

Debt Metrics - We believe that our fixed charge coverage ratio, which is the ratio of Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, excluding impairments of real estate properties and gains on dispositions) to fixed charges (interest expense at contractual rates, net of capitalized interest and principal payments on debt), and the ratio of consolidated net debt (debt less cash and cash equivalents) to Adjusted EBITDA are meaningful measures of our ability to service our debt. We use these two measures as a useful basis to compare the strength of our consolidated balance sheet with those of our peer group. We also believe our consolidated balance sheet gives us a competitive advantage when accessing debt markets.

Our fixed charge ratio was 5.3x for the year ended December 31, 2025. Reference the “Adjusted EBITDA” section below for a table showing the fixed charge ratio calculation. Giving effect to significant acquisitions, financing arrangements, dispositions and note payoffs on an annualized basis, our consolidated net debt to annualized Adjusted EBITDA ratio for the year ended December 31, 2025 was as follows ( $ in thousands ):

Consolidated Total Debt

Less: Cash and cash equivalents

Consolidated Net Debt

Adjusted EBITDA

Annualized impact of recent investments, dispositions and payoffs

Annualized Adjusted EBITDA

Consolidated Net Debt to Annualized Adjusted EBITDA

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Supplemental Guarantor Financial Information

The principal amounts due on each of our debt instruments outstanding as of December 31, 2025 are fully and unconditionally guaranteed on a senior unsecured basis by each of our subsidiaries, except for certain excluded subsidiaries (the “Guarantors”). The Guarantors are either owned or controlled by, or are affiliates of, us.

The following tables present summarized financial information NHI and the Guarantors, on a combined basis after eliminating (i) intercompany transactions and balances among the Guarantors and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor ($ in thousands) :

December 31,

Real estate properties, net

Other assets, net

Note receivable due from non-guarantor subsidiary

Total assets

Debt, net

Other liabilities

Total liabilities

Redeemable noncontrolling interest

Noncontrolling interests

Year Ended

December 31,

Revenues

Interest income on a note due from non-guarantor subsidiary

Expenses

Gains from equity method investment

Gains on sales of real estate properties, net

Other non-operating gains, net

Net income

Net income attributable to NHI and the subsidiary guarantors

Equity and Dividends

As of December 31, 2025, we had 48,302,944 shares of our common stock outstanding with a market value of $3.7 billion. We had $1.5 billion of total equity on our consolidated balance sheet as of December 31, 2025.

Dividends - Our Board of Directors approves a regular quarterly dividend which is reflective of expected taxable income on a recurring basis. Taxable income is determined in accordance with the Internal Revenue Code and differs from net income for financial statement purposes that has been determined in accordance with GAAP. Our Board of Directors has historically directed us towards maintaining a strong consolidated balance sheet. Therefore, we consider the competing interests of short-term and long-term debt interest rates, maturities and other terms versus the higher cost of new equity, and we accept some level of risk associated with leveraging our investments. We intend to continue to make new investments that meet our underwriting criteria and where the credit spread over our costs of equity and debt capital on a leverage neutral basis will generate sufficient returns to our stockholders. We do not expect to utilize borrowings to satisfy the payment of dividends and project that cash flows from operations will be adequate to fund dividends at the current rate.

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We intend to comply with REIT dividend requirements that require us to distribute at least 90% of our annual taxable income for the year ended December 31, 2025 and thereafter. Historically, we have distributed at least 100% of our annual taxable income. Dividends declared for the fourth quarter of each fiscal year that are paid by the end of the following January are treated for federal income tax purposes, with some exceptions, as having been paid in the fiscal year just ended as provided in Section 857(b)(9) of the Internal Revenue Code. To the extent a portion, or all of such dividend, exceeds our current year earnings and profits, the excess is treated as having been received in the year paid for federal income tax purposes.

A summary of our cash distributions paid to common stockholders for federal income tax purposes on a per share basis follows:

Year Ended December 31,

Ordinary income

Capital gains

Return of capital

Total cash distributions on a per share basis

Pursuant to Section 857(b)(9) of the Internal Revenue Code, the aggregate amount of cash distributions paid to common stockholders for federal income tax purposes is limited to our earnings and profits for the respective year. As a result, the $0.92 per share cash distribution paid by us on January 30, 2026 to stockholders of record as of December 31, 2025 was treated as received by our common stockholders on December 31, 2025 for federal income tax purposes up to the extent of our earnings and profits for the year ended December 31, 2025. The remainder of the $0.92 per share cash distribution received by our common stockholders was recognized in the year ending December 31, 2026 for federal income tax purposes.

During the years ended December 31, 2025, 2024 and 2023, we declared dividends of $3.64 per share, $3.60 per share and $3.60 per share, respectively. On February 17, 2026, the Board of Directors declared a $0.92 per share dividend payable on May 1, 2026 to common stockholders of record on March 31, 2026.

Shelf Registration Statement - We have an automatic shelf registration statement on file with the SEC that allows us to offer and sell to the public an unspecified amount of common stock, preferred stock, debt securities, warrants and/or units at prices and on terms to be announced when and if such securities are offered. The details of any future offerings, along with the use of proceeds from any securities offered, will be described in a prospectus supplement or other offering materials at the time of offering. Our shelf registration statement expires in March 2026.

Forward Equity Sales Agreements - During the year ended December 31, 2024, we entered into forward equity sales agreements with financial institutions to sell up to an aggregate of 2.8 million shares of common stock, at an initial forward sale price of $68.40 per share, pursuant to which the financial institutions borrowed and sold these shares of common stock in a public offering. We did not receive any proceeds from the sale of the shares of common stock by the forward purchasers at the time of the offering. The net forward sale price that we received upon physical settlement of the forward sales agreements is subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread and (ii) scheduled dividends during the term of the forward equity sales agreements.

During the year ended December 31, 2024, we partially settled the above forward equity sales agreements by issuing 1.8 million shares of our common stock at a forward price of $68.00 per share for net proceeds of $122.4 million. During the year ended December 31, 2025, we settled the remainder of the above forward equity sales agreements by issuing 1.0 million shares of our common stock at a forward price of $68.21 per share for 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 sales 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 are authorized to sell up to $500.0 million of our common stock.

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During the year ended December 31, 2024, we entered into an ATM forward sales agreement with a financial institution to sell shares of our common stock over a forward selling period to be completed by the end of the year. Pursuant to this agreement, we sold 1.0 million shares of our common stock on a forward basis at a weighted average price of $74.99 per share, net of sales agent fees, which totaled $74.2 million. In accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedges, Contracts in Entity’s Own Equity, we determined the ATM forward sales under this agreement did not qualify for equity classification on our consolidated balance sheet during the forward selling period. Accordingly, we recognized a $6.3 million gain on the forward sales agreement in our consolidated statement of income for the year ended December 31, 2024. We settled a portion of the ATM forward sales agreement during the year ended December 31, 2024 by issuing 0.3 million shares of our common stock for net proceeds of $20.0 million, or $75.22 per share.

During the year ended December 31, 2025, we entered into multiple ATM forward sales agreements with financial institutions to sell shares of our common stock. Pursuant to these agreements, we sold 1.5 million shares of our common stock on a forward basis at a weighted average price of $71.83 per share, net of sales agent fees, which totaled $107.2 million. These ATM forward sales agreements mature in the first and second quarters of 2026 and qualify for equity treatment in accordance with GAAP.

During the year ended December 31, 2025, we partially settled our outstanding ATM forward sales agreements by issuing 1.6 million shares of our common stock at a weighted average forward price of $73.75 for total consideration of $116.0 million, net of sales agent fees.

As of December 31, 2025, we had the ability to access 0.6 million shares of our common stock at a weighted average price of $69.23 per share, net of sales agent fees, under remaining active ATM forward sales agreements, which mature in the second quarter of 2026, and represent $44.5 million of undrawn net proceeds. As of December 31, 2025, we had the ability to access $315.8 million through the issuance of common stock under our ATM equity program.

We use ATM equity program proceeds to rebalance our leverage in response to our acquisitions activity which keeps our alternatives flexible for financing further growth of our business. We have historically used proceeds from the ATM equity program for general corporate purposes, which may include future acquisitions and repayment of indebtedness including borrowings under our Credit Facility. We view our ATM equity program as an effective way to match-fund our smaller acquisitions by exercising control over the timing and size of transactions and achieving a more favorable cost of capital as compared to larger follow-on offerings.

Material Cash Requirements

As of January 31, 2026, we had $29.7 million in cash and cash equivalents on hand and $356.0 million of availability under our Credit Facility. Our expected material cash requirements for the 12-months ending December 31, 2026 and thereafter consist of long-term debt maturities, interest payments on our debt and other contractually obligated expenditures. We expect to meet our short-term liquidity needs largely through cash generated from operations, borrowings under our Credit Facility, settlements of ATM forward sales agreements and proceeds from the sale of real estate properties, although we may choose to seek alternative sources of liquidity. Should we have additional liquidity needs, we believe that we could access long-term financing in the debt and equity capital markets.

We believe our current liquidity position, supplemented by our ability to generate positive cash flows from operations in the future, and our low net leverage will be sufficient to meet all of our short-term and long-term financial commitments.

Contractual Obligations and Contingent Liabilities

A summary of our contractual obligations as of December 31, 2025 follows ($ in thousands) :

Less than

More than

Total

1 Year

1 - 3 Years

3 - 5 Years

5 Years

Debt, including interest 1

Loan commitments

Development commitments

Total contractual obligations

1     Interest was calculated based on the weighted average interest rate on the principal amounts outstanding on our debt as of December 31, 2025. The calculation also includes a facility fee of 0.25%.

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A summary of our loan commitments as of December 31, 2025 follows ( $ in thousands ):

Asset

Type of

Total

Class

Commitment

Commitments

Funded

Remaining

Carriage Crossing Senior Living

Bloomington 1

SHO

Mortgage

Encore Senior Living

SHO

Construction Loan

Mainstay Healthcare

SHO

Revolving Credit

Montecito Medical Real Estate

MOB

Mezzanine Loan

Senior Living

SHO

Revolving Credit

Senior Living Hospitality Group 2

SHO

Working Capital

The Sanders Trust, LLC

HOSP

Construction Loan

Timber Ridge OpCo

SHO

Working Capital

Vizion Health

SHO

Mezzanine Loan

Total loan commitments

1      Funding is contingent upon the operating performance of the respective facility.

2     This operator was formerly referred to as Watermark Retirement.

As of December 31, 2025, the total credit loss liabilities established for our unfunded loan commitments were $0.2 million. We estimate the amounts we expect to fund using the same methodology as the one applied to provide for credit loss reserves on our mortgage and other notes receivable.

A summary of our outstanding development commitments as of December 31, 2025 follows ( $ in thousands ):

Asset

Type of

Total

Class

Commitment

Commitments

Funded

Remaining

Bickford

SHO

Renovation

Juniper Communities, LLC

SHO

Renovation

Mainstay Healthcare

SHO

Renovation

Navion Senior Solutions

SHO

Renovation

Senior Living

SHO

Renovation

Spring Arbor

SHO

Renovation

William James Group, LLC

SHO

Renovation

Total development commitments

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A summary of our outstanding contingency commitments as of December 31, 2025 follows ( $ in thousands ):

Asset

Type of

Total

Class

Contingency

Commitments

Funded

Remaining

Acquisition

Compass Senior Living

SHO

consideration

Lease

IntegraCare

SHO

inducement

Lease

Navion Senior Solutions

SHO

inducement

Lease

Spring Arbor

SHO

inducement

Total contingency commitments

Capital Funding Commitments

Capital expenditures in our Real Estate Investments segment primarily relate to new investments of real estate properties. Our tenant leases typically require the tenant to pay property taxes and insurance, repairs and maintenance costs and a minimum amount of capital expenditures each year. As a result, we do not expect to incur material capital expenditures on our existing properties in the Real Estate Investments segment during the year ending December 31, 2026.

Capital expenditures in our SHOP segment primarily relate to improvements made in our senior housing communities. During the year ending December 31, 2026, we expect to fund approximately $18.4 million of capital expenditures related to existing properties in our SHOP segment from our operating cash flows and other existing liquidity sources.

We expect the capital expenditures of our consolidated partnerships will be funded from the NOI of the respective consolidated partnership and additional capital contributions from the respective partners.

Litigation

From time to time, we are party to various lawsuits, investigations, claims and other legal and regulatory proceedings arising in connection with our business. Such claims may include, among other things, professional and general liability claims, as well as regulatory proceedings related to our SHOP segment. Further, from time to time, we are party to certain legal proceedings for which third parties, such as our tenants, managers and borrowers, are contractually obligated to indemnify us from and against various claims, litigation and liabilities arising in connection with their respective businesses. 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.

Non-GAAP Financial Measures

The supplemental performance measures described below may not be comparable to similarly titled measures used by other REITs. Consequently, our funds from operations (“FFO”), Normalized FFO and Normalized Funds Available for Distribution (“FAD”) may not provide a meaningful measure of our performance as compared to that of other REITs. Since other REITs may not use our definition of these performance measures, caution should be exercised when comparing our FFO, Normalized FFO and Normalized FAD to that of other REITs. These performance measures do not represent cash generated from operating activities in accordance with GAAP as they exclude the changes in operating assets and liabilities, and therefore should not be considered an alternative to net income as an indication of our performance or as an alternative to net cash flows from operating activities as determined in accordance with GAAP as a measure of our liquidity, and are not necessarily indicative of cash available to fund cash needs.

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Funds From Operations - FFO

Our FFO per diluted share for the year ended December 31, 2025 increased $0.10 per share, or 2.2%, as compared to the year ended December 31, 2024 primarily due to new investments completed since January 1, 2024, partially offset by dispositions of real estate properties since January 1, 2024. FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and applied by us, is calculated using the two-class method with net income allocated to common stockholders and holders of unvested restricted stock awards by applying the respective weighted average shares outstanding during each period. The calculation of FFO begins with net income attributable to common stockholders (computed in accordance with GAAP) and excludes gains or losses on sales of real estate properties, impairments of real estate properties, and real estate depreciation and amortization after adjusting for unconsolidated partnerships and joint ventures, if any. FFO per diluted share attributable to common stockholders assumes the exercise of stock options and other potentially dilutive securities.

Our Normalized FFO per diluted share for the year ended December 31, 2025 increased $0.47 per share, or 10.7%, compared to the year ended December 31, 2024 primarily due to $12.4 million of non-cash write-offs of straight-line rents receivable related to the Discovery lease terminations in the year ended December 31, 2025 and $6.3 million of gains on forward equity sales agreements, net, in the year ended December 31, 2024. Normalized FFO excludes from FFO certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FFO for the current period to similar prior periods, and may include, but are not limited to including, impairments of non-real estate assets, gains or losses attributable to the acquisition and disposition of non-real estate assets and liabilities, and recoveries of previous write-downs.

FFO and Normalized FFO are important supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the realizable value of real estate assets diminishes predictably over time. Since real estate asset values instead have historically risen and fallen with market conditions, presentation of operating results for a REIT that uses historical cost accounting for depreciation could be less informative and should be supplemented with a performance measure such as FFO. The term FFO was designed by the REIT industry to address this issue.

Funds Available for Distribution - FAD

Our Normalized FAD for the year ended December 31, 2025 increased $27.9 million, or 13.7%, compared to the year ended December 31, 2024. In addition to the adjustments made to net income attributable to common stockholders that are included in the calculation of Normalized FFO, Normalized FAD excludes the impact of straight-line rent revenue adjustments and the amortization of debt issuance costs and discounts. We also adjust Normalized FAD for the net change in our credit loss reserves, non-cash share-based compensation expense, SHOP capital expenditures, as well as certain non-cash items related to our equity method investment, such as straight-line lease expense and amortization of purchase accounting adjustments. Normalized FAD for the year ended December 31, 2025 includes an adjustment for transaction costs incurred related to a large SHOP transaction that did not materialize. Approximately $0.6 million of this adjustment related to amounts that were capitalized in other assets, net, on our consolidated balance sheet as of December 31, 2024.

Normalized FAD is an important supplemental performance measure for a REIT and a useful measure of liquidity as an indicator of our ability to distribute dividends to our stockholders. GAAP requires a lessor to recognize contractual lease payments as income on a straight-line basis over the expected term of the lease. This straight-line rent adjustment has the effect of reporting rental income that is significantly more or less than the contractual cash flows received pursuant to the terms of our lease agreements. GAAP also requires any discount or premium related to indebtedness and debt issuance costs to be amortized as non-cash adjustments to earnings.

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The following table reconciles our net income attributable to common stockholders, the most directly comparable GAAP financial measure, to NAREIT FFO, Normalized FFO and Normalized FAD and provides supplemental information on basic and diluted earnings per share using these metrics ($ in thousands, except per share amounts) :

Year Ended December 31,

Net income attributable to common stockholders

Elimination of certain non-cash items in net income:

Real estate depreciation and amortization

Real estate depreciation related to noncontrolling interests

Gains on sales of real estate properties, net

Impairments of real estate properties

NAREIT FFO attributable to common stockholders

Non-cash write-offs of straight-line rents receivable

Non-cash rental income related to operations

transfers upon early lease terminations

Other non-cash rental income

Proxy contest and related expenses

Gains on forward equity sales agreements, net

Loss on early retirement of debt

Gains on operations transfers, net

Normalized FFO attributable to common stockholders

Straight-line rent revenue adjustments

Straight-line rent revenue adjustments related to noncontrolling interests

Amortization of lease incentives

Amortization of lease incentives related to noncontrolling interests

Non-real estate depreciation

Non-real estate depreciation related to noncontrolling interests

Amortization of debt discount

Amortization of debt issuance costs

Adjustments related to equity method investment, net

Gains from equity method investment

Equity method investment capital expenditures

SHOP recurring capital expenditures

SHOP recurring capital expenditures related to noncontrolling interests

Equity method investment non-refundable fees received

Notes receivable credit (benefit) loss expense

Non-cash share-based compensation expense

Transaction costs

Normalized FAD attributable to common stockholders

Basic:

Weighted average common shares outstanding

NAREIT FFO attributable to common stockholders per share

Normalized FFO attributable to common stockholders per share

Diluted:

Weighted average common shares outstanding

NAREIT FFO attributable to common stockholders per share

Normalized FFO attributable to common stockholders per share

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Adjusted EBITDA

We consider Adjusted EBITDA to be an important supplemental financial measure because it provides information which we use to evaluate our performance and serves as an indication of our ability to service debt. We define Adjusted EBITDA as consolidated earnings before interest, income taxes, depreciation and amortization, excluding impairments of real estate properties and gains on dispositions and certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing Adjusted EBITDA for the current period to similar prior periods. These items include, but are not limited to, impairments of non-real estate assets, gains or losses on disposition of assets and liabilities, and recoveries of previous write-downs on mortgages and other notes. Adjusted EBITDA also includes our proportionate share of an unconsolidated equity method investment presented on a similar basis. Since others may not use our definition of Adjusted EBITDA, caution should be exercised when comparing our Adjusted EBITDA to that of other companies. Adjusted EBITDA reflect GAAP interest expense, which excludes amounts capitalized during the period.

The following table reconciles our net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA ( $ in thousands ):

Year Ended December 31,

Net income

Depreciation and amortization

Interest

Franchise, excise and other taxes

Write-offs of straight-line rents receivable

Non-cash rental income related to operations

transfers upon early lease terminations

Notes receivable credit (benefit) loss expense

Gains on sales of real estate properties, net

Loss on early retirement of debt

Gains on forward equity sales agreements, net

Other non-cash rental income

Write-offs of transaction costs

Gains on operations transfers, net

NHI’s share of EBITDA adjustments for

unconsolidated subsidiaries

Impairments of real estate properties

Adjusted EBITDA

Interest expense at contractual rates 1

Principal payments on debt, excluding

balloon payments

Fixed charges

Fixed charge coverage

1     Interest expense at contractual rates includes capitalized interest in the table above.

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Net Operating Income

NOI is a non-GAAP supplemental financial measure used to evaluate the operating performance of real estate. We define NOI as total revenues, less tenant reimbursements and property operating expenses. We believe NOI provides investors relevant and useful information as it measures the operating performance of real estate assets at the property level on an unleveraged basis. We use NOI to make decisions about resource allocations to our segments and to assess the property level performance of our investment portfolios.

The following table reconciles our net income, the most directly comparable GAAP financial measure, to NOI ( $ in thousands ):

Year Ended December 31,

Net income

Depreciation and amortization

Interest expense

Legal expense

Franchise, excise and other taxes

General and administrative expenses

Proxy contest and related expenses

Loan and realty (gains) losses, net

Gains on sales of real estate properties, net

Gains from equity method investment

Gains on forward equity sales agreements, net

Loss on early retirement of debt

Gains on operations transfers, net

Other income

NOI

The following table provides a summary of our NOI by segment ($ in thousands) :

Year Ended December 31,

Real Estate Investments segment

SHOP segment

Non-segment / corporate

Total NOI

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