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Investment Activity | 6 Months Ended
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Jun. 30, 2025
Real Estate [Abstract] |
Investment Activity | Investment Activity Asset Acquisitions During the six months ended June 30, 2025, we completed the following real estate acquisitions within our Real Estate Investments segment ($ in thousands):
|  |  |  | Number of |  | Asset |  |  |  | Buildings and |  |
Operator |  | Period |  | Properties |  | Class |  | Land |  | Improvements |  | Total
Generations, LLC |  | Q1 2025 |  | 1 |  | SLC |  | $ | 3,062 |  |  | $ | 18,138 |  |  | $ | 21,200 |
Mainstay Healthcare 1 |  | Q1 2025 |  | 1 |  | ALF |  | 2,864 |  |  | 5,736 |  |  | 8,600 |
Juniper Communities, LLC |  | Q1 2025 |  | 1 |  | ALF |  | 4,154 |  |  | 42,130 |  |  | 46,284 |
Agemark Senior Living |  | Q2 2025 |  | 6 |  | ALF |  | 7,461 |  |  | 56,039 |  |  | 63,500 |
|  |  |  |  |  |  |  | $ | 17,541 |  |  | $ | 122,043 |  |  | $ | 139,584 |
1 This property was acquired in a deed in lieu of foreclosure transaction with Senior Living Management to satisfy the repayment of its $10.0 million mortgage with us. See “Cash Basis Tenants” below. In January 2025, we acquired a 108-unit assisted living and memory care community in Montrose, Colorado. The acquisition price was $21.2 million, including $0.2 million in closing costs. The property is leased pursuant to a 10-year triple-net lease, which includes two five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%. In March 2025, we acquired a 120-unit assisted living and memory care community in Bergen County, New Jersey. The acquisition price was $46.3 million, including $0.3 million in closing costs. The property is leased pursuant to a 15-year triple-net lease, which includes two five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%. The lease includes a $0.8 million capital improvement commitment, which will be added to the respective lease base, if funded. In April 2025, we acquired a portfolio of six memory care communities located in Nebraska for a total purchase price of $63.5 million, including $0.3 million in closing costs. The portfolio of properties is leased pursuant to a 15-year triple-net master lease, which includes two five-year extension options and has an initial lease rate of 8.0% with fixed annual escalators of 2.0%. Third Quarter 2025 Activity Effective August 1, 2025, we entered into a lease termination agreement for our triple-net master lease with related parties of Discovery for a portfolio of six senior housing properties held in the consolidated real estate partnership with a related party of Discovery, which requires the Discovery tenant to pay us approximately $3.3 million. We recorded a $9.0 million write off of the related straight-line rent receivable in the third quarter of 2025. Additionally, on August 1, 2025, we purchased the remaining 2.0% noncontrolling equity interest in the real estate partnership for a nominal amount. Concurrently with the activities above, we transitioned this portfolio from our Real Estate Investments segment into our SHOP segment. Reference Note 5 for additional information. The aggregate net carrying value of these real estate properties was $125.7 million on our condensed consolidated balance sheet as of June 30, 2025. We recognized rental income of $1.2 million and $2.8 million during the three and six months ended June 30, 2025, respectively, and $1.5 million and $3.1 million during the three and six months ended June 30, 2024, respectively, in our condensed consolidated statements of income related to this triple-net master lease. Also, effective August 1, 2025, we terminated a triple-net lease with an affiliate of Discovery for an ILF in Tulsa, Oklahoma. We recorded a $3.2 million write off of the related straight-line rent receivable in the third quarter of 2025. Concurrently with the termination, we transitioned this property from our Real Estate Investments segment to the existing Discovery member SHOP venture in our SHOP segment. Reference Note 5 for additional information. As of June 30, 2025, the net carrying value of this property was $28.0 million on our condensed consolidated balance sheet. We recognized rental income of $0.7 million and $1.4 million during the three and six months ended June 30, 2025, respectively, and $0.7 million and $1.4 million during the three and six months ended June 30, 2024, respectively, in our condensed consolidated statements of income related to this triple-net lease. Impairment of Long-Lived Assets During the three and six months ended June 30, 2025, we did not recognize any impairment charges. During each of the three and six months ended June 30, 2024, we recognized an impairment charge of $0.7 million on one property in our Real Estate Investments segment, which was reclassified to assets held for sale in the second quarter of 2024. This property was subsequently sold in the fourth quarter of 2024. We reduce the carrying value of an impaired real estate property to its estimated fair value or, with respect to properties classified as assets held for sale, to its estimated fair value less cost to sell. To estimate the fair value of a property, we utilize a market approach which considers binding agreements for sales of similar properties (Level 1 inputs), non-binding offers to purchase the property from unrelated third parties, broker quotes of estimated fair value (Level 3 inputs), and / or third-party valuations of the property (Level 3 inputs). Tenant Purchase and Sale Agreement We lease a senior living community that is subject to an outstanding purchase and sale agreement for the tenant to acquire the property for approximately $39.0 million. The purchase and sale agreement, as amended, expires in October 2025. The property was classified as a held and used asset on our condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. During each of the three and six months ended June 30, 2025 and 2024, we recognized $0.7 million and $1.4 million, respectively, of rental income related to the existing triple-net lease at this property, which expires in July 2027. The property will be reclassified to assets held for sale when the sale becomes probable, including when the tenant demonstrates its ability to obtain sufficient financing to close on the sale of the property within the terms of the purchase and sale agreement. As of June 30, 2025, the net carrying value of this real estate property was $18.8 million on our condensed consolidated balance sheet. Tenant Concentrations The following table presents information related to concentrations of tenants, or affiliates of tenants, in our Real Estate Investments segment that exceed 10% of our consolidated revenues, excluding $2.6 million for our corporate office, a credit loss reserve of $17.5 million and $360.8 million in real estate assets in the SHOP segment ($ in thousands):
|  |  |  |  |  |  | Six Months Ended June 30,
| June 30, 2025 |  | 2025 |  | 2024
| Asset |  | Real Estate |  | Mortgages |  |  |  | % of |  |  |  | % of
| Class |  | Properties |  | and Notes |  | Revenues 1 |  | Total |  | Revenues 1 |  | Total
Senior Living Communities, LLC |  |  |  |  |  |  |  |  |  |  |  |  |
(“Senior Living”) | EFC |  | $ | 577,865 |  |  | $ | 46,700 |  |  | $ | 27,447 |  |  | 15% |  | $ | 26,406 |  |  | 16%
Bickford Senior Living (“Bickford”) | ALF |  | 429,495 |  |  | 16,017 |  |  | 21,318 |  |  | 12% |  | 20,691 |  |  | 12%
National HealthCare Corporation (“NHC”) | SNF |  | 133,770 |  |  | — |  |  | 20,614 |  |  | 11% |  | 20,836 |  |  | 13%
All others, net | Various |  | 1,593,255 |  |  | 207,687 |  |  | 76,622 |  |  | 43% |  | 66,369 |  |  | 40%
Escrow funds received from tenants for |  |  |  |  |  |  |  |  |  |  |  |  |
property operating expenses | Various |  | — |  |  | — |  |  | 5,801 |  |  | 3% |  | 5,535 |  |  | 3%
Total tenant concentrations |  |  | $ | 2,734,385 |  |  | $ | 270,404 |  |  | 151,802 |  |  | 84% |  | 139,837 |  |  | 84%
Resident fees and services 2 |  |  |  |  |  |  | 28,156 |  |  | 16% |  | 26,645 |  |  | 16%
Total revenues |  |  |  |  |  |  | $ | 179,958 |  |  | 100% |  | $ | 166,482 |  |  | 100%
1 Amounts include interest income from mortgage and other notes receivable and rental income from real estate properties classified as assets held for sale. 2 There are no tenant concentration in revenues from resident fees and services because the related agreements are with individual residents. As of June 30, 2025, our real estate properties in South Carolina represented 11.0% of real estate properties, net, on our condensed consolidated balance sheet. There were no other states that had a real estate investment concentration of 10% or greater as of this date. Senior Living As of June 30, 2025, we leased ten retirement communities to Senior Living. We recognized straight-line rent revenue of $(0.4) million and $(0.5) million from Senior Living for the six months ended June 30, 2025 and 2024, respectively. Bickford As of June 30, 2025, we leased 38 facilities to Bickford under four master leases. Bickford has been on the cash basis of revenue recognition since the second quarter of 2022 based upon information we obtained from Bickford regarding its financial condition that has raised substantial doubt as to its ability to continue as a going concern. During the three and six months ended June 30, 2025, Bickford repaid $1.2 million and $2.5 million, respectively, of its outstanding rent deferrals, which primarily related to past due payments during the COVID-19 pandemic. During the three and six months ended June 30, 2024, Bickford repaid $1.3 million and $2.8 million, respectively, of its outstanding rent deferrals. As of June 30, 2025, Bickford’s outstanding rent deferrals totaled $10.4 million. NHC As of June 30, 2025, we leased three ILFs and 32 SNFs to NHC, a publicly held company, under a master lease. Four of these properties are subleased to other third parties for whom the lease payments are guaranteed to us by NHC. We recognized straight-line rent revenue of $0.3 million and $0.1 million from NHC for the six months ended June 30, 2025 and 2024, respectively. Under the terms of the master lease with NHC, rent escalates by 4.0% of the increase, if any, in each of the facility’s annual revenue over a base year and is referred to as “percentage rent.” The following table summarizes our percentage rental income from NHC ($ in thousands):
| Six Months Ended
| June 30,
| 2025 |  | 2024
Current year | $ | 3,237 |  |  | $ | 2,759 |
Prior year final certifications 1 | 956 |  |  | 1,656 |
Total percentage rental income | $ | 4,193 |  |  | $ | 4,415 |
1 For purposes of the percentage rent calculation described in the master lease agreement, NHC’s annual revenue by facility for a given year is certified to us by March 31 st of the following year. One of the members of our board of directors is also a member of NHC’s board of directors. Cash Basis Tenants We had two tenants, including Bickford, on the cash basis of accounting for revenue recognition during the three and six months ended June 30, 2025 for their leasing arrangements with us based on our assessment of each tenant’s ability to satisfy its contractual obligations under the terms of the respective lease. During the three and six months ended June 30, 2024, we had three tenants, including Bickford, on the cash basis of accounting for revenue recognition related to their leasing arrangements with us. Lease payments received from cash basis tenants were as follows ($ in thousands):
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Bickford | $ | 9,993 |  |  | $ | 9,946 |  |  | $ | 19,977 |  |  | $ | 19,310 |
All others | 1,482 |  |  | 5,142 |  |  | 2,962 |  |  | 7,544 |
Total | $ | 11,475 |  |  | $ | 15,088 |  |  | $ | 22,939 |  |  | $ | 26,854 |
Senior Living Management Senior Living Management (“SLM”) was a cash basis tenant from 2022 until January 1, 2025 when the remaining two properties leased to SLM were transitioned to a new operator who had been serving as the interim manager of the properties. Concurrently with this transaction, we executed a 15-year triple-net master lease with the new operator, which includes two five-year extension options. This master lease has approximately $1.1 million in initial annual contractual lease payments with fixed annual escalators of 2.0%. In February 2025, we acquired an assisted living facility in Oviedo, Florida upon the execution of a deed in lieu of foreclosure agreement in settlement of a $10.0 million non-performing mortgage due from SLM. We recorded the acquired real estate property at its estimated fair value of $8.6 million, which represented the net carrying value of the mortgage at the closing of the deed in lieu of foreclosure transaction. Concurrently, we executed a new lease of the acquired property with the operator who was serving as the interim manager of the property. This lease has approximately $0.7 million in annual contractual lease payments. Tenant Purchase Options Certain of our leases contain purchase options allowing tenants to acquire the leased properties at a fixed base price, a fixed base price plus a specified share in any appreciation of the property or a fixed minimum internal rate of return on our investment. As of June 30, 2025, tenants had purchase options on four of our properties, representing an aggregate net carrying value of $76.0 million, which have individual exercise dates between 2028 and 2031. Rental income from these properties with tenant purchase options totaled $2.5 million and $5.0 million for the three and six months ended June 30, 2025, respectively, and $2.0 million and $3.8 million for the three and six months ended June 30, 2024, respectively. We cannot reasonably estimate at this time the probability that any purchase options will be exercised in the future. Consideration to be received from the exercise of any tenant purchase option is expected to exceed the respective net carrying values of the properties at the time of sale. Future Minimum Lease Payments The fixed amounts of future minimum lease payments due to us under our existing tenant leases as of June 30, 2025 were as follows ($ in thousands):
Remainder of 2025 | $ | 131,619 |
2026 | 269,241 |
2027 | 220,143 |
2028 | 215,015 |
2029 | 206,183 |
2030 | 197,456 |
Thereafter | 779,528 |
Total | $ | 2,019,185 |
Variable Lease Payments Most of our leases contain annual rent escalators. Some of our leases contain rent escalators that are determined annually based on a variable index or other factors that are indeterminable at the inception of the lease. The following table summarizes our rental income based on fixed and variable rent escalators ($ in thousands):
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Lease payments based on fixed escalators | $ | 64,286 |  |  | $ | 60,110 |  |  | $ | 125,976 |  |  | $ | 116,702 |
Lease payments based on variable escalators | 2,761 |  |  | 2,358 |  |  | 6,365 |  |  | 6,251 |
Straight-line rent, net of write-offs | 1,034 |  |  | 1,213 |  |  | 2,444 |  |  | 905 |
Escrow funds received from tenants for |  |  |  |  |  |  |
property operating expenses | 2,914 |  |  | 2,802 |  |  | 5,801 |  |  | 5,535 |
Amortization of lease incentives | (725) |  |  | (723) |  |  | (1,450) |  |  | (1,446) |
Total rental income | $ | 70,270 |  |  | $ | 65,760 |  |  | $ | 139,136 |  |  | $ | 127,947 |

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