Mortgage and Other Notes Receivable

9 Months Ended

Sep. 30, 2025

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

We enter into financing arrangements with our tenants, operators and other third parties primarily for construction, renovation and expansion projects, funding of working capital or other corporate needs and the acquisition of real estate properties. These investments are primarily secured loans guaranteed by significant parties to the notes or by cross-collateralization of properties with the same owner. Mortgage and other notes receivable are included in the Real Estate Investments segment. As of September 30, 2025, the principal amounts of our mortgage notes totaled $158.4 million and the principal amounts of our other notes, primarily mezzanine loans, totaled $66.2 million. As of December 31, 2024, the principal amounts of our mortgages and other notes totaled $175.8 million and $113.4 million, respectively. We had credit loss reserves of $15.4 million and $20.2 million as of September 30, 2025 and December 31, 2024, respectively, on these investments.

Non-Performing Notes

As of September 30, 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. As of December 31, 2024, the principal amount due to us on the SLM mezzanine loan was $14.5 million and the principal amount due to us on the Bickford loan was $1.4 million. Reference the “Senior Living Management” section in Note 3 for additional information on the $10.0 million SLM mortgage note settlement in February 2025 which was also a non-performing note at December 31, 2024.

Interest income recognized on a cash basis from non-performing notes was $0.1 million during both the three and nine months ended September 30, 2025 and $0.3 million and $1.3 million during the three and nine months ended September 30, 2024, respectively. Credit loss reserves related to non-performing notes totaled $13.3 million and $16.1 million as of September 30, 2025 and December 31, 2024, respectively.

Senior Living Management Loans

As previously discussed, we acquired a property in Florida in connection with a deed in lieu of foreclosure agreement initiated by SLM to settle its non-performing mortgage note in February 2025. Reference the “Senior Living Management” section in Note 3.

In May 2025, we received $2.5 million as a partial repayment of the unsecured mezzanine loan due from SLM that is classified as non-performing. This repayment resulted in a $1.3 million reduction of the credit loss reserve and related credit loss expense on this loan in the second quarter of 2025. As of September 30, 2025, the remaining principal amount outstanding on this loan was $12.0 million, which is fully covered by the related credit loss reserve.

Vizion Health Loan Amendment

In March 2025, we amended a mezzanine loan agreement with affiliates of Vizion Health to provide for 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 of each year. As of September 30, 2025, the principal amount outstanding on the loan was $17.2 million and the 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 and memory care facility 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 September 30, 2025, the principal amount outstanding on this construction loan was $2.8 million.

Montecito Medical Real Estate Loan

As of September 30, 2025, the principal amount outstanding on the loan was $6.6 million, which relates to four medical office buildings (“MOB”) with a combined purchase price of approximately $48.3 million. During the three and nine months ended September 30, 2025, we recognized interest income of $0.5 million and $1.2 million, respectively, related to this loan. During the three and nine months ended September 30, 2024, we recognized interest income of $0.4 million and $1.4 million, respectively.

Bickford Construction Loan and Mortgage Note

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

As of September 30, 2025, we held an $11.9 million second mortgage note as a component of the purchase price consideration in connection with the sale of six properties to Bickford in 2021. This second mortgage note bears a 10.0% annual interest rate and matures in April 2026. We did not include this note receivable in the determination of the initial gain recognized on the sale of this portfolio of six properties and this mortgage note is not reflected in mortgage and other notes receivable, net, on the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. During the three and nine months ended September 30, 2025, we recognized interest income related to this mortgage note of $0.3 million and $0.9 million, respectively. During the three and nine months ended September 30, 2024, we recognized interest income related to this mortgage note of $0.3 million and $1.0 million, respectively. Bickford repaid $0.1 million and $0.3 million on this mortgage note during the three and nine months ended September 30, 2025, respectively, which was included in gains on sales of real estate properties, net, in our condensed consolidated statements of income.

Senior Living Loans

We provided a $15.0 million revolving line of credit to Senior Living which is available for working capital needs and to finance construction projects within Senior Living’s portfolio, including projects to build additional units at existing facilities. The revolving line of credit matures in December 2031 concurrent with the maturity of the Senior Living leases. As of September 30, 2025, the outstanding balance on the Senior Living revolving line of credit was $6.8 million and the interest rate was 8.0%.

As of September 30, 2025, we had a $32.7 million mortgage due from Senior Living related to a 251-unit CCRC in South Carolina. As previously discussed, in October 2025, the outstanding principal on this mortgage note was applied to the consideration paid when we acquired this property. Concurrently with this acquisition, we executed a triple-net lease with Senior Living and provided a new $1.5 million revolving line of credit which bears an initial annual interest rate of 8.25%. Reference the “Fourth Quarter 2025 Acquisitions” section in Note 3 for additional information.

Credit Loss Reserves

Our principal measures of credit quality, except for construction loans, are debt service coverage for amortizing loans and interest or fixed charge coverage for non-amortizing loans (collectively, “Coverage”). A Coverage ratio provides a measure of the borrower’s ability to make scheduled principal and interest payments. The Coverage ratios presented in the table below have been calculated utilizing the most recent date for which data is available, June 30, 2025, using EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) and the requisite debt service, interest service or fixed charges, as defined in the applicable loan agreement. We categorize Coverage into three levels: (i) more than 1.5x, (ii) between 1.0x and 1.5x, and (iii) less than 1.0x. We update our calculations of Coverage on a quarterly basis. Coverage is not a meaningful credit quality indicator for construction loans as these developments are typically not generating any operating income, or they have insufficient operating income because occupancy levels necessary to stabilize the properties have not yet been achieved. We measure credit quality for these mortgages by considering the construction and stabilization timelines and the financial condition of the borrower, as well as economic and market conditions. We consider the guidance in ASC 310-20, Receivables - Nonrefundable Fees and Other Costs, when determining whether a modification, extension or renewal constitutes a current period origination.

The following table summarizes the credit quality indicators related to the principal amounts due to us from mortgage and other notes receivable as of September 30, 2025 ($ in thousands):


	Year of Loan Origination
											Prior
	2025		2024		2023		2022		2021		Years		Total
Mortgages notes:
More than 1.5x	$	2,542	$	58,192	$	725	$	14,741	$	—	$	32,700	$	108,900
Between 1.0x and 1.5x	—		—		—		28,380		—		14,700		43,080
Less than 1.0x	—		—		—		—		—		6,423		6,423

	2,542		58,192		725		43,121		—		53,823		158,403
Mezzanine loans:
More than 1.5x	—		—		543		—		20,282		—		20,825
Between 1.0x and 1.5x	1,632		—		—		—		6,650		—		8,282
Less than 1.0x	—		—		237		—		—		12,500		12,737

	1,632		—		780		—		26,932		12,500		41,844
Non-performing notes:

Between 1.0x and 1.5x	—		1,289		—		—		—		—		1,289
Less than 1.0x	—		—		—		—		—		12,000		12,000
	—		1,289		—		—		—		12,000		13,289
Revolving lines of credit:
More than 1.5x													11,076



Credit loss reserves													(15,443)
Total mortgage and other notes
receivable, net													$	209,169

Our methodology for estimating credit loss reserves on non-performing notes incorporates considerations of the sufficiency of the underlying collateral, current economic conditions and forecasts of future economic conditions that may impact the collectability of these loans, including qualitative factors, which may differ from conditions existing in the historical periods. Due to the continuing challenges in the U.S. financial markets and the potential impact on the collectability of our mortgage and other notes receivable, we forecasted a 20% increase in the probability of a default and a 20% increase in the amount of estimated loss from a default on all loans, other than those designated as non-performing notes, resulting in an effective adjustment of 4.5% as of September 30, 2025.

The following table provides a summary of the changes in our credit loss reserves for the nine months ended September 30, 2025 ($ in thousands):


Balance at December 31, 2024	$	20,249
Provision for credit losses, net of recoveries	(3,406)
Write-offs	(1,400)

Balance at September 30, 2025	$	15,443