CTRE 10-K & 10-Q changes, risk factors and insider trading
CareTrust REIT, Inc. · NYSE · Real Estate Investment Trusts · CIK 1590717 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are dependent on the ability of our third party managers to successfully manage and operate our SHOP communities.”
New heading “The intended benefits of the Care REIT acquisition may not be realized.”
New heading “We will be subject to additional risks from our investment in Care REIT and any other international investments.”
New heading “We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition.”
New heading “Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.”
New heading “We may be affected by unfavorable resolution of litigation or disputes and rising liability and insurance costs as a result thereof or other market factors.”
New heading “The lease of qualified healthcare properties to a TRS is subject to special requirements.”
New heading “Certain subsidiaries might fail to qualify or remain qualified as a REIT”
New heading “Changes in international U.S. or non-U.S. tax laws, including changes to tax rates, may adversely affect our results of operations.”
Largest changes
“Under the REIT tax rules, the senior housing communities in our SHOP platform that are “qualified healthcare properties” generally must be operated and managed for us by third party managers and we have limited rights to direct or influence the business or operations of those communities. …”see in full comparison
see in full comparisonWe andWe, ourtenantstenants, managers, and borrowers are subject to HIPAA and various other state and federallawslaws, as well as contractual obligations, that relate to privacy and data security, including the reporting of data breaches involving personal information as discussed in “Government Regulation, Licensing and Enforcement-— Privacy, Security and Data Breach Notification Laws” in Item 1 of this Annual Report on Form 10-K. Failure byus orus, ourtenantstenants, managers, and borrowers to comply with these requirements could have a material adverse effect on us andthecouldabilityresult in enforcement actions, investigations, imposition of fines, or civil or criminal penalties. The imposition of significant fines or penalties on our tenantsandor borrowers could have a material adverse effect on their ability to meet their obligations to us. Furthermore, the adoption of new privacy, security and data breach notification laws at the federal and state level could require us or ourtenantstenants, managers, and borrowers to incur significant compliance costs. In addition, the cost and operational consequences of responding to data breaches and implementing remediation measures could be significant.
“We may be affected by unfavorable resolution of litigation or disputes and rising liability and insurance costs as a result thereof or other market factors.”see in full comparison
“For our SHOP communities, we generally rely on our third party managers’ personnel, expertise, technical resources and information systems, risk management processes, proprietary information, good faith and judgment to manage the senior housing communities’ operations efficiently and effectively. …”see in full comparison
“Furthermore, with respect to our SHOP communities, we generally directly bear the costs of any such increases in litigation, monitoring, reporting, and insurance due to our direct exposure to the cash flows of such properties. We are responsible for these claims, litigation, and liabilities, with limited indemnification rights against the managers, which are typically based on the gross negligence or willful misconduct by the operator. …”see in full comparison
“Even when a tenant is obligated to indemnify us for liability incurred as a result of a lawsuit pursuant to the terms of its agreement with us, the tenant may fail to satisfy those obligations and, in such event, we would have to incur the costs that should have been covered by the tenant and determine whether to expend additional resources to seek the contractually owed indemnity from that tenant, including potentially through litigation or arbitration. …”see in full comparison
Full comparison: every changed paragraph (97)
Because allthe majority of the properties we own are operated by our tenants pursuant to triple-net master leases (including properties we own in consolidated joint ventures), we are unable to directly implement strategic business decisions regarding the daily operation and marketing of these properties. While we have rights as the property owner under our triple-net leases and monitor the performance of our tenants’ and operators’ performance,tenants, we may have limited recourse under our master leases and other agreements if we believe that aone tenantof or operatorthem is not performing adequately, and any failure by a tenantthem to effectively conduct its operations or to maintain and improve our properties could adversely affect itstheir business reputation and its ability to attract and retain residents in our properties, which in turn, could adversely affect their ability to make rentalcontractual payments to us and otherwise adversely affect our results of operations, including our ability to repay our outstanding indebtedness or our ability to pay dividends to our stockholders as required to maintain our REIT status. Additionally, because each master lease is a triple-net lease, we depend on our tenants to pay all insurance, taxes, utilities and maintenance and repair expenses and to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their business. There can be no assurance that our tenants will have sufficient assets, income and financing to enable them to satisfy their contractual lease payment or indemnification obligations and our tenantsthey have in the past, and may in the future, fail to make rent payments when due, or our tenantsthey may declare bankruptcy.
We are dependent on the ability of our third party managers to successfully manage and operate our SHOP communities.
For our SHOP communities, we generally rely on our third party managers’ personnel, expertise, technical resources and information systems, risk management processes, proprietary information, good faith and judgment to manage the senior housing communities’ operations efficiently and effectively. We also rely on the third party managers to set appropriate resident fees, to provide accurate property-level financial results in a timely manner and otherwise manage risk and operate the senior housing communities in compliance with the terms of our management agreements and all applicable laws and regulations. We are generally responsible for all operational costs, expenses and other risks and liabilities of the SHOP communities. While our managers typically indemnify us, pursuant to the terms of management agreements, for liabilities arising out of certain of their actions such as gross negligence, fraud or willful misconduct, it may be difficult to enforce our rights or we may need to seek alternative solutions to ensure the liability is appropriately addressed. In addition, as a result of our SHOP structure, we are exposed to various operational risks with respect to our SHOP communities that may increase our costs or adversely affect our ability to generate revenues. These risks include fluctuations in occupancy experienced during the normal course of business, private pay rates or, if applicable, government reimbursements; economic conditions; the availability and increases in the cost of labor (as a result of unionization or otherwise); competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; increases in property taxes; state regulation and rights of residents related to entrance fees; and federal and state housing laws and regulations.
Global credit and financial markets have experienced extreme volatility and disruptions over the past several years, including declines in consumer confidence, concerns about declines in economic growth, increases in the rate of inflation, increases in borrowing rates and changes in liquidity and credit availability, and uncertainty about economic stability, including most recently in connection with ongoing and proposed policieschanges ofto theU.S. Trumptrade administration,and fiscal policy, actions undertaken by the U.S. Federal Reserve Board to address inflation, the military conflicts in Ukraine and Gaza and supply chain disruptions. While consumer sentiment is on the rise, concerns about declines in economic growth have faded and inflation has cooled thereThere can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur.occur or persist. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or unpredictable and unstable market conditions. In addition, increased costs due to inflationary conditions may continue to adversely affect the operating expenses of our tenants and borrowers and their ability to meet their obligations to us and may also increase the costs to operate our SHOP communities and the costs for us to make capital improvements to our facilities.properties.
There is significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs. The Trumpcurrent U.S. administration hasis indicated it will institutepursuing trade policy changeschanges, including the imposition of additional tariffs on imported products in an effort to address trade imbalances, specifically with China.imbalances. In response to some of these actions, certain countries mayhave imposeimposed retaliatory actions against the U.S. These policiespolicies, and any additional measures and countermeasures implemented by the U.S. and other countries, may lead to supply chain constraints and additional inflation, further increasing operational costs of our facilities.properties.
Our business could also be adversely impacted by volatility caused by geopolitical events, such as the conflictsconflict in Ukraine and Gaza.Ukraine. A significant downturn in economic activity may cause a reduction in spending on healthcare matters and our tenants and borrowers may need to seek to lower their costs by renegotiating their agreements with us. Such reductions may disproportionately affect our revenue. In addition, if the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.
OurMost of our tenants and borrowers depend on reimbursement from government and other third-partythird party payors and if reimbursement rates from such payors are reduced by future legislative reform, it could cause our tenants’revenues or the revenues of our tenants and borrowers’ revenuesborrowers to decline and could affect their ability to meet their obligations to us.
Sometimes, governmental payors freeze or reduce payments to healthcare providers, or provide annual reimbursement rate increases that are smaller than expected, due to budgetary and other pressures. Healthcare reimbursement will likely continue to be of significant importance to federal and state authorities. For example, the federal government and a number of states are currently managing budget deficits and, as a result, many states are focusing on the reduction of expenditures under their Medicaid programs, which may result in a freeze on Medicaid rates or a decrease in reimbursement rates for us, our tenants and borrowers.borrowers, as recently occurred in Idaho. However, for fiscal year 2026, the Medicare prospective payment system for skilled nursing facilities is projected to increase by 3.2%. The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes. These potential reductions could be compounded by the potential for federal cost-cutting efforts that could lead to reductions in reimbursement to us, our tenants and borrowers under both the Medicaid and Medicare programs. Additionally, in July 2023, Medicare excluded marriage and family therapist services and mental health counselor services from SNF consolidated billing. While these services may still be billed by the clinicians providing the services, such services may not be covered under the SNFs Medicare Part A payment. While we cannot make any assessment as to the ultimate timing or the effect that any future legislative reforms may have on us, our tenants’ orand borrowers’ costs of doing business and onor the amount of reimbursement by government and other third-partythird party payors, potential reductions in Medicaid and Medicare reimbursement,reimbursement or in non-governmental third-partythird party payor reimbursement, to our tenants and borrowers could reduce the revenues of our tenants and borrowers and their ability to meet their obligations to us.
We receive a significant portion of our income as rental payments under leases of properties we own directly or through our joint ventures. We have no control over the success or failure of our tenants’ businesses and, at any time, any of our tenants may experience a downturn in its business that may weaken its financial condition. As a result, our tenants have in the past, and may in the future, fail to make rent payments when due, or our tenants may declare bankruptcy. Tenant bankruptcies or failures to make rent payments when due could result in termination of the tenant’s lease and could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to our stockholders (which could adversely affect our ability to raise capital or service our indebtedness). This risk is magnified where we lease multiple properties to a single tenant, such as Ensign.tenant.
If a tenant is unable to comply with the terms of its lease, we may be forced to write off unpaid amounts due to us from the tenant, move to a cash basis method of accounting for recognizing rental income from the tenant or otherwise modify the tenant’s lease in ways that are unfavorable to us. Alternatively, failure of a tenant to perform under a lease could require us to declare a default, repossess the property, find a suitable replacement tenant, hire third-partythird party managers to operate the property or sell the property. See Note 2, Summary of Significant Accounting Policies and Note 3,4, Real Estate Investments, Net for further information.
If one or more of our tenants or borrowers files for bankruptcy relief, the U.S. Bankruptcy Code provides that a debtor has the option to assume or reject the unexpired lease or other executory contract within a certain period of time. Any bankruptcy filing by or relating to one of our tenants or borrowers could bar all efforts by us to collect pre-bankruptcy debts from that tenantparty or seize its property. A tenant bankruptcy could also delay our efforts to collect past due balances under the leasesagreements and could ultimately preclude collection of all or a portion of these sums. It is possible that we may recover substantially less than the full value of any unsecured claims we hold, if any, which may have a material adverse effect on our business, financial condition and results of operations, and our ability to make distributions to our stockholders.
Replacement tenants or operatorsmanagers may be difficult to identify and we may be required to incur substantial renovation costs to make our healthcare properties suitable for such tenants or operators.parties.
If our tenants or managers terminate or do not renew their leasesagreements with us, we would attempt to reposition the properties with another tenantparty. or operator. Rental paymentsPayments on such properties could decline or cease altogetheraltogether, or costs may increase, while we reposition the properties with a suitable replacement tenant or operatorparty and we may be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of, and avoid the imposition of liens on, such properties while they are being repositioned.
Healthcare facilitiesproperties are typically highly customized and may not be easily adapted to non-healthcare-related uses. The improvements generally required to conform a property to healthcare use, such as upgrading electrical, gas and plumbing infrastructure and security, are costly and at times tenant-specific.party-specific. A new or replacement tenant may require different features in a property, depending on that tenant’sparty’s particular operations. If a current tenant is unable to paymeet rentits obligations and vacates a property, we may incur substantial expenditures to modify a property before we are able to secure another tenant. Supply chain volatility and labor shortages may increase these construction costs. In addition, approvals of local authorities for any required modifications and/or renovations may be necessary, resulting in delays in transitioning a facilityproperty to a new tenant. These expenditures or renovations and delays could materially and adversely affect our business, financial condition or results of operations.
In addition, we may fail to identify suitable replacements or enter into leases or other arrangements with new tenantstenants, managers, or operators on a timely basis or on terms as favorable to us as our current leases,agreements, if at all. If we experience a significant number of properties not under a lease due to the inability to find suitable replacement tenantstenants, or successfully reposition the property, or we are unable to identify a replacement manager for the properties in our SHOP platform, our operating expenses could increase significantly. Even after a suitable replacement tenant or operatormanager has taken over operation of a property, it may still take an extended period of time before such property is fully repositioned and value restored, if at all. Any of these results could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to stockholders.
The geographic concentration of some of our facilitiesproperties could leave us vulnerable to an economic downturn, regulatory changes or acts of nature in those areas.
As a result of the concentration of our properties in CaliforniaCalifornia, the U.K., Texas, and TexasTennessee as described in “Classification of properties in our Portfolio Summary” under Item 1 of this Annual Report on Form 10-K, the conditions of local economies and real estate markets, including increases in real estate taxes, changes in governmental rules, regulations and reimbursement rates or criteria, changes in demographics, state funding, acts of nature, the impacts of climate change and other factors that may result in a decrease in demand and/or reimbursement for skilled nursing services in these states could have a disproportionately adverse effect on our tenants’ and borrowers’ revenue,revenues, costs and results of operations, which may affect their ability to meet their obligations to us.us and may also adversely affect the revenues and results of operations related to our SHOP senior housing communities.
Our owned facilitiesproperties and the facilitiesproperties securing our loans receivable that are located in Texas and certain other states in the southeast are especially susceptible to natural disasters such as hurricanes, tornadoes and flooding and our owned facilitiesproperties and the facilitiesproperties securing our loans receivable that are located in California are particularly susceptible to natural disasters such as fires, earthquakes and mudslides. These types of natural disasters will likely increase in number, scope and intensity as a result of climate change. Further, these acts of nature may cause disruption to us, our tenantstenants, managers, or borrowers, their employees and the underlying facilities,properties, which could have an adverse impact on our tenants’ or borrowers’their patients and businesses. In order to provide patient care, ourthe tenantsoperators and borrowersmanagers of our properties are dependent on consistent and reliable delivery of food, pharmaceuticals, utilities and other goods to the facilitiesproperties they operate, and the availability of employees to provide services at the facilities.properties. If the power supply, delivery of goods or the ability of employees to reach the facilitiesproperties is interrupted in any material respect due to a natural disaster or other reasons, it would have a significant impact on the facilitiesproperties and our tenants’ and borrowers’the businesses at those facilities.properties. Furthermore, the impact, or impending threat, of a natural disaster may require thatthe ourevacuation tenants or borrowers evacuateof one or more facilities,properties, which would be costly and would involve risks, including potentially fatal risks, for the patients at such facilities.properties. The impact of disasters and similar events is inherently uncertain. Such events could harm our tenants’ or borrowers’the patients and employees,employees within the facilities or severely damage or destroy one or more of the facilitiesproperties, theywhich operate,could harm our tenants’ or borrowers’the business, reputation, financial condition and financial performance,performance of our tenants, managers or borrowers, or otherwise cause our tenants’ or borrowers’their businesses to suffer in ways that we currently cannot predict.
In addition, to the extent that significant changes in the climate occur in areas where our properties are located, we may experience extreme weather, including higher temperatures, increases in precipitation, fire, drought and flood, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions. Based on our overall portfolio physical climate risk assessment, we found that the highest climate risk for our portfolio was heat caused by higher temperatures, which may result in higher operating and energy costs for us, our tenantstenants, managers, and borrowers and higher capital costs for resiliency measures for us and our tenantstenants, managers, and borrowers to maintain the property and its value. Should the impact of climate change be material in nature, including destruction or degradation of our owned properties or the properties securing our loans receivable, or occur for lengthy periods of time, our financial condition or results of operations may be adversely affected. Increased costs to our tenantstenants, managers, and borrowers to maintain the properties and take appropriate resiliency measures could harm thetheir financial condition and financial performance of our tenants and borrowers.performance. 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.
We are subject to risks associated with public health crises and government measures to prevent the spread of infectious diseases, including the global health concerns related to the COVID-19 pandemic and the H6 bird flu.influenza. The COVID-19 pandemic adversely impacted nearly all aspects of our business. Public health crises, including significant COVID-19 outbreaks and any future epidemics or pandemics, could result in similar adverse impacts on our business, results of operations, cash flows and financial condition. Risks to our business that have been associated with the COVID-19 pandemic, and may be associated with future COVID-19 outbreaks or other public health crises, include:
•one or more of our tenants or borrowers could experience deteriorating financial conditions and be unable or unwilling to pay rent or other obligations on time and in full (which has, and could continue to result from, among other reasons (i) increased operating costs and staffing requirements related to compliance with Centers for Disease Control and Prevention (“CDC”) protocols, (ii) decreased occupancy rates, (iii) increased scrutiny by regulators, (iv) potential repayments of relief funds received by tenants, (v) nursing or other staffing shortages;shortages, or (vi) decisions by elderly individuals to avoid or delay entrance into assisted living and other long-term care facilitiesproperties);
•the possibility we may have to restructure our tenants’ or borrowers’ obligations and may not be able to do so on terms that are favorable to us;
•increased costs or delays that we have incurred, and may continue to incur, if we need to reposition or transition any of our currently-leasedcurrently leased properties to another tenant or operator, which have adversely impacted, and may in the future adversely impact, our revenues and results of operations;
•risks related to lawsuits and regulatory enforcement actions related to pandemic outbreaks involving us, our tenants, operatorsmanagers, or borrowers, including increases in the costs of business, negative publicity and/or further decreases in occupancy and/or profitability at our facilitiesproperties;
The extent to which public health crises may impact our business, results of operations, cash flows and financial condition depends on many factors which are highly uncertain and are difficult to predict. These factors include, but are not limited to, the duration and spread of any outbreak, the timing, distribution and efficacy of vaccines and other treatments, UnitesUnited States and foreign government actions to respond to the outbreak, the extent of disruption to our business and the business of our tenantstenants, managers, and borrowers, and how quickly and to what extent normal operation conditions can resume.
We pursue property acquisitions and other real estate investments and seek strategic opportunities in the ordinary course of our business, which may result in significant usage of management resources or costs, and we may not fully realize the potential benefits of such transactions.
We regularly review, evaluate, engage in discussions regarding, and pursue acquisitions of properties and other real estate investments and seek other strategic opportunities in the ordinary course of business in order to maximize stockholder value. We may devote a significant amount of our management resources to, and incur significant costs in connection with, such transactions, which may not result in definitive agreements or the completion of any transaction and could negatively impact our operations. In addition, there is no assurance that we will fully realize the potential benefits of any past or future acquisitioninvestment or strategic transaction.
If we cannot identify and purchase a sufficient quantity of suitable properties at favorable prices or if we are unable to finance acquisitionsinvestments on commercially favorable terms, or at all, our business, financial position or results of operations could be materially and adversely affected. Furthermore, any future acquisitions or investments may require the issuance of securities, the incurrence of debt, assumption of contingent liabilities or incurrence of significant expenditures, each of which could materially adversely impact our business, financial condition or results of operations. Additionally, the fact that we must distribute 90% of our REIT taxable income in order to maintain our qualification as a REIT may limit our ability to rely upon rental payments from our leased properties or subsequently acquired properties in order to finance acquisitions.our investments. As a result, if debt or equity financing is not available on acceptable terms, further acquisitions might be limited.
In addition, we have entered into joint ventures with respect to certain of our properties under the SHOP platform that were structured under a RIDEA structure. This permits REITs to participate directly in the cash flow of “qualified healthcare properties” (as opposed to receiving only contractual rent payments) but requires them to rely on a manager to manage and operate the property, including complying with laws and providing resident care. Although the RIDEA structure gives us certain oversight approval rights and the right to review operational and financial reporting information, our managers are in control of the day-to-day business of the property. As a result, as the owner of the property under a RIDEA structure, we are responsible for, and our financial performance is impacted by, operational and legal risks and liabilities of the property, including those described above, even though we have limited ability to control or influence our operators’ management of these risks.
The intended benefits of the Care REIT acquisition may not be realized.
On May 8, 2025, we closed our acquisition of Care REIT by means of a court-sanctioned scheme of arrangement under Part 26 of the United Kingdom Companies Act of 2026, which at the time of acquisition owned 134 care homes across England, Scotland and Northern Ireland. On June 30, 2025, we separately acquired substantially all of the assets of Impact Health Partners LLP, the investment manager of Care REIT.
The intended benefits of the Care REIT acquisition may not be realized. The acquisition poses risks for our ongoing operations, including, among others, that senior management's attention may be diverted from the management of daily operations in our U.S. operations to the integration of the Care REIT properties; costs and expenses associated with any undisclosed or potential liabilities; that the Care REIT properties may not perform as well as anticipated; and unforeseen difficulties may arise in integrating operations in the U.K. into our company. As a result of the foregoing, we cannot assure you that the Care REIT acquisition will be accretive to us in the near term or at all.
We will be subject to additional risks from our investment in Care REIT and any other international investments.
Care REIT is our first major investment in the United Kingdom. We may also pursue other significant acquisition opportunities outside the United States, including in the United Kingdom, elsewhere in Europe or in Canada. International investment may expose us to a variety of risks that are different from and in addition to those commonly found in our current markets. Our acquisition of Care REIT and any other investments we may make internationally will subject us to additional risks, including:
•complying with a wide variety of foreign laws;
•fluctuations in exchange rates between foreign currencies and the U.S. dollar and exchange controls;
•limited experience with local business and cultural factors that differ from our usual standards and practices;
•challenges in establishing effective controls and procedures to regulate operations in different regions;
•the impact of regional or country-specific business cycles and economic instability;
•the impact of extreme weather or weather-related conditions and other natural disasters that may affect specific locations in which our properties are located, including hurricanes, flash floods, sea-level rise and coastal erosion, that may affect Care REIT properties or other properties we may acquire outside the United States; and
•political instability or civil unrest.
If we are unable to adequately address these risks, they could adversely affect our business, financial position or results of operations.
We assume operational and legal risks with respect to our properties managed in RIDEA structures that could have a material adverse effect on our business, results of operations and financial condition.
We have entered into various joint ventures that were structured under the provisions of RIDEA. Under a RIDEA structure, we rely on independent, third party managers to manage and operate the properties. Although we have some general oversight approval rights and the right to review operational and financial reporting information, our third party managers are ultimately in control of the day-to-day business of the property, including clinical decision-making, and we rely on them to operate and manage the properties including complying with laws and providing resident care. However, as the owner of the property under a RIDEA structure, we are responsible for operational and legal risks and liabilities of the property, other than those arising out of certain actions by our managers, such as gross negligence, fraud or willful misconduct, including, those relating to employment matters of our third party managers, compliance with health care fraud and abuse and other laws, governmental reimbursement matters, compliance with federal, state, local and industry-related licensure, certification and inspection laws, regulations, and standards, and litigation involving our properties or residents/patients, even though we have limited ability to control or influence our third party managers’ management of these risks. As such, these operational risks include our dependence on the availability and cost of general and professional liability insurance coverage. If these or other operational or legal risks occur with respect to our properties, our business could suffer and our financial position, results of operations or cash flows may be materially affected.
Our operating assets may expose us to various operational risks, liabilities and claims that could adversely affect our ability to generate revenues or increase our costs and could adversely affect our business, financial condition and results of operations.
Under the REIT tax rules, the senior housing communities in our SHOP platform that are “qualified healthcare properties” generally must be operated and managed for us by third party managers and we have limited rights to direct or influence the business or operations of those communities. However, in each case, we nonetheless participate directly in the financial performance of the communities’ operations and are ultimately responsible for all operational risks and other liabilities of such properties, other than those arising out of certain actions by our managers, such as gross negligence, fraud or willful misconduct. These risks include, and our financial performance is impacted by, among other things, fluctuations in occupancy levels, the inability to charge desirable resident fees (including anticipated increases in those fees), increases in the cost of food, supplies, energy, labor (as a result of labor shortages, unionization, inflation or otherwise) or other services, rent control regulations, national and regional economic conditions, the imposition of new or increased taxes, capital expenditure requirements, changes in management or equity, accounting misstatements, professional and general liability claims, litigation and regulatory actions and the availability and cost of insurance. Any one or a combination of these factors could impact the performance of our SHOP platform, which could adversely affect our business, financial condition and results of operations.
We generally hold the applicable healthcare license and enroll in applicable government healthcare programs on behalf of the properties in our SHOP platform, which subjects us to potential liability under various healthcare laws and regulations. See “—Risks Related to Laws and Regulations.”
The healthcare industry is highly competitive. The occupancy levels at, and results of operations from, our owned facilitiesproperties and the facilitiesproperties securing loans receivable are dependent on our ability and the ability of our borrowerstenants and tenantsborrowers to compete with other tenants and operators on a number of different levels, including the quality of care provided, reputation, the physical appearance of a facility,property, price, the range of services offered, family preference, amenities, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location, and the size and demographics of the population in the surrounding area. Operating expenses such as food, utilities, taxes, insurance, labor costs (including due to minimum wage laws and minimum staffing requirements) and rent or debt service continue to increase. In addition, our tenants and borrowers face an increasingly competitive labor market for skilled management personnel and nurses together with Medicaid reimbursement in some states that does not cover the full cost of caring for residents. Significant turnover, or a shortage of nurses or other trained personnel or general inflationary pressures on wages, may force tenants, borrowerstenants or operatorsborrowers to enhance pay and benefits packages to compete effectively for skilled personnel, or to use more expensive contract personnel, but they may be unable to offset these added costs by increasing the rates charged to residents. Further, the current Trump administration hasis announcedpursuing itspolicies intentionthat to engage ininclude the mass deportation of undocumented immigrants and sharplysharp limitlimits the amount ofon legal immigration, which wouldis expected to further increase competition and wages for labor. Any increase in labor costs and other property operating expenses or any failure by our tenants or borrowers to attract and retain qualified personnel could reduce the revenues of our borrowerstenants and tenantsborrowers and their ability to meet their obligations to us.
In addition, if development of seniorssenior housing facilitiesproperties outpaces demand for those assets in markets in which we are located, those markets may become saturated and our seniorssenior housing tenants and operatorsborrowers could experience decreased occupancy, which may affect their ability to meet their financial and other contractual obligations to us.
Our tenants and borrowers that operate SNFs and other healthcare facilities must be licensed under applicable state law and, depending upon the type of facility,property, certified or approved as providers under the Medicare and/or Medicaid programs. Prior to the transfer of the operations of such healthcare properties to successor operators, the new operator generally must become licensed under state law and, in certain states, receive change of ownership approvals under certificate of need laws (which provide for a certification that the state has made a determination that a need exists for the beds located on the property) and, if applicable, file for a Medicare and Medicaid change of ownership. Upon termination or expiration of existing leases, delays or the failure of the new tenant in receiving regulatory approvals from the applicable federal, state or local government agencies, has in the past prolonged, and may in the future prolong, the period during which we are unable to collect rent and the property may experience performance declines. We could also incur substantial additional expenses in connection with any licensing, receivership or change of ownership proceedings.
We, our tenantstenants, or our borrowers may experience uninsured or underinsured losses, which could result in a significant loss of the capital we have invested in a property, decrease anticipated future revenues or cause us to incur unanticipated expenses.
Our lease and lending agreements require that the tenant or borrower, as applicable, maintain general and professional liability insurance and comprehensive liability and hazard insurance. However, there are certain types of losses (including, but not limited to, losses arising from environmental conditions or of a catastrophic nature, such as earthquakes, wildfires, hurricanes and floods) that may be uninsurable or not economically insurable. In addition, insurance coverage may be insufficient to pay the full current market value or replacement cost of any loss. Inflation, changes in tort liability laws, changes in building codes and ordinances, environmental considerations, and other factors also might make it infeasible to use insurance proceeds to protect a tenant in a liability claim or replace a property after such property has been damaged or destroyed. Under such circumstances, the insurance proceeds received might not be adequate to restore the economic position with respect to such tenanttenant, borrower, or property.
With respect to our SHOP platform, we are responsible for the operational and legal risks and liabilities of the property. As such, we are responsible for maintaining general and professional liability insurance for these properties, which may not fully cover an insured loss, depending on the magnitude and nature of the claim. The need to maintain insurance for our SHOP platform properties will increase our costs, and changes in the cost of insurance or the availability of insurance in the future could further increase our costs to ensure we maintain an appropriate level of coverage or could cause us to reduce our insurance coverage.
In addition, even if damage to our owned properties or the properties securing our loans receivable is covered by insurance, business disruptions caused by a casualty event may result in lost revenue for us, our tenants, borrowerstenants or usborrowers for which insurance may not fully compensate them or us for such loss of revenue. If one of our tenants or borrowers experiences such a loss, it may be unable to satisfy its payment obligations to us.
We may be affected by unfavorable resolution of litigation or disputes and rising liability and insurance costs as a result thereof or other market factors.
Our tenants, managers, and borrowers are from time to time parties to litigation, including, for example, disputes regarding the quality of care at healthcare properties or the operations of the properties. The effect of litigation may materially increase the costs incurred by our tenants, managers, and borrowers, including costs to monitor and report quality of care compliance. In addition, the cost of professional liability, medical malpractice, property, business interruption, and general liability, insurance policies can be significant and may increase or not be available at a reasonable cost or at all. Cost increases could cause our tenants and borrowers to be unable to make their lease or other obligations to us or fail to purchase the appropriate liability and malpractice insurance, or cause our borrowers to be unable to meet their obligations to us, potentially decreasing our revenues and increasing our collection and litigation costs.
Furthermore, with respect to our SHOP communities, we generally directly bear the costs of any such increases in litigation, monitoring, reporting, and insurance due to our direct exposure to the cash flows of such properties. We are responsible for these claims, litigation, and liabilities, with limited indemnification rights against the managers, which are typically based on the gross negligence or willful misconduct by the operator. Although our leases provide us with certain information rights with respect to our tenants, one or more of our tenants may be or become party to pending litigation or investigation of which we are unaware or in which we do not have a right to participate or evaluate. In such cases, we would be unable to determine the potential impact of such litigation or investigation on our tenants or our business or results. Moreover, negative publicity of any of our tenants’, or managers’, litigation or other legal proceedings or investigations may also negatively impact their and our reputation, resulting in lower customer demand and revenues, which could have a material adverse effect on our financial condition, results of operations, and cash flows.
We may also be named as defendants in lawsuits arising out of our alleged actions or the alleged actions of our tenants or managers for which such tenants or managers may have agreed to indemnify us. Unfavorable resolution of any such litigation, including an outsized jury verdict, or negative publicity as a result of such litigation could have a material adverse effect on our business, results of operations, and financial condition. Regardless of the outcome, litigation or other legal proceedings may result in substantial costs, disruption of our normal business operations, and the diversion of management attention. We may be unable to prevail in, or achieve a favorable settlement of, any pending or future legal action against us.
Even when a tenant is obligated to indemnify us for liability incurred as a result of a lawsuit pursuant to the terms of its agreement with us, the tenant may fail to satisfy those obligations and, in such event, we would have to incur the costs that should have been covered by the tenant and determine whether to expend additional resources to seek the contractually owed indemnity from that tenant, including potentially through litigation or arbitration. In some instances, we may decide not to enforce our indemnification rights if we believe that enforcement of such rights would be more detrimental to our business than alternative approaches. Regardless, such an event would divert management attention and may result in a disruption to our normal business operations, any or all of which could have an adverse effect on our business, results of operations, and financial condition.
We derive revenue primarily by leasing our assets under long-term triple-net leases with rental rates that, subject to certain limitations, are generally fixed with annual rent escalations contingent on changes in the Consumer Price Index or Retail Price Index, subject to maximum fixed percentages. If the Consumer Price Index or Retail Price Index does not increase, our revenues may not increase. In addition, if economic conditions result in significant increases in the Consumer Price Index or Retail Price Index, but the escalations under our leases are capped, our growth and profitability also may be limited.
Management's Discussion & Analysis (MD&A)
New heading “SHOP Communities”
New heading “The Acquisition”
New heading “Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”
New heading “Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”
New heading “Earn-out Obligations”
Removed heading “Year Ended December 31, 2023 Compared to Year Ended December 31, 2022”
Removed heading “Year Ended December 31, 2023 Compared to Year Ended December 31, 2022”
Largest changes
The interest rates applicable to loans under the Third Amended Revolving Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.05% to 0.55% per annum orsee in full comparisonAdjustedTerm SOFR orAdjustedDaily Simple SOFR (each as defined in the Third Amended Credit Agreement) plus a margin ranging from 1.05% to 1.55% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt). In addition, the Operating Partnership will pay a facility fee on the revolving commitments under the Third AmendedRevolvingCredit Facility ranging from 0.15% to 0.35% per annum, based on the debt to asset value ratio of the Company and our consolidated subsidiaries (unless we obtain certain specified investment grade ratings on our senior long-term unsecured debt and the Operating Partnership elects to decrease the applicable margin as described above, in which case the Operating Partnership will pay a facility fee on the revolving commitments ranging from 0.125% to 0.30% per annum based off the credit ratings of the Company’s senior long-term unsecured debt). The interest rates applicable to loans under the Term Loan Facility are, at the Operating Partnership’s option, equal to either a base rate plus a margin ranging from 0.10% to 0.80% per annum or Term SOFR or Daily Simple SOFR (each as defined in the Third Amended Credit Agreement) plus a margin ranging from 1.10% to 1.80% per annum based on the debt to asset value ratio of the Company and our consolidated subsidiaries (subject to decrease at the Operating Partnership’s election if we obtain certain specified investment grade ratings on our senior long-term unsecured debt). The First Amendment to the Third Amended Credit Agreement also removed the SOFR credit spread adjustment applicable to loans under the Third Amended Credit Facility bearing interest at Term SOFR or Daily Simple SOFR.
“On July 10, 2025, we entered into two interest rate swaps, with a notional amount of $250.0 million each, to hedge the variable cash flows associated with the Term Loan Facility (as defined below). The interest rate swaps convert the Term Loan Facility’s Term SOFR rate to an effective fixed interest rate of 3.5%. Our objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. …”see in full comparison
“On September 19, 2024, we prepaid in full the $200.0 million aggregate principal amount outstanding under the Term Loan (as defined under “― Liquidity and Capital Resources ― Material Cash Requirements” below). See Note 7, Debt, for additional information.”see in full comparison
“On December 18, 2024, we amended and restated our Second Amended Credit Agreement (as defined under “― Liquidity and Capital Resources ― Material Cash Requirements” below). See Note 7, Debt, for additional information.”see in full comparison
“In July 2025, we paid off the entire outstanding balance of the secured notes payable and paid off and terminated the secured revolving credit facilities, which were each assumed in connection with the Acquisition. In connection with the payoff of the secured revolving credit facilities, we terminated the outstanding interest rate caps. We funded the payoffs with cash on hand and $65.0 million in net borrowings under the Third Amended Revolving Facility (as defined below).”see in full comparison
“Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”see in full comparison
Full comparison: every changed paragraph (125)
CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, financing, development and leasing of skilled nursing, senior housing and other healthcare-related properties.
CareTrust REIT is a self-administered, publicly-traded REIT engaged in the ownership, acquisition, financing, development and leasing of skilled nursing, seniors housing and other healthcare-related properties. As of December 31, 2024,2025, weCareTrust REIT owned, directly or indirectly in consolidated joint ventures, and leased to independent operatorsoperators, 258407 skilled nursing facilitiesfacilities, (“SNFs”),senior multi-servicehousing campuses, assisted living facilities (“ALFs”)communities and independentother living facilities (“ILFs”),properties consisting of 28,08837,628 operational beds and units located in 32 states and the United Kingdom (the “U.K.”) with the highest concentration of properties by rental income located in CaliforniaCalifornia, the U.K., Texas, and Texas.Tennessee. As of December 31, 2024,2025, we also had other real estate related investments consisting of threefour preferred equity investments, 1516 real estate secured loans receivable and five mezzanine loans receivable with a carrying value of $795.2$899.3 million and one financing receivable with a carrying value of $96.0$92.2 million.
During the fourth quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”) as permitted by the Housing and Economic Recovery Act of 2008 in connection with the establishment of a senior housing operating platform (“SHOP”) and completed our first SHOP acquisition in December 2025. As of December 31, 2025, CareTrust REIT also owned, indirectly in consolidated joint ventures, the properties and operations of three senior housing communities consisting of 270 units in Texas that are operated on our behalf by independent managers pursuant to the terms of separate management agreements under our SHOP platform.
SHOP Communities
During the fourth quarter of 2025, we began utilizing the RIDEA structure and established a SHOP platform through the acquisition of three senior housing communities.
The Acquisition
On May 8, 2025, we closed our acquisition (the “Care REIT Acquisition”) of Care REIT plc (“Care REIT”). In connection with this acquisition, on June 30, 2025, we also acquired substantially all of the assets of Impact Health Partners LLP, the investment manager of Care REIT (together with the Care REIT Acquisition, the “Acquisition”). We treat these acquisitions as a single transaction as they were entered into in contemplation of one another and were intended to achieve an overall economic effect.
The Care REIT Acquisition was implemented by means of a court-sanctioned scheme of arrangement (the “Scheme”) under Part 26 of the United Kingdom Companies Act of 2006. Under the terms of the Scheme, Care REIT stockholders received 108 pence in cash per share, totaling approximately $595.4 million. At closing, we also assumed Care REIT’s liabilities of approximately $290.9 million. In addition, we paid the partners of Impact Health Partners LLP approximately $6.8 million for substantially all of Impact Health Partners LLP’s assets.
Recent macroeconomic conditions, particularly market uncertainty, immigration restrictions and changes to immigration enforcement policy, changes to the U.S. healthcare system, shutdown of the federal government, declining consumer sentiment, inflation (including higher supply costs and shortages), effects of global tariffs, elevated interest rates and related changes to consumer spending, including, but not limited to, causing individuals to delay or defer moves to seniors housing, has adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us. Higher interest rates and market volatility have also increased our costs of capital to finance acquisitions and increased our borrowing costs. We continue to monitor changes in the interest rate environment and the effect of changing rates on our business. In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges.
As a result of the above factors, our tenants are continuing to experience elevated operating costs at their facilities. At a portfolio wide level, occupancy levels at our seniors housing facilities, comprising our ALFs and ILFs, continue to remain below occupancy levels at the onset of the COVID-19 pandemic. Within our SNFs, occupancy levels have continued to improve since their trough in January 2021 and have reached or exceeded occupancy levels prior to the onset of the COVID-19 pandemic, for most of our tenants.
As a result of impacts experienced by our operators since the onset of the COVID-19 pandemic and due to recent market trends and uncertainties, the ability of some of our tenants and borrowers to meet their financial obligations to us in full hasmay beenbe negatively impacted. From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we have also restructured tenants’ long-term obligations. See “Impairment of Real Estate Assets,Investments, Assets Held for Sale and Asset Sales” below. During the three months and twelve monthsyear ended December 31, 2024,2025, we collected 98.8%100% and 98.5%99.7% of contractual rents and interest due from our tenantsoperators and borrowers excludingexclusive cashof deposits,properties held-for-sale and sold during the period, respectively. In the event our tenants or borrowers are unable to satisfy their obligations to us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental and interest income would be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges or fair value adjustments.
For more information regarding the potential impact of public health crises, including COVID-19, and macroeconomic conditions on our business, see “Risk Factors” in Item 1A of this report.
During the third quarter of 2025, both Idaho and North Carolina announced Medicaid reimbursement rate reductions that could adversely impact the operations of our tenants and borrowers at our SNFs located in those states. In Idaho, the Department of Health and Welfare enacted a 4% across-the-board rate cut in response to an $80 million budget shortfall. Effective December 10, 2025, North Carolina reversed the Medicaid reimbursement reductions and restored rates to September 30, 2025 levels.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act of July 2025 (“OBBBA”) into law. This comprehensive budget reconciliation package reshapes federal policy across numerous sectors of the American economy, including taxation, healthcare, social safety nets, immigration, and education.
The OBBBA includes the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 and other changes to the Internal Revenue Code of 1986, as amended (the “Code”) that affect REITs and their investors. For instance, for taxable years beginning on or after January 1, 2026, the OBBBA modifies the REIT asset test requirement with respect to taxable REIT subsidiaries, providing that not more than 25% (previously 20%) of the gross value of a REIT’s assets may be represented by securities of one or more taxable REIT subsidiaries. Additionally, the OBBBA permanently extends the Code Section 199A pass-through qualified business income deduction. This allows certain individuals, trusts, and estates to continue deducting 20% of their qualified business income, including qualified REIT dividends.
The OBBBA also introduced sweeping changes to healthcare policy and funding in the U.S. which may affect our industry in ways we cannot yet predict. Notably, however, the bill did not include previously proposed cuts to Medicaid reimbursement rates for SNFs, which is expected to provide continued stability for many of our tenants and borrowers, particularly those operating in states with high Medicaid census.
On October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities. As a result of SB 525, certain health care facilities (including licensed skilled nursing facilities) operating in California are required to increase the wages of their covered health care employees to at least $21 per hour, which was initially required to be effective from June 1, 2024 to May 31, 2026, $22 or $23 per hour (depending on facility type) from June 1, 2026 to May 31, 2028, and $25 per hour after June 1, 2028. After the initial implementation was delayed by the Governor of California in June 2024, SB 525 went into effect on October 16, 2024.
The Centers for Medicare and Medicaid Services (“CMS”) issued a final rule on July 31, 2024, updating Medicare payment policies and rates for SNFs for fiscal year 2025. This update includesincluded a 4.2% increase in Medicare Part A payments to SNFs, totaling approximately $1.4 billion. These increases are expected to partially offset some of our tenants’ and borrowers’ higher operating costs. Further, in this final rule, CMS expanded its ability to impose penalties on SNFs for health and safety deficiencies/non-compliance by allowing for more per instance and per day civil monetary penalties to be imposed for such health and safety deficiencies/non-compliance, as appropriate.
CMS issued a final rule on July 31, 2025, updating Medicare payment policies and rates for SNFs for fiscal year 2026. This update provides for a net increase of 3.2% in Medicare Part A payments to SNFs. This increase is expected to partially offset some of our tenants’ and borrowers’ higher operating costs.
On April 22, 2024, CMS issued a final rule intended to establish comprehensive minimum staffing requirements for nursing homes. However, the rule was vacated by a federal court in Texas in April 2025. Subsequently, the OBBBA, enacted on July 4, 2025, imposed a legislative moratorium on the rule, effective until September 30, 2034. Further, in December 2025, HHS announced that it formally repealed these minimum staffing requirements. We continue to monitor regulatory developments closely and remain engaged with our tenants to assess the operational and financial implications of legislative actions.
On October 13, 2023, California Senate Bill No. 525 (“SB 525”) was signed into law, requiring a substantial increase in the minimum wage for workers operating in certain health care facilities. As a result of SB 525, certain health care facilities (including licensed skilled nursing facilities) operating in California are required to increase the wages of their covered health care employees to at least $21 per hour, which was initially required to be effective from June 1, 2024 to May 31, 2026, $22 or $23 per hour (depending on property type) from June 1, 2026 to May 31, 2028, and $25 per hour after June 1, 2028. After the initial implementation was delayed by the Governor of California in June 2024, SB 525 went into effect on October 16, 2024.
On April 22, 2024, CMS issued a final rule regarding minimum staffing requirements and increased inspections at nursing homes in order to establish comprehensive nurse staffing requirements. The rule consists of three core staffing requirements: (1) overall minimum standard of 3.48 total nurse staff hours per resident day; (2) minimum nurse staffing standards of 0.55 hours per resident day for registered nurses and 2.45 hours of care from a certified nurse’s aid per resident per day; and (3) a requirement to have a registered nurse onsite 24 hours a day, seven days a week. The rule includes a staggered implementation approach for which CMS will publish additional details on compliance as the implementation dates approach. The rule also includes possible waivers and temporary hardship exemptions for select facilities; however, no funding for the additional staff will be provided. We are currently evaluating the impact of the rule, but believe the unfunded mandate to increase staff may have a material and adverse impact on the financial condition of our tenants.
The following table summarizes the Company’sour acquisitions from January 1, 20242025 through FebruaryDecember 12,31, 2025 (dollars in thousands):
(2)Initial annual cash rent represents initial annual cash rent for the first twelve12 months.
(3)The number of beds/units includes operating beds/units at acquisition date.
(4)Includes facilitiesproperties held in consolidated joint ventures. See Note 3,4, Real Estate Investments, Net, and Note 12,15, Variable Interest EntitiesEntities, for additional information.
(5)Includes U.K. Care Homes acquired in connection with the Acquisition. See Note 3, Acquisitions, for additional information. On July 31, 2025, we swapped 10 U.K. Care Homes for six U.K. Care Homes and received £2.2 million in cash before selling costs. The amounts shown above are inclusive of this asset swap. See Note 5, Impairment of Real Estate Investments, Assets Held for Sale and Asset Sales, for additional information.
On December 1, 2025, the Company purchased three senior housing communities for $40.3 million via JVs, which includes capitalized acquisition costs. In exchange, the Company holds approximately 98% of the equity interest in the JVs. The JV partner contributed the remaining $0.9 million of the total investment in exchange for approximately 2% of the equity interest in the JVs. The three senior housing communities are operated by a third party manager under the SHOP platform.
The following table summarizes our financing receivable investment from January 1, 2024 through February 12, 2025 (dollars in thousands):
(1)Investment does not include transaction costs given they were expensed during the year ended December 31, 2024 as a result of our election to use the fair value option.
(2)Represents annualized investment-date interest income.
The following table summarizes our other real estate related investments by the Company from January 1, 20242025 through FebruaryDecember 12,31, 2025 (dollars in thousands):
(1)Table excludes a $1.0 million mortgage loan originated in connection with the sale of one ALF during the period presented.
(2)The number of beds/units includes operating beds at the investment date.
In July 2025, we paid off the entire outstanding balance of the secured notes payable and paid off and terminated the secured revolving credit facilities, which were each assumed in connection with the Acquisition. In connection with the payoff of the secured revolving credit facilities, we terminated the outstanding interest rate caps. We funded the payoffs with cash on hand and $65.0 million in net borrowings under the Third Amended Revolving Facility (as defined below).
On July 10, 2025, we entered into two interest rate swaps, with a notional amount of $250.0 million each, to hedge the variable cash flows associated with the Term Loan Facility (as defined below). The interest rate swaps convert the Term Loan Facility’s Term SOFR rate to an effective fixed interest rate of 3.5%. Our objective in using interest rate derivatives is to change variable interest rates to fixed interest rates by using interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the term of the agreements without exchange of the underlying notional amount.
On May 30, 2025, the Operating Partnership entered into a first amendment to the Third Amended Credit Agreement (the “First Amendment to the Third Amended Credit Agreement”). The First Amendment to the Third Amended Credit Agreement provides for an unsecured term loan facility (the “Term Loan Facility”) with term loan commitments in an aggregate principal amount of $500.0 million in addition to the Third Amended Revolving Facility.
On December 18, 2024, we amended and restated our Second Amended Credit Agreement (as defined under “― Liquidity and Capital Resources ― Material Cash Requirements” below). See Note 7, Debt, for additional information.
On September 19, 2024, we prepaid in full the $200.0 million aggregate principal amount outstanding under the Term Loan (as defined under “― Liquidity and Capital Resources ― Material Cash Requirements” below). See Note 7, Debt, for additional information.
On June 3, 2024, KeyBank National Association purchased a $75.0 million undivided participation interest in a $165.0 million mortgage loan from us (see Note 5, Other Real Estate Related and Other Investments, for additional information). On July 30, 2024, we exercised the call option on the $75.0 million secured borrowing. See Note 7, Debt, for additional information.
On NovemberAugust 1,14, 2024,2025, we completed an underwritten public offering of 15.923.0 million newly issued shares of our common stock at a price per share of $32.00, resulting in gross proceeds of $507.8$736.0 million. TheWe used a portion of the proceeds wereto usedpay down the outstanding revolving credit facility and intend to use the remaining proceeds to fund acquisitions during the fourth quarter of 2024.acquisitions.
On January 21, 2025, we entered into a new equity distribution agreement to issue and sell, from time to time, up to $750.0 million in aggregate offering price of our common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated our previous $750.0 million “at-the-market” equity offering program (together, with all previous at-the-market equity offering programs, the “Previous ATM Programs” and together with the New ATM Program, the “ATM ProgramsProgram”). In addition to the issuance and sale of shares of our common stock, we may also enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of shares of our common stock under the ATM Program. There were no outstanding ATM forward contracts that had not settled as of December 31, 2024.
We expect to fully physically settle forward equity sales by delivery of shares of common stock to the forward purchaser and receive cash proceeds upon one or more settlement dates, which are typically a one-year term, at our discretion, prior to the final settlement date, at which time we expect to receive aggregate net cash proceeds at settlement equal to the number of shares sold on a forward basis multiplied by the relevant forward price per share. The weighted average forward sale price that we expect to receive upon physical settlement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends through the settlement. During the year ended December 31, 2025, we entered into ATM forward contracts under the ATM Program with a financial institution acting as a forward purchaser to sell 6.5 million shares of common stock at a weighted average initial sales price of $37.30 per share, respectively, before commissions and offering expenses. For the shares subject to the ATM forward contracts, we will not receive any proceeds from sales of those shares of common stock by the forward sellers until the forward contracts are settled.
The following tablestable summarizesummarizes the ATM Program activity for the year ended December 31, 20242025 (in thousands, except per share amounts).
(1) Total gross proceeds is before $13.4$4.6 million of commissions paid to the sales agents and forward adjustments during the year ended December 31, 2024,2025, under the ATM Program.
In January 2026, we entered into ATM forward contracts under the ATM Program with a financial institution acting as a forward purchaser to sell 3.5 million shares of common stock at an initial sales price of $37.00 per share before commissions and offering expenses.
Impairment of Real Estate Assets,Investments, Assets Held for Sale, and Asset Sales
During the year ended December 31, 2024,2025, we recognized aggregate impairment charges of $42.2$2.5 million, of which $18.8 million related to properties held for sale, $9.4 million related to properties held for investment, and $14.0 million related to properties that were sold.
We periodically reassess our investments and tenantoperator relationships, and from time to time we have selectively disposed of certain facilitiesproperties or investments, or terminated tenantoperator relationships, and we expect to continue making such reassessments and, where appropriate, taking such actions. We classify our real estate investments as held for sale when the applicable criteria have been met, which includes a formal plan to sell the properties that is expected to be completed within one year, among other criteria. Upon designation as held for sale, we cease depreciation and record the investment at the lower of carrying value or estimated fair value less costs to sell, which could result in an impairment of the real estate investments held for sale, if necessary.
(1)One non-operational previously impaired property sold during the year ended December 31, 2025 was not classified as held for sale as of December 31, 2024. In addition, two properties sold during the year ended December 31, 2025 were not classified as held for sale during the year.
(2)Net sales proceeds includes non-cash consideration related to an asset exchange and $36.0 million of seller financing.
Subsequent to December 31, 2024, we sold or disposed of three SNFs, one SNF Campus and one ALF, for which we expect to record an estimated gain on sale of real estate of $3.9 million.
Our primary business consists of acquiring, developing, financing and owning real property to be leased to third party tenants or operated by third party mangers in the healthcare sector.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
* Not meaningful
Rental income. Rental income increased by $139.9 million as detailed below:
Total contractual rent includes initial contractual cash rent and tenant reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by us. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Total contractual cash rent increased by $127.4 million due to an increase of $123.6 million in contractual cash rent from real estate investments made after January 1, 2024, including properties acquired in connection with the Acquisition, an increase of $6.5 million from increases in rental rates for our existing tenants, an increase of $2.8 million related to transfers of properties between operators, and a $2.1 million increase in tenant reimbursements, partially offset by a $3.9 million decrease in rental income related to certain tenants on a cash basis method of accounting and a $3.7 million decrease related to the disposal of real estate . Straight-line rent increased by $8.8 million due to the Acquisition. Amortization of above and below market leases increased $3.9 million primarily due to lease terminations in August 2025, which accelerated the amortization of the applicable below market lease intangibles.
Resident fees and services. During the year ended December 31, 2025, we recorded $1.2 million of resident fees and services related to the acquisition of three senior housing communities under the SHOP platform in December 2025.
Interest income from financing receivable. Interest income from financing receivable increased $10.5 million for the year ended December 31, 2025 due to an investment classified as a financing receivable in December 2024.
Interest income from other real estate related investments and other income. The $28.5 million, or 42%, increase in interest and other income was primarily due to an increase of $32.2 million from the origination of loans receivable after January 1, 2024, an increase of $4.6 million of interest income earned on escrow deposits in connection with the Acquisition and an increase of $1.0 million due to originations of other loans, partially offset by a decrease of $7.3 million of interest income on money market funds, a decrease of $1.7 million related to loan payments and a $0.3 million decrease of interest income due to placing one other loan on non-accrual status during 2024. See above under “Recent Developments” for additional information on the origination of loans receivable.
What changed in the latest 10-Q
Risk Factors
New heading “Our use of, or inability to use, artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business and operating results or the business and operating results of our tenants, managers, borrowers or business partners.”
Largest changes
“We use, and may expand our use of, generative artificial intelligence and machine learning (collectively, “AI”). If our peers use AI tools to optimize operations and we fail to utilize AI tools in a comparable manner, we may be competitively disadvantaged. While AI tools may facilitate optimization and operational efficiencies, they also have the potential for inaccuracy, bias, infringement or misappropriation of intellectual property. …”see in full comparison
“Our use of, or inability to use, artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business and operating results or the business and operating results of our tenants, managers, borrowers or business partners.”see in full comparison
“Additionally, the complex and rapidly evolving landscape around AI may expose us to claims, inquiries, demands and proceedings by private parties and global regulatory authorities and subject us to legal liability as well as reputational harm. New laws and regulations are being adopted in the U.S. and in non-U.S. jurisdictions, and existing laws and regulations may be interpreted in ways that would affect our business operations and the way in which we use AI. …”see in full comparison
“Our use of third-party AI models, platforms, vendors, datasets, or infrastructure relies on safeguards implemented by those third parties, including safeguards related to model performance, availability, privacy, data use, security, intellectual property, confidentiality, accuracy, bias mitigation, regulatory compliance, and other matters, and these safeguards may be insufficient. …”see in full comparison
“In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us. The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.”see in full comparison
Full comparison: every changed paragraph (6)
We have disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 risk factors which materially affect our business, financial condition, or results of operations. There have been no material changes from the risk factors previously disclosed.disclosed, except as noted below.
Our use of, or inability to use, artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business and operating results or the business and operating results of our tenants, managers, borrowers or business partners.
We use, and may expand our use of, generative artificial intelligence and machine learning (collectively, “AI”). If our peers use AI tools to optimize operations and we fail to utilize AI tools in a comparable manner, we may be competitively disadvantaged. While AI tools may facilitate optimization and operational efficiencies, they also have the potential for inaccuracy, bias, infringement or misappropriation of intellectual property. The use of AI tools may introduce errors or inadequacies that are not easily detectable, including deficiencies, inaccuracies, or biases in the data used for AI training, or in the content, analyses, or recommendations generated by AI applications. Uncertainty around the safety and security of new and emerging AI applications may require additional investment in the development of proprietary datasets, machine learning models and systems to test for security, accuracy, bias and other variables, which are often complex, may be costly and could impact our operating results. Cybersecurity threat actors may also utilize AI tools to automate and enhance cybersecurity attacks against us and could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm. Additionally, AI-enabled solutions and features may become more important to our tenants, managers, borrowers and business partners over time. They may also incorporate AI into their products and services without disclosing such use to us or fail to disclose risks presented by their use of AI. If our tenants, managers, borrowers or business partners use AI tools that do not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection, compliance and transparency, among others, it could inhibit our and their ability to maintain an adequate level of functionality or service.
Our use of third-party AI models, platforms, vendors, datasets, or infrastructure relies on safeguards implemented by those third parties, including safeguards related to model performance, availability, privacy, data use, security, intellectual property, confidentiality, accuracy, bias mitigation, regulatory compliance, and other matters, and these safeguards may be insufficient. Third-party AI providers may also change their models, terms, pricing, availability, data-use practices, privacy and security commitments, intellectual property positions, or compliance posture in ways that adversely affect our operations, costs, or ability to meet our contractual or regulatory obligations. Interruptions, errors, degradation, security incidents, or changes involving third-party AI technologies could impair our products or internal operations and could adversely affect our business.
Additionally, the complex and rapidly evolving landscape around AI may expose us to claims, inquiries, demands and proceedings by private parties and global regulatory authorities and subject us to legal liability as well as reputational harm. New laws and regulations are being adopted in the U.S. and in non-U.S. jurisdictions, and existing laws and regulations may be interpreted in ways that would affect our business operations and the way in which we use AI. Future regulations could impose restrictions on the use of AI technology and require us to incur significant costs to implement compliance measures or change the way in which we use AI. Any of these outcomes could impair our ability to compete effectively, damage our reputation, result in the loss of valuable property or information and adversely impact our results of operations.
In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us. The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.
Management's Discussion & Analysis (MD&A)
New heading “Equity Offering of Common Stock”
Largest changes
Our cash flows provided by financing activities for thesee in full comparisonthreesix months endedMarchJune31,30, 2026 were primarily comprised of$127.9$484.3 million in net proceeds from the issuance of common stock, $310.0 million in net borrowings under our Third Amended Revolving Facility (as defined below) and$0.1$1.2 million in contributions from noncontrolling interests, partially offset by$74.8$163.3 million in dividends paid, a $10.5 million net settlement adjustment on restricted stock, and$2.2$4.3 million in distributions to noncontrolling interests. Our cash flows provided by financing activities for thethreesix months endedMarchJune31,30, 2025 were primarily comprised of$425.0$500.0 million in net borrowings under our Third Amended Revolving Facility,$15.5$365.3 million in net proceeds from the issuance of common stock and$1.4$6.9 million in contributions from noncontrolling interests, partially offset by$54.4$117.4 million in dividends paid, a $4.2 million payment of deferred financing costs, a $3.3 million net settlement adjustment on restrictedstock,stock$0.9and $2.2 million in distributions to noncontrollinginterests, and a $0.1 million payment of deferred financing costs.interests.
“Impairment of real estate investments. During the three months ended March 31, 2026, we did not recognize any impairment charges. During the three months ended December 31, 2025, we recognized impairment charges of $2.0 million related to one property that was sold during the period.”see in full comparison
“Unrealized gain on other real estate related investments, net. During the three months ended March 31, 2026, we recorded $1.5 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.7 million, to bring the interest rates in line with market rates, and an unrealized foreign currency loss of $0.8 million related to two mortgage loans receivable. …”see in full comparison
“Unrealized gain on other real estate related investments, net. During the six months ended June 30, 2026, we recorded $4.8 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $2.4 million, to bring the interest rates in line with market rates, and an unrealized foreign currency loss of $0.7 million related to two mortgage loans receivable. …”see in full comparison
Unrealized gain on other real estate related investments, net. During the three months ended June 30, 2026, we recorded $2.6 million of unrealized gains on our secured and mezzanine loans receivable partially offset by unrealized losses of $1.0 million to bring the interest rates in line with market rates and an unrealized foreign currency gain of $0.1 million related to two mortgage loans receivable. During the three months ended March 31, 2026, we recorded $1.5 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.7 million, to bring the interest rates in line with market rates, andsee in full comparison$0.8 million ofan unrealized foreign currency loss of $0.8 million related to two mortgage loans receivable.During the three months ended December 31, 2025, we recorded an unrealized gain of $9.0 million on our secured and mezzanine loans receivable, to bring the interest rates in line with market rates.
Full comparison: every changed paragraph (94)
Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: (i) the ability of our tenants, managers, and borrowers to successfully operate our properties and to meet and/or perform their obligations under the agreements we have entered into with them, including without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (ii) the impact of unstable market and economic conditions; (iii) the impact of healthcare reform legislation, including reimbursement rates and potential minimum staffing level requirements, on the operating results and financial conditions of our tenants, managers, and borrowers; (iv) the consequences of bankruptcy, insolvency or financial deterioration of our tenants, managers and borrowers; (v) the ability and willingness of our tenants, managers and borrowers to renew their agreements with us, and our ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant or manager; (vi) the risk that we may have to incur additional impairment charges related to ourany assetsasset held for salesales if we are unable to sell such assets at the prices we expect; (vii) the impact of public health crises; (viii) the availability of and the ability to identify (a) tenants and managers who meet our credit and operating standards, and (b) suitable acquisition opportunities and the ability to acquire and lease the respective properties to such tenants and managers on favorable terms; (ix) the intended benefits of our acquisition of Care REIT plc (“Care REIT”) may not be realized, and the additional risks we will be subject to from our investment in Care REIT and any other international investments; (x) the additional operational and legal risks associated with our properties managed in a RIDEA (as defined below) structure; (xi) the impact of the unfavorable resolution of litigation or disputes and rising liability and insurance costs as a result thereof or other market factors; (xii) the ability to retain our key management personnel; (xiii) the ability to maintain our status as a real estate investment trust (“REIT”); (xiv) changes in the United States (“U.S.”) and United Kingdom (“U.K.”) tax law and other state, federal or local laws, whether or not specific to REITs; (xv) the ability to generate sufficient cash flows to service our outstanding indebtedness; (xvi) access to debt and equity capital markets; (xvii) fluctuating interest and currency rates; (xviii) risks and challenges related to our use of, or inability to use, artificial intelligence; and (xviiixix) any additional factors included under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025,2025 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (the “SEC”).
As of MarchJune 31,30, 2026, we owned, directly or indirectly in consolidated joint ventures, and leased to independent operators, 417426 skilled nursing facilities (each, a “SNF”), senior housing communities and other properties consisting of 38,51239,667 operational beds and units located in 3233 states and the United Kingdom with the highest concentration of properties by rental income located in California, the U.K., Texas,California, Texas and Tennessee. As of MarchJune 31,30, 2026, we also had other real estate related investments consisting of four preferred equity investments, 1721 real estate secured loans receivable and fivefour mezzanine loans receivable with a carrying value of $931.5$1.1 millionbillion and onethree financing receivablereceivables with a carrying value of $92.5$556.2 million.
During the fourth quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”) as permitted by the Housing and Economic Recovery Act of 2008 in connection with the establishment of a senior housing operating portfolio (“SHOP”) and completed our first SHOP acquisition in December 2025. As of MarchJune 31,30, 2026, CareTrust REIT also owned, indirectly in consolidated joint ventures, the properties and operations of threefour senior housing communities consisting of 270372 units in Texas and Arizona that are operated on our behalf by independent managers pursuant to the terms of separate management agreements under our SHOP platform.
Recent macroeconomic conditions, particularly market uncertainty, immigration restrictions and changes to immigration enforcement policy, changes to the U.S. healthcare system, shutdown of the federal government, inflation (including higher supply costs and shortages), effects of global tariffs, elevated interest rates and related changes to consumer spending, have adversely impacted and could continue to adversely impact our tenants’ ability to meet some of their financial obligations to us. Higher interest rates and market volatility have also increased our costs of capital to finance acquisitions and increased our borrowing costs. We continue to monitor changes in the interest rate environment and the effect of changing rates on our business. In addition, current macroeconomic conditions and the resulting market volatility may adversely impact our ability to sell properties on acceptable terms, if at all, which could result in additional impairment charges.
As a result of impacts experienced by our operators due to recent market trends and uncertainties, the ability of some of our tenants and borrowers to meet their financial obligations to us in full may be negatively impacted. From time to time in the past, we have taken actions to reposition one or more properties with a replacement tenant or sell the property and, in certain cases, we have also restructured tenants’ long-term obligations. During the three months ended MarchJune 31,30, 2026, we collected approximately 100% of contractual rents and interest due from our operators and borrowers. In the event our tenants or borrowers are unable to satisfy their obligations to us and we are unable to effect these actions on terms that are as favorable to us as those currently in place, our rental and interest income would be adversely impacted and we may incur additional expenses or obligations and be required to recognize additional impairment charges or fair value adjustments.
The following information supplements and updates, and should be read in conjunction with, the information contained under the caption Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments - Regulatory Updates, in our Annual Report on Form 10-K for the year ended December 31, 2025.
TheOn July 29, 2026, Centers for Medicare and Medicaid Services (“CMS”) issued a final rule on July 31, 2025, updating MedicareSNF payment policies and rates for SNFs for fiscal year 2026.2027, This update providesproviding for a net increase of 3.2%2.4% in Medicare Part A payments to SNFs, representing an estimated $882.7 million increase in aggregate payments to SNFs. This increase is expected to partially offset some of our tenants’ and borrowers’ higher operating costs. In April 2026, CMS proposed a payment rate update to SNF reimbursements for fiscal 2027, which includes a net increase of 2.4% in Medicare Part A payments to SNFs. This increase, if finalized, is expected to partially offset some of our tenants’ and borrowers’ higher operating costs.
In connection with the fiscal year 2027 proposed rule,rulemaking, CMS issued a Request for Information (“RFI”) seeking input on methodologies to quantify and address potential "case-mix creep" under the Patient-Driven Payment Model (“PDPM”). Comments were due June 1, 2026. In the final rule, CMS confirmed it will take the comments received under advisement in connection with any potential future rulemaking to address case-mix upcoding under PDPM. While the RFI doesdid not proposeresult in specific rate changes,changes for fiscal year 2027, it indicates CMS may pursue future recalibrations to PDPM that could reduce per-beneficiary Medicare payments to SNFs in fiscal years beyond fiscal year 2027. Comments are due June 1, 2026.
In the same proposedfinal rule, CMS proposedfinalized updates to the SNF Quality Reporting Program,Program (“QRP”), including the removal of two COVID-19 vaccination measures, shorter data submission deadlines, and,measures beginning with the fiscal year 20312028 programSNF year,QRP, a shortened data submission timeframe from approximately 4.5 months to approximately 45 days beginning with the fiscal year 2029 SNF QRP, and a requirement that SNFs submit Minimum Data Set assessments for all residents receiving covered skilled care regardless of payerpayer. (estimatedThese by CMS to increase aggregate SNF compliance costs by approximately $88 million annually). If adopted, these expandedfinalized obligations would broaden the conduct that triggers the existing 2-percentage-point reduction to a SNF’s annual market basket update for noncompliance, which could adversely affect our tenants’ and borrowers’ financial condition and ability to meet their obligations to us.
In April 2026, CMS issued revised guidance updating Chapters 5 and 7 of the State Operations Manual, including updates to survey procedures and revisit protocols, strengthened Civil Money Penalty enforcement (with per-instance and per-day fines and public posting of certain penalties on Nursing Home Care Compare beginning June 24, 2026), and refined Immediate Jeopardy definitions. Non-compliance could harm operators’ reputations and ability to attract patients. In addition, increased compliance burdens or enforcement actions against our tenants or borrowers could adversely affect their financial condition and, in turn, their ability to meet their obligations to us.
Non-compliance could harm operators’ reputations and ability to attract patients. In addition, increased compliance burdens or enforcement actions against our tenants or borrowers could adversely affect their financial condition and, in turn, their ability to meet their obligations to us.
California Senate Bill No. 525 (“SB 525”), signed into law on October 13, 2023 and effective October 16, 2024, requires substantial minimum wage increases for workers at certain health care facilities (including licensed SNFs) operating in California. The currentminimum wage increased from $21 per hour minimum wage for covered health care employees, in effect since June 1, 2024, is scheduled to increase to $22 or $23 per hour (depending on property type) on June 1, 2026, with a further increase to $25 per hour on June 1, 2028. The upcoming June 2026 step-up may further pressure operating costs for our California-based tenants and borrowers, which could adversely affect their financial condition and ability to meet their obligations to us.
The following table summarizes our acquisitions from January 1, 2026 through MarchJune 31,30, 2026 (dollars in thousands):
(4)Includes properties held in consolidated joint ventures. See Note 15, Variable Interest Entities, for additional information.
(5)Includes non-cash consideration related to the acquisition of one property previously subject to a loan in which the principal and interest under the loan agreement was settled in exchange for title of the property.
The following table summarizes our otherfinancing real estate relatedreceivable investments from January 1, 2026 through MarchJune 31,30, 2026 (dollars in thousands):
(1)Includes acquisition costs.
(2)Represents annualized acquisition-date interest income, exclusive of amortization of loan costs.
(3)The number of beds/units includes operating beds at the investment date.
The following table summarizes our other real estate related investments from January 1, 2026 through June 30, 2026 (dollars in thousands):
(2)Includes an additional fundingfundings on an existing mortgage secured loanloans receivable.
Equity Offering of Common Stock
On May 18, 2026, we entered into an underwriting agreement in connection with an underwritten public offering of 12.5 million shares of common stock, sold on a forward basis pursuant to forward sale agreements. The underwriters exercised in full their option to purchase an additional 1.9 million shares on May 20, 2026. The forward sale agreements have an initial forward price of $40.225 per share, subject to certain adjustments, and mature on May 20, 2027. As of June 30, 2026, 14.4 million shares remained unsettled, representing approximately $578.2 million in gross proceeds.
On February 17, 2026, we entered into a new equity distribution agreement to issue and sell, from time to time, up to $1.0 billion in aggregate offering price of our common stock through an “at-the-market” equity offering program (the “New ATM Program”) and terminated our previous $750.0 million “at-the-market” equity offering program (together, with all previous at-the-market equity offering programs, the “Previous ATM Programs” and together with the New ATM Program, the “ATM Program”). In addition to the issuance and sale of shares of itsour common stock, the ATM Program also provides for the ability to enter into one or more forward sales agreements (each, an “ATM forward contract”) with sales agents for the sale of shares of our common stock under the ATM Program.
We expect to fully physically settle ATM forward contracts entered into under the ATM program by delivery of shares of common stock to the forward purchaser and receipt of cash proceeds upon one or more settlement dates, which are typically a one-year term, at the Company’sour discretion, prior to the final settlement date, at which time we would expect to receive aggregate net cash proceeds at settlement equal to the number of shares sold on a forward basis multiplied by the relevant forward price per share. The weighted average forward sale price that we would expect to receive upon physical settlement would be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends through the settlement. As of MarchJune 31,30, 2026, 9.50.1 million shares remained unsettled under forwardthe contracts,ATM Program, representing approximately $363.6$2.5 million in gross proceeds.
The following table summarizes the ATM Program activity for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands, except per share amounts):
(1) Total gross proceeds is before $1.0$7.0 million and $0.2$4.4 million of commissions paid to sales agents and forward adjustments during the three months ended MarchJune 31,30, 2026 and 2025, respectively, under the ATM Program. Total gross proceeds is before $8.0 million and $4.6 million of commissions paid to the sales agents and forward adjustments during the six months ended June 30, 2026 and 2025, respectively, under the ATM Program.
As of MarchJune 31,30, 2026, we had $879.0$876.4 million available for future issuances under the New ATM Program.
Subsequent to June 30, 2026, we entered into forward contracts under the ATM Program to sell 2.2 million shares for gross proceeds of $90.6 million, all of which remain outstanding.
Subsequent to MarchJune 31,30, 2026, we borrowed $350.0an millionadditional $285.0 million, net onunder the Third Amended Revolving Facility (as defined below) to fund recent acquisitions. In addition, we settled outstanding forward contracts under the ATM Program for 9.5 million shares and gross proceeds of approximately $363.6 million.
Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended DecemberMarch 31, 20252026:
Total contractual rent includes initial contractual cash rent and tenant operating expense reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Total contractual rent increased by $7.8$3.6 million due to a $7.1$3.4 million increase in rental income from real estate investments made after SeptemberDecember 30,31, 2025,2025 and a $1.1$0.8 million increase in rental rates for our existing tenants, an increase of $0.2 million related to recoveries, and an increase of $0.1 million in tenant reimbursements partially offset by a $0.7$0.3 million decrease infrom rentaltenant incomereimbursements, a $0.2 million decrease related to dispositions.recoveries Straight-linein rentthe increasedquarter byended $0.3March 31, 2026 and a $0.1 million decrease related to realtenants estateon investments.a cash basis.
Resident fees and services. The $2.6$0.8 millionmillion, or 21%, increase in resident fees and services was primarily due to the acquisition of threeone senior housing communitiescommunity under the SHOP platform in DecemberMay 2025.2026.
Interest income from financing receivable.receivables. InterestThe $8.9 million increase in interest income from financing receivablereceivables didwas notprimarily changedue significantlyto the origination of two financing receivables during the quarterthree months ended MarchJune 31,30, 2026 compared to the quarter ended December 31, 2025.2026.
Interest income from other real estate related investments and other income. The $2.5$4.8 million, or 10%,22%, decreaseincrease in interest income from other real estate related investments and other income was primarily due to aan decreaseincrease of $3.0$4.6 million of interest earnedincome on moneynew marketinvestments funds,made aafter decreaseDecember 31, 2025, an increase of $0.8 million related to loan payments, a decrease of $0.3$0.2 million related to the number of days in the quarter compared to the prior quarterquarter, an increase of $0.2 million related to the amortization of loan origination fees, and an increase of $0.1 million of interest earned on cash and cash equivalents, partially offset by a decrease of $0.1$0.3 million duerelated to originationloan fees received in the prior quarter, partially offset by $1.7 million of interest income on new investments made after September 30, 2025.payments.
Depreciation and amortization. The $2.3$0.9 million, or 8%,3%, increase in depreciation and amortization was primarily due to an increase of $3.0$1.2 million due to acquisitions and capital improvements made after SeptemberDecember 30,31, 2025, partially offset by a decrease of $0.3 million related to dispositions, a decrease of $0.3 million due to reclassifying assets as held for investment in the quarter ended December 31, 2025 and a decrease of $0.1 million related to assets becoming fully depreciated after SeptemberDecember 30,31, 2025.
Interest expense. Interest expense did not change significantly during the quarter ended March 31, 2026 compared to the quarter ended December 31, 2025.
Property taxes and insurance. The $0.2 million, or 9%, increase in property taxes and insurance was primarily due to an increase of $0.1 million due to acquisitions made after September 30, 2025 and an increase of $0.1 million due to reassessments.
Senior housing operating expenses. The $2.2 million increase in senior housing operating expenses was due to the acquisition of three senior housing communities under the SHOP platform in December 2025.
Impairment of real estate investments. During the three months ended March 31, 2026, we did not recognize any impairment charges. During the three months ended December 31, 2025, we recognized impairment charges of $2.0 million related to one property that was sold during the period.
Transaction costs. Transaction costs for the three months ended March 31, 2026 and December 31, 2025 are primarily related to integrating the operations of the Care REIT acquisition in the U.K. in 2025.
Property operating expenses (recoveries). During the three months ended March 31, 2026, we recognized $0.3 million of property operating expenses related to assets we sold or transitioned to new operators. During the three months ended December 31, 2025, we recognized $1.5 million in recoveries related to assets we have sold.
GeneralInterest andexpense. administrative. General and administrativeInterest expense decreasedincreased by $1.1$4.1 million as detailed below:
Property taxes and insurance. The $0.3 million, or 12%, decrease in property taxes and insurance was primarily due to a decrease of $0.5 million due to reassessments, partially offset by an increase of $0.2 million due to acquisitions made after December 31, 2025.
Senior housing operating expenses. The $0.6 million, or 20%, increase in senior housing operating expenses was primarily due to the acquisition of one senior housing community under the SHOP platform in May 2026.
Transaction costs. Transaction costs for the three months ended June 30, 2026 and March 31, 2026 are primarily related to integrating the operations of the Care REIT acquisition in the U.K. in 2025.
Provision for loan losses. During the three months ended June 30, 2026, we recorded a $4.7 million provision for loan losses due to the credit loss reserve on two new financing receivables originated in the period. During the three months ended March 31, 2026, we did not record any provision for loan losses.
Property operating (recoveries) expenses. Property operating (recoveries) expenses for the three months ended June 30, 2026 and March 31, 2026 relate to assets we sold or transitioned to new operators.
General and administrative. General and administrative expense increased by $1.4 million as detailed below:
Other income, net. During the three months ended March 31, 2026, we did not record any other income. During the three months ended December 31, 2025, we recorded other income of $5.0 million related to a fee received in connection with the release of a property from a purchase agreement, partially offset by $0.6 million in fees paid in connection with the transaction.
Gain on sale of real estate, net. During the three months ended March 31, 2026, we did not record any gain on the sale of real estate. During the three months ended December 31, 2025, we recorded a $27.7 million gain on the sale of real estate related to the sale of one skilled nursing facility and eight senior housing communities.
Unrealized gain on other real estate related investments, net. During the three months ended June 30, 2026, we recorded $2.6 million of unrealized gains on our secured and mezzanine loans receivable partially offset by unrealized losses of $1.0 million to bring the interest rates in line with market rates and an unrealized foreign currency gain of $0.1 million related to two mortgage loans receivable. During the three months ended March 31, 2026, we recorded $1.5 million of unrealized gains on our secured and mezzanine loans receivable, partially offset by unrealized losses of $0.7 million, to bring the interest rates in line with market rates, and $0.8 million ofan unrealized foreign currency loss of $0.8 million related to two mortgage loans receivable. During the three months ended December 31, 2025, we recorded an unrealized gain of $9.0 million on our secured and mezzanine loans receivable, to bring the interest rates in line with market rates.
Gain (loss) on foreign currency transactions. During both the three months ended June 30, 2026 and March 31, 2026, we recorded a $0.1 million foreign currency gain related to our cash flow hedges. During the three months ended December 31, 2025, we recorded a $0.1 million loss related to our cash flow hedges.
Income tax expense. During the three months ended June 30, 2026 and March 31, 2026, we recorded $2.5 million and $2.3 million of income tax expenseexpense, respectively, primarily related to foreign withholding taxes related to taxable income in the U.K. During the three months ended December 31, 2025, we recorded $1.9 million of income tax expense primarily related to foreign withholding taxes related to taxable income in the U.K.
Net (loss) income attributable to noncontrolling interests. Net loss attributable to noncontrolling interests increaseddid not change significantly during the threequarter monthsended June 30, 2026 compared to the quarter ended March 31, 2026 primarily due to other income recognized in the three months ended December 31, 2025.2026.
ThreeSix Months Ended MarchJune 31,30, 2026 Compared to ThreeSix Months Ended MarchJune 31,30, 2025:
Total contractual rent includes initial contractual cash rent and tenant operating expense reimbursements, as adjusted for applicable rental escalators and rent increases due to capital expenditures funded by the Company. For tenants on a cash basis, this represents the lesser of the amount that would be recognized on a straight-line basis or cash that has been received. Total contractual rent increased by $39.6$70.3 million due to a $35.7$63.5 million increase in rental income from real estate investments made after December 31, 2024, a $3.2$5.8 million increase in rental rates for our existing tenants, a $1.3$2.2 million increase in rental income related to transfers to new operators, and a $0.2$0.4 million increase infrom tenant reimbursements, partially offset by a $0.8$1.4 million decrease in rental income related to dispositions made after December 31, 2024.2024, and a $0.2 million decrease related to tenants on a cash basis. Straight-line rent increased by $3.9$6.3 million due to investments made after December 31, 2024. Amortization of above and below market leases decreased $0.9by $1.9 million primarily due to lease terminations in August 2025, which accelerated the amortization of the applicable below market lease intangibles.
Resident fees and services. The $3.9$8.5 million increase in resident fees and services was primarily due to the acquisition of three senior housing communities under the SHOP platformplatform, including three communities acquired in December 2025.2025 and one community acquired in May 2026.
Interest income from financing receivable.receivables. InterestThe $8.8 million increase in interest income from financing receivablereceivables didwas notprimarily changedue significantlyto the origination of two financing receivables during the quarterthree months ended MarchJune 31,30, 2026 compared to the quarter ended March 31, 2025.2026.
Interest income from other real estate related investments and other income. The $0.2 million decrease in interest and other income was primarily due to a $2.0 million decrease in interest income related to loan repayments made after December 31, 2024, a $1.6 million decrease from interest income earned on escrow deposits, a $0.9 million decrease from interest income on money market funds, and a $0.1 million decrease in interest income due to loan fee amortization, partially offset by a $4.2 million increase related to the origination of loans receivable after December 31, 2024, and a $0.2 million increase from the origination of other loans.
CTRE insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding CTRE (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 1,817,723 | $73.3M | 0.05% | Added 73% |
| Two Sigma Investments | 2026-06-30 | 1,699,720 | $68.6M | 0.05% | Added 65% |
| Millennium Management (Israel Englander) | 2026-06-30 | 882,046 | $35.6M | 0.02% | Reduced 25% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 793,285 | $32.0M | 0.05% | Added 149% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 699,350 | $28.2M | 0.02% | Reduced 49% |
| Soros Fund Management | 2026-06-30 | 325,320 | $13.1M | 0.17% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 66,481 | $2.7M | 0.0% | Reduced 3% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 10,478 | $422.8K | 0.0% | Added 2% |