NHP 10-K & 10-Q changes, risk factors and insider trading
National Healthcare Properties, Inc. (also HLTC, NHPBP) · Nasdaq · Real Estate Investment Trusts · CIK 1561032 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Physical and regulatory risks related to catastrophic weather and other natural events and climate change could have a material adverse impact on us.”
New heading “Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.”
New heading “If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we could be materially and adversely affected.”
New heading “Negative publicity relating to the reputation and safety of our properties may adversely impact our brand and occupancy levels.”
New heading “We depend on a complex ecosystem of third-parties to support our business, which may increase execution risk and could materially and adversely affect us.”
New heading “Risks Related to Investments in Real Estate”
New heading “We compete with third parties in acquiring properties and other investments and attracting creditworthy tenants.”
New heading “Our methodology used to measure the credit quality of our tenants, and used in the selection, acquisition, expansion or development of our properties, may not be accurate and may materially and adversely affect us.”
New heading “We may be materially and adversely affected by potential development and construction delays and resultant increased costs and risks.”
New heading “Artificial intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data.”
New heading “If our tenants or operators are found to have violated applicable privacy and security laws and regulations, as well as contractual obligations, our tenants or operators could be subject to sanctions, fines, damages and other additional civil or criminal penalties, which could have a material adverse effect on us.”
New heading “We may be unable to raise additional capital on favorable terms, or at all, needed to grow our business.”
New heading “Conflicts of interest could arise as a result of our officers’ other positions and/or interests outside of us.”
New heading “We have opted out of certain provisions of the MGCL relating to deterring or defending hostile takeovers.”
New heading “The MGCL and our organizational documents limit our stockholders’ right to bring claims against our officers and directors.”
Removed heading “Damage from catastrophic weather and other natural events and climate change could result in losses to us.”
Removed heading “Our operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks.”
Removed heading “We compete with third parties in acquiring properties and other investments and attracting credit worthy tenants.”
Removed heading “Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.”
Removed heading “If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we could be adversely impacted.”
Removed heading “We have a classified board, which may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.”
Removed heading “Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.”
Removed heading “Certain provisions in our bylaws and agreements may deter, delay or prevent a change in our control.”
Removed heading “Maryland law limits the ability of a third-party to buy a large stake in us and exercise voting power in electing directors, which may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.”
Removed heading “The stockholder rights plan adopted by our Board may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.”
Removed heading “Our stockholders may have tax liability on distributions that they elect to reinvest in shares of our common stock, but they would not receive the cash from such distributions to pay such tax liability.”
Largest changes
“Complying with these various laws, rules, regulations and standards, and with any new laws or regulations changes to existing laws, could cause us to incur substantial costs that are likely to increase over time, require us to change our business practices, divert resources from other initiatives and projects, and restrict the way products and services involving data are offered, all of which may have a material adverse effect on us. …”see in full comparison
“The management of PHI is subject to several regulations at the federal level, including HIPAA and the HITECH Act. The HIPAA privacy and security regulations protect medical records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health information, and limiting most uses and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose. …”see in full comparison
“If our tenants or operators are found to have violated applicable privacy and security laws and regulations, as well as contractual obligations, our tenants or operators could be subject to sanctions, fines, damages and other additional civil or criminal penalties, which could have a material adverse effect on us.”see in full comparison
“We periodically evaluate our real estate investments for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and legal structure. For example, the early termination of, or default under, a lease by a major tenant may lead to an impairment charge. If we determine that an impairment has occurred, we are required to make a downward adjustment to the net carrying value of the property. …”see in full comparison
“We may enter into sale-leaseback transactions, where we purchase a property and then lease the same property back to the seller, who becomes our tenant as part of the transaction. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could materially and adversely affect us. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. …”see in full comparison
“We may enter into sale-leaseback transactions, where we purchase a property and then lease the same property back to the seller, who becomes our tenant as part of the transaction. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. …”see in full comparison
Full comparison: every changed paragraph (261)
•Our property portfolio has a high concentration of properties located in certain states. Our properties may be adversely affected by economic cycles and risks inherent to those states.
•We may be unable to enter into contracts for and complete property acquisitions (especially in the SHOP segment) or dispositions on advantageous terms and our property acquisitions may not perform as we expect.
•We have not paid ourany distributions on our common stock in cash since 2020, and there can be no assurance we will pay distributions on our common stock in cash in the future.
•Our results of operations have been, and may continue to be, adversely impacted by our inability to collect rent from tenants.
•Our properties and tenants may be unable to compete successfully.
•We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
•DamagePhysical fromand regulatory risks related to catastrophic weather and other natural events and climate change could resulthave ina lossesmaterial toadverse impact on us.
•Covenants, conditions and restrictions may impact our ability to operate a property.
•We assume additional operational risks and are subject to additional regulation and liability because we depend on eligible independent contractors to manage some of our facilities.
•Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.
•Net leases may not result in market rental rates over time.
•If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we could be materially and adversely affected.
•We depend on a complex ecosystem of third-parties to support our business, which may increase execution risk and could materially and adversely affect us.
•Our real estate investments are relatively illiquid, and therefore we may not be able to dispose of properties when we desire to do so or on favorable terms.
•We compete with third parties in acquiring properties and other investments and attracting creditworthy tenants.
•Our methodology used to measure the credit quality of our tenants, and used in the selection, acquisition, expansion or development of our properties, may not be accurate and may materially and adversely affect us.
•We may be materially and adversely affected by potential development and construction delays and resultant increased costs and risks.
•Discovery of previously undetected environmentally hazardous conditions may materially and adversely affect us.
•Our real estate investments are concentrated in healthcare-related facilities, and we may be negativelymaterially impactedand adversely affected by adverse trends in the healthcare industry.
•The healthcare industry is heavily regulated, and new laws or regulations, changes to existing laws or regulations, loss of licensure or failure to obtain licensure could result in the inability of our tenants to make rent payments to us.us and materially and adversely affect our operators.
•Required regulatory approvals can delay or prohibit transfers of our healthcare facilities.
•A reduction in Medicare payment rates may have a material adverse effect on the Medicare reimbursements received by our tenants and operators.
•We may incur costs associated with complying with the Americans with Disabilities Act.
•We assume additional operating risks and are subject to additional regulation and liability because we depend on eligible independent contractors to manage some of our facilities.
•Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.
•Events that materially and adversely affect the ability of seniors and their families to afford daily resident fees at our SHOPs could cause our occupancy rates and resident fee revenues to decline.
•Termination of SHOP leases by residents pursuant to state law mandated contractual provisions could have a material adverse effect on us.
•TenantsSome tenants and operators of our healthcare-related assets maymust becomply subjectwith to significant legal actions that could subject them to increased operating costsfraud and substantialabuse uninsuredlaws, liabilities,the violation of which may affectjeopardize their ability to paymeet their rent paymentsobligations to us.
•Tenants and operators of our healthcare-related assets may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may materially and adversely affect their ability to pay their rent payments or meet their other obligations to us.
•We may experience material adverse effects as a result of potential financial and operational challenges faced by the tenants and operators of any senior housing facilities and skilled nursing facilities we own or acquire.
•If our tenants or operators are found to have violated applicable privacy and security laws and regulations, as well as contractual obligations, our tenants or operators could be subject to sanctions, fines, damages and other additional civil or criminal penalties, which could have a material adverse effect on us.
•Our business and operations could suffer if our operations experiences system failures or cyber incidents or a deficiency in cybersecurity.
•Changes in the debt markets could have a material adverse impact on us.
•Elevated interest rates may make it difficult for us to finance or refinance indebtedness secured by our properties and could increase the amount of our debt payments.
•Any hedging strategies we utilize may not be successful in mitigating our risks.
•We have opted out of certain provisions of the MGCL relating to deterring or defending hostile takeovers.
•Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third-party from acquiring us in a manner that might result in a premium price to our stockholders.
Our property portfolio has a high concentration of properties located in certain states. Our properties may be materially and adversely affected by economic cyclescycles, natural disasters, local oversupply and other risks inherent to those states.
A total of 10% or more of our consolidated annualized rental income on a straight-line basis for the fiscal year ended December 31, 20242025 was generated from each of Florida, Georgia, Pennsylvania and Georgia.Iowa. Any adverse situation that disproportionately affects operations or investments in these states may have a magnified adverse effect on our portfolio. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how economic conditions will impact thisthese marketmarkets, or others in bothwhich we may develop investment concentrations, in either the short andor long-term. Declines in the economy oreconomies, a decline in the real estate markets and local oversupply of senior housing communities and outpatient medical facilities in these states could hurt our financial performance and the value of our properties. Historically,For example, historically, Florida has been at greater risk of acts of nature such as hurricanes and tropical storms, which may have worsened as a result of climate change, and has been subject to more pronounced real estate downturns than other regions. Accordingly, ourwe business, financial condition and results of operations may beare particularly susceptible to downturns or changes in the local Florida, Georgia, Pennsylvania and GeorgiaIowa economies where wesignificant operate.portions of our assets are located. Other factors that may negatively affect economic conditions include:
•regulatory changes regarding senior housing and other healthcare real estate operations;
•increased telecommuting and use of alternative workplaces;
•concessions or reduced rental rates under new leases for properties where tenants defaulted or prolonged vacancies at such properties;
We may be unable to enter into contracts for and complete property acquisitions (especially in the SHOP segment) or dispositions on advantageous terms and our property acquisitions may not perform as we expect.
InWe themay nearbe term, we expectunable to focusacquire on disposing properties to reduce our existing indebtedness. There is no assurance that we will be able toor dispose of properties on terms that are found favorable to us or at the time we wish to do so.so, Overespecially thein longerconnection term,with weacquiring expectsenior housing properties as part of our objective to continueincrease acquiringexposure additionalto properties;SHOP. pursuingPursuing thisour investment objective exposes us to numerous risks, including:
•competition from other real estate investors with significantsignificantly greater capital resources or lower cost of capital than we have;
•we may be unable to identify or source suitable acquisition targets;
•we may not successfully integrate, manage andor lease the properties we acquire or find suitable operators for any SHOP in a fashion that meets our expectations or market conditions may result in lower operating results or future vacancies and lower-than expected rental rates;
After the Internalization, we became an internally-managed REIT and are responsible for hiring and maintaining our own workforce to facilitateprovide the advisory and property management services.services previously provided by our external advisor. Because we are now internally managed, we are responsible for directly compensating our officers, employees and consultants, as well as paying overhead expenses associated with our workforce. There is no assurance that we will realize all, or any, of the anticipated cost-savingcost-savings or synergies of the Internalization. We are now also subject to potential liabilities that are commonly faced by employers, such as workers’ disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances. We bear the cost of establishing and maintaining employee compensation plans. In addition, as we have neverlimited previouslyhistory operatedoperating as a self-managed REIT, we may encounter unforeseen costs, expenses and difficulties associated with providing these services on a self-advised basis. Finally, with respect to our recent and ongoing strategic initiative of internalizing our property management functions, we may not be able to realize the expected financial or operational benefits.
All dividends or other distributions on our common stock are paid in the discretion of our Board. We have not paid cash distributions sinceon 2020. From October 2020 through January 2024, we issued dividends in the form ofour common stock valuedsince at the Estimated Per-Share NAV in effect on the applicable date. We do not intend to declare any further stock dividends in the future.2020. There is also no assurance when or if we will pay dividends or other distributions in cash in the future. We last published an Estimated Per-Share NAV on March 27, 2024. The estimate was as of December 31, 2023 and has not been adjusted since publication and will not be adjusted until the Board determines a new Estimated Per-Share NAV which is expected in late March 2025. Our ability to make future cash distributions on our common stock will depend on our futurebusiness, cashfinancial flowscondition, liquidity, results of operations, financial metrics, prospects, maintenance of our REIT qualification, applicable law and indebtednesssuch andother matters as our Board may furtherdeem dependrelevant onfrom our abilitytime to obtain additional liquidity, which may not be available on favorable terms, or at all.time. Further, if we do not pay dividends on our Series A Preferred Stock or Series B Preferred Stock, we will not be permitted to pay any cash distributions on our common stock, any accrued and unpaid dividends payable with respect to the Series A Preferred Stock or Series B Preferred Stock become part of the liquidation preference thereof, as applicable, and, whenever dividends on the Series A Preferred Stock or Series B Preferred Stock are in arrears, whether or not authorized or declared, for six or more quarterly periods, holders of Series A Preferred Stock or Series B Preferred Stock will have the right to elect two additional directors to serve on our Board.
We have previously had tenants file for bankruptcy and seek the protections afforded under Title 11 of the United States Code. There is no assurance we will not experience this in the future. A bankruptcy filing by one of our tenants or any guarantor of a tenant’s lease obligations would result in a stay of all efforts by us to collect pre-bankruptcy debts from these entities or their assets, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be required to be paid currently. If a lease is assumed by the tenant, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would only have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid as of the date of the bankruptcy filing (post-bankruptcy rent would be payable in full). This claim could be paid only if funds were available, and then only in the same percentage as that realized on other unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases and could ultimately preclude full collection of these sums. A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for dividends and other distributions to our stockholders. In the event of a bankruptcy, there is no assurance that the debtor in possession or the bankruptcy trustee will assume the lease.
We may enter into sale-leaseback transactions, where we purchase a property and then lease the same property back to the seller, who becomes our tenant as part of the transaction. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If this plan were confirmed by the bankruptcy court, we would be bound by the new terms. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow.
On occasion, residents at certain properties in our SHOP segment and tenants at certain properties in our OMF segment and residents at certain properties in our SHOP segment have been in default under their leases to us. These defaults negatively impact our results of operations. We incurred $1.5$0.7 million, $1.2$1.5 million and $3.2$1.2 million of bad debt expense, including straight-line rent write-offs, related to tenants in default under their leases to us during the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively.
Further, even if we replace tenants in default to us in a manner that will allow us to transition the properties leased to those tenants to our SHOP segment, there can be no assurance this strategy will be successful and we may be more exposed to changes in property operating expenses. There also can be no assurance that we will be able to replace these tenants on a timely basis, or at all, and our results of operations may therefore continue to be adversely impacted by bad debt expenses related to our inability to collect rent from defaulting tenants. Transitions will also increase our exposure to risks associated with operating in this structure.
When dealing with defaults in our properties, we may seek to transition a property to a RIDEA structure in our SHOP segment. Any such transition will expose us to increased operating risks at the property, and no assurance can be given that any such transition will be successful in replacing the rent under the defaulted lease. Similarly, where we seek to re-tenant a property with a defaulted lease, there can be no assurance that we will be able to do so on a timely basis, or at all, and our results of operations may therefore continue to be adversely impacted by bad debt expenses related to our inability to collect rent from defaulting tenants Our tenants in our OMF segment or operatorsresidents in our SHOP segment that experience deteriorating financial conditions have been, or may, in the future be, unwilling or unable to pay us in full or on a timely basis due to bankruptcy, lack of liquidity, lack of funding, operational failures or for other reasons. There is no assurance we will continue to collect at the current rates. Our ability to collect rents in future periods may be impacted by issues or events that cannot be determined as present and the amount of cash rent collected during 20242025 may not be indicative of any future period.
We obtain only limited warranties when we purchase a property and therefore have only limited recourse if our due diligence did not identify any issues that lower the value of ourthe property.
We have acquired and may continue to acquire properties in “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements we entered into in the past, or may enter into in the future, may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all our invested capital in the property as well as the loss of rental income from that property if a situation or loss occurs after the fact for which we have limited or no remedy.
The properties we have acquired and willexpect to acquire may face competition from nearby hospitals, senior housing properties and other outpatient medical facilities that provide comparable services. Regions where we operate may face an oversupply of such properties, leading to pricing pressure and lower occupancy rates. Some of those competing facilities are owned by governmental agencies and supported by tax revenues, and others are owned by nonprofit corporations and may be supported to a large extent by endowments and charitable contributions. These types of support are not available to our properties. Similarly, our tenants face competition from other medical practices in nearby hospitals and other medical facilities. Additionally, the introduction and explosion of new stakeholdersparticipants competing with traditional providers in the healthcare market, including companies such as telemedicine, telehealth and mhealth,mobile arehealth companies, is disrupting the healthcare industry. Our tenants’ failure to compete successfully with these other practices and providersproviders, especially in regions of oversupply, could adversely affect their ability to make rental payments, which could adversely affect our rental revenues.
Further, from time to time and for reasons beyond our control, referral sources, including physicians and managed care organizations, may change their lists of hospitals or physicians to which they refer patients. This could adversely affect the ability of our tenants to make rental payments,payments to us, which could have a material adverse impacteffect on us.
Lock-out provisions, such as the provisions contained in certain mortgage loans we have entered into, could materially restrict our ability to sell or otherwise dispose of or refinance properties, including by requiring a yield maintenance premium to be paid in connection with the required prepayment of principal upon a sale or disposition. See Note 5 — Mortgage Notes Payable and Other Debt to our Consolidated Financial Statements for additional details. Lock-out provisions may also prohibit us from reducing the outstanding indebtedness with respect to certain properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could also impair our ability to take other actions during the lock-out period that may otherwise be in the best interests of our stockholders. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control. Payment of yield maintenance premiums in connection with dispositions (including for several of our dispositions in 2024 and 2025) or refinancings could materially and adversely affect us.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Years Ended December 31, 2025 and 2024”
New heading “Segment Results — Senior Housing Operating Properties”
New heading “Fannie Mae and Other Secured Debt”
New heading “Unsecured Credit Facilities”
New heading “Commitments and Contingencies”
Removed heading “Revenue Recognition”
Removed heading “Investments in Real Estate”
Removed heading “Accounting for Leases”
Removed heading “Lessor Accounting”
Removed heading “Lessee Accounting”
Removed heading “Above-and Below-Market Lease Amortization”
Removed heading “Comparison of the Years Ended December 31, 2024 and 2023”
Removed heading “Net Operating Income”
Removed heading “Segment Results — Seniors Housing Operating Properties”
Removed heading “Gain (Loss) on Non-Designated Derivatives”
Removed heading “Cash Flows from Operating Activities”
Removed heading “Internalization and Promissory Note”
Removed heading “Credit Facilities”
Removed heading “Acquisitions — Year Ended December 31, 2024”
Removed heading “Dispositions — Year Ended December 31, 2024”
Removed heading “Dispositions — Subsequent to December 31, 2024”
Removed heading “Adjusted Funds from Operations”
Largest changes
“We may be adversely impacted by inflation on the leases with tenants in our OMF segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. …”see in full comparison
“Management assesses on a continuous basis whether there are indicators that the carrying value of our real estate properties may be impaired. Such indicators include significant declines in market value, changes in property use or condition, legal or business developments, costs that significantly exceed management’s expectations, ongoing operating losses and changes in anticipated holding period. …”see in full comparison
“When circumstances indicate the carrying value of a property may not be recoverable, we review the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. …”see in full comparison
“We may be adversely impacted by inflation on the leases with tenants in our OMF segment that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of December 31, 2024, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 3.2%. To help mitigate the adverse impact of inflation, most of our leases with our tenants in our OMF segment contain rent escalation provisions which increase the cash that is due under these leases over time. …”see in full comparison
Full comparison: every changed paragraph (172)
The following discussion and analysis should be read in conjunction with the accompanying Consolidated Financial Statements. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. See “Cautionary Note on Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K for a description of these risks and uncertainties.
We have elected to be taxed as a REIT commencing with our taxable year ended December 31, 2013. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on SHOPs and OMFs. As of December 31, 2025, we owned 167 properties and a land parcel located in 29 states, consisted of 37 senior housing communities, with 3,615 units, in our SHOP segment and 130 outpatient medical facilities, with approximately 3.7 million square feet of GLA in our OMF segment.
We are a REIT for U.S. federal income tax purposes. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on outpatient medical facilities and senior housing operating properties. As of December 31, 2024, we owned 193 properties (including one land parcel) located in 31 states and comprised of 8.4 million rentable square feet.
Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Prior to consummation of the Internalization on September 27, 2024, our former Advisor managed our day-to-day business with the assistance of our Property Manager. Prior to the Internalization, the Advisor and Property Manager were under common control with the Advisor Parent and these related parties received compensation and fees for providing services to us. In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce; the Property Manager became our wholly-owned subsidiary as a result of the Internalization. See Note 1 — Organization and Note 9 — Related Party Transactions and Arrangements to our Consolidated Financial Statements for additional information. Effective September 30, 2024, we also effected the Reverse Stock Split.
We operate in two reportable business segments for management and financial reporting purposes: OMFsSHOP and SHOPs.OMF. All of our properties across both business segments are located throughout the United States. In our SHOP segment, we invest in senior housing properties through the RIDEA structure. As of December 31, 2025, we engaged three eligible independent contractors to operate 37 SHOPs. In our OMF operating segment, we own, manage and lease singlesingle- and multi-tenant OMFs where tenants are generally required to pay their pro rata share of property operating expenses,expenses and certain capital expenditures, which may be subject to expense exclusions and floors, in addition to base rent. Our Property ManagerWe or third-party managers manage our OMFs. In our SHOP segment, we invest in seniors housing properties through the RIDEA structure. As of December 31, 2024, we had four eligible independent contractors operating 44 SHOPs.
Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Prior to consummation of the Internalization on September 27, 2024, our former Advisor and its related affiliates managed our day-to-day business and received compensation and fees for providing services to us. In connection with the Internalization, we internalized our advisory and property management functions with our own dedicated workforce. See Note 1 — Organization and Note 9—Related Party Transactions and Arrangements to our Consolidated Financial Statements for additional information. Effective September 30, 2024, we also effected the Reverse Stock Split.
We declared and issued quarterly dividends entirely in shares of our common stock from October 2020 through January 2024. We do not intend to declare any further stock dividends in the future.
The preparation of our Consolidated Financial Statements in conformity with GAAP included in Part IV, Item 15 of this Annual Report on Form 10-K requires us to use judgment in the application of critical accounting estimates and assumptions. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. These estimates could affect our financial position or results of operations. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our Consolidated Financial Statements. We periodically re-evaluate our estimates and assumptions and, in the event estimates or assumptions prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Below is a discussion of accounting policies and estimates that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. For a more detailed discussion of our significant accounting policies, see Note 2 — Summary of Significant Accounting Policies to our Consolidated Financial Statements.
Set forth below is a summary of the critical accounting policies and estimates that management believes are important to the preparation of our Consolidated Financial Statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and critical accounting policies include:
Revenue Recognition
Our revenues, which are derived primarily from lease contracts, include rent received from tenants in our OMF segment. As of December 31, 2024, these leases had a weighted average remaining lease term of 6.5 years. Rent from tenants in our OMF segment (as discussed below) is recorded in accordance with the terms of each lease on a straight-line basis over the initial term of the lease. Because many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record a receivable for, and include in revenue from tenants on a straight-line basis, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When we acquire a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. We defer the revenue related to lease payments received from tenants in advance of their due dates. Tenant revenue also includes operating expense reimbursements which generally increase with any increase in property operating and maintenance expenses in our OMF segment. In addition to base rent, dependent on the specific lease, tenants are generally required to pay either (i) their pro rata share of property operating and maintenance expenses, which may be subject to expense exclusions and floors, or (ii) their share of increases in property operating and maintenance expenses to the extent they exceed the properties’ expenses for the base year of the respective leases. Under ASC 842, we have elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, we have reflected them on a net basis.
Our revenues also include resident services and fee income primarily related to rent derived from lease contracts with residents in our SHOP segment, held using a structure permitted under RIDEA. Rental income from residents in our SHOP segment is recognized as earned when services are provided. Residents pay monthly rent that covers occupancy of their unit and basic services, including utilities, meals and some housekeeping services. The terms of the leases are short term in nature, primarily month-to-month.
We defer the revenue related to lease payments received from tenants and residents in advance of their due dates. Pursuant to certain of our lease agreements, tenants are required to reimburse us for certain property operating and maintenance expenses related to non-SHOP assets (recorded in revenue from tenants), in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating and maintenance costs of the respective properties.
We continually review receivables related to rent and unbilled rent and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standards, we are required to assess, based on credit risk only, if it is probable that we will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. If we determine that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if we determine it is not probable that we will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants in accordance with current accounting rules, on the accompanying consolidated statements of operations and comprehensive loss in the period the related costs are incurred, as applicable.
During the years ended December 31, 2024, 2023 and 2022, we recorded reductions in revenue of $1.5 million, $1.2 million and $3.2 million, respectively, related to uncollectible accounts. Approximately $1.3 million of bad debt expense recorded in the year ended December 31, 2022, related to previously disposed properties. There were no significant write-offs related to previously disposed properties during the year ended December 31, 2024 and 2023.
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
At the time an asset is acquired, we evaluate the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the “Purchase Price Allocation” section below for a discussion of the initial accounting for investments in real estate.
Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on our operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations during the years ended December 31, 2024, 2023 and 2022. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. We evaluate probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. There were no real estate investments held for sale as of December 31, 2024 and 2023.
At the time an asset is acquired, we evaluate the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations and comprehensive loss. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In both a business combination and an asset acquisition, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as-ifas if vacant basis. Intangible assets may include the value of in-place leases and above- and below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates. In allocating the fair value to any assumed or issued non-controlling interests, amounts are recorded at their fair value at the close of business on the acquisition date. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. All acquisitions during the years ended December 31, 2024, 2023 and 2022 were asset acquisitions. We acquired four properties during the year ended December 31, 2024.
Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. We utilize various estimates, processes and information to determine the as-if vacant property value. We estimate the fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, market rental rates, discount rates and land values per square foot.
Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months.period. We also estimate costs to execute similar leases including leasing commissions, legal and other related expenses.
The aggregate value of intangible assets related to customer relationships, as applicable, is measured based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the tenant. Characteristics considered by us in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. We did not record any intangible asset amounts related to customer relationships during the years ended December 31, 2024 and 2023.
Accounting for Leases
Lessor Accounting
We evaluate new leases (by us or by a predecessor lessor/owner) pursuant to ASC 842: Leases to determine lease classification. A lease is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor. As of December 31, 2024 and 2023, we had no leases as a lessor that would be considered as sales-type leases or financings under sale-leaseback rules.
As a lessor of real estate, we have elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating and maintenance expenses) as a single lease component as an operating lease because (i) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (ii) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.
Lessee Accounting
We are also the lessee under certain land leases which will continue to be classified as operating leases under transition elections unless subsequently modified. These leases are reflected on the consolidated balance sheets as of December 31, 2024 and 2023, and the rent expense is reflected on a straight-line basis over the lease term in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024, 2023 and 2022.
For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to our operating leases, see Note 16 — Commitments and Contingencies to our Consolidated Financial Statements.
Management assesses on a continuous basis whether there are indicators that the carrying value of our real estate properties may be impaired. Such indicators include significant declines in market value, changes in property use or condition, legal or business developments, costs that significantly exceed management’s expectations, ongoing operating losses and changes in anticipated holding period. If any of these indicators are present, management evaluates whether the property’s carrying value may not be recoverable based on an estimate of future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. If an impairment exists due to the inability to recover the carrying value, we will recognize an impairment loss in the consolidated statements of operations and comprehensive loss to the extent that the carrying value exceeds the estimated fair value of real estate properties which are held for use. Our estimated fair value is primarily based upon (i) estimated sales prices from signed contracts or letters of intent from third-party offers or (ii) discounted cash flow models of the property over its anticipated hold period. Capitalization rates and discount rates utilized in these models are based upon unobservable rates that we believe to be within a reasonable range of current market rates. In addition, such cash flow models consider factors such as expected future operating income, market and other applicable trends, residual value, leasing demand, competition, and other relevant factors.
When circumstances indicate the carrying value of a property may not be recoverable, we review the property for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, we would recognize an impairment loss in the consolidated statements of operations and comprehensive loss to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held for use. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net loss because recording an impairment loss results in an immediate negative adjustment to earnings.
Above-and Below-Market Lease Amortization
Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.
Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
Recently IssuedRecent Accounting Pronouncements
See “Note 2 — Summary of Significant Accounting Policies — Recent Accounting Pronouncements” to our Consolidated Financial Statements for furtherthe discussion.impact of new accounting standards.
Below is a discussion of our results of operations for the years ended December 31, 2024 and 2023. See the “Results of Operations” section located under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our results of operations for the year ended December 31, 2023 and comparisons between December 31, 2023 and 2022.
Comparison of the Years Ended December 31, 2024 and 2023
Net loss attributable to common stockholders was $203.5 million and $86.1 million for the years ended December 31, 2024 and 2023, respectively. The following table shows our results of operations for the years ended December 31, 2024 and 2023 and the year-to-year change by line item of the consolidated statements of operations:
Net Operating Income
We, through our chief operating decision maker (“CODM”), evaluate the performance of the combined properties in each segment based on total revenues from tenants, less property operating costs. As such, this excludes all other items of expense and income included in the financial statements in calculating net loss (each item discussed separately in “Other Results of Operations” below). We use net operating income (“NOI”) to assess and compare property level performance and to make decisions concerning the operation of our properties. We believe that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from consolidated loss before income taxes. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) and net income (loss) attributable to common stockholders (each as determined in accordance with GAAP) as presented in our Consolidated Financial Statements. NOI should not be considered as an alternative to net income (loss) and net income (loss) attributable to common stockholders (each as determined in accordance with GAAP) as an indication of our performance or to cash flows as a measure of our liquidity. A reconciliation of NOI to net income (loss) attributable to common stockholders can be found in “Note 15 — Segment Reporting” to our Consolidated Financial Statements.
Below is a discussion of our results of operations for the years ended December 31, 2025 and 2024. See the “Results of Operations” section located under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our results of operations for the year ended December 31, 2024 and comparison between the years ended December 31, 2024 and 2023.
Comparison of the Years Ended December 31, 2025 and 2024
The following table shows our results of operations for the years ended December 31, 2025 and 2024 and the year-to-year change by line item of the consolidated statements of operations (dollars in thousands):
(1)Certain 2024 amounts have been reclassified from general and administrative to property operating and maintenance to align with the current period presentation.
Segment Results — Senior Housing Operating Properties
The following table presents the results of operations and the period-to-period change in our SHOP segment for the years ended December 31, 2025 and 2024 (dollars in thousands):
(1)Excludes one land parcel with a gross asset value of $0.6 million.
Revenue from tenants within our SHOP segment are generated in connection with rent and services offered to residents depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expense relates to the costs associated with staffing to provide care for the residents in our SHOPs, as well as supplies, overhead and management fees paid to our third-party operators and costs associated with maintaining the physical site.
The increase in SHOP NOI for the year ended December 31, 2025 over the prior year was primarily due to positive trends in occupancy and revenue per occupied room, partially offset by (i) higher property operating and maintenance expense driven by higher occupancy and inflationary impacts on labor costs and (ii) the nine SHOPs sold in 2024 and 2025.
The following table presents the componentsresults of NOIoperations and the period to periodperiod-to-period change withinin our OMF segment for the years ended December 31, 20242025 and 20232024 (dollars in thousands):
(1) Occupancy for the OMF segment is presented as of the end of the period shown.
Revenue from tenants within our OMF segment primarily reflects contractual rent received from tenants in our OMFs and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expensesexpense in our OMF segment. Pursuant to many of our lease agreements in our OMFs, tenants are required to pay their pro rata share of property operating and maintenance expenses,expenses and certain capital expenditures, which may be subject to expense exclusions and floors, in addition to base rent. Property operating and maintenance expensesexpense reflectreflects the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees.
The decrease in OMF NOI increase for the year ended December 31, 20242025 over the prior year was primarily drivendue to disposition of 30 OMFs in the second half of 2024 and throughout 2025, partially offset by thefavorable leasing activity and acquisition of four propertiesOMFs in the first quarter of 2024, partially offset by the disposition of 12 OMF properties in the third and fourth quarters ofduring 2024.
Segment Results — Seniors Housing Operating Properties
The following table presents the revenue and property operating and maintenance expense and the period to period change within our SHOP segment for the years ended December 31, 2024 and 2023:
Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relate to the costs associated with staffing to provide care for the residents in our SHOPs, as well as food, marketing, real estate taxes, management fees paid to our third-party operators and costs associated with maintaining the physical site.
The SHOP NOI increase for the year ended December 31, 2024 over the prior year was primarily due to positive trends in revenue driven by occupancy gains, partially offset by higher operating and maintenance expenses, which was primarily attributable to macro inflationary impacts on labor costs.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors disclosed in Part I — Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 20, 2026, and we direct your attention to those risk factors.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Gain on Extinguishment of Debt”
New heading “Income Tax Expense”
New heading “Allocation for Preferred Stock Distributions”
New heading “Comparison of the Six Months Ended June 30, 2026 and 2025”
New heading “Segment Results — Senior Housing Operating Portfolio”
New heading “Segment Results — Outpatient Medical Facilities”
New heading “Corporate Results”
New heading “Impairment Charges”
New heading “Acquisition and Transaction Related”
New heading “General and Administrative Expenses”
New heading “Depreciation and Amortization Expenses”
New heading “(Loss) Gain on Sale of Real Estate Investments”
New heading “Interest Expense”
New heading “Interest and Other Income, Net”
New heading “Gain on Extinguishment of Debt”
New heading “Gain on Non-Designated Derivatives”
New heading “Preferred Stock Tender Offer”
Removed heading “Gain (loss) on Non-Designated Derivatives”
Largest changes
Cash flowssee in full comparisonusedprovidedinby financing activities increased by$0.9$306.0 million for thethreesix months endedMarchJune31,30, 2026 compared to the same period in 2025 primarily due topaymentsthe $495.5 million cash received, net of$0.4offering costs, from the Offering in April 2026, partially offset by the $186.0 millionforfulltaxrepaymentsettlementofontheequity-basedRevolvingcompensationFacility (as defined below) and $26.7 million paid to repurchase our preferred stock in2026 and $0.6 million in proceeds from interest rate swap terminations in 2025.2026.
Full comparison: every changed paragraph (105)
National Healthcare Properties, Inc. is a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We acquire, own and manage a diversified portfolio of healthcare-related real estate focused on senior housing operating propertiesportfolio (“SHOP”) communities and outpatient medical facilities (“OMF”). Substantially all of our business is conducted through the OP and our wholly-owned subsidiaries, which include certain taxable REIT subsidiaries (“TRSs”).
As of MarchJune 31,30, 2026, we owned 168170 properties (including one land parcel) located in 29 states, consisting of 3739 senior housing communities, with 3,6153,616 units, and 130 outpatient medical facilities, with approximately 3.7 million square feet of gross leasable area.
We operate two operating and reportable business segments: SHOP and OMF. In the SHOP segment, we invest in senior housing communities through the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”) structure. Under RIDEA, a REIT may lease “qualified healthcare properties” on an arm’s length basis to a TRS if the property is operated on behalf of such subsidiary by a person who qualifies as an “eligible independent contractor.” As of MarchJune 31,30, 2026, we had three eligible independent contractors operating 3739 senior housing communities. In the OMF segment, we own, manage and lease single and multi-tenant OMFs where, in addition to base rent, tenants are required to pay their pro rata share of property operating expenses and certain capital expenditures, which may be subject to expense exclusions and floors. As of MarchJune 31,30, 2026, we managed all OMFs directly, without the use of third party service providers.
On April 23, 2026, pursuant to a Registrationregistration Statementstatement on Form S-11 (File No. 333-294895) filed with the United States Securities and Exchange Commission (the “SEC”) onunder Formthe S-11,Securities Act of 1933, as amended, we completed our public offering (the “Offering”) and issued an aggregate of 44,275,000 shares of Class A common stock, $0.01 par value per share (“Class A common stock”) (which included shares issued pursuant to the underwriters’ exercise of their overallotment option on April 28, 2026) for aggregate gross offering proceeds of approximately $531.3 million. In connection with the Offering, our Class A common stock became listed on The Nasdaq Global Market under the symbol “NHP” and began trading on April 22, 2026. Each share of Class A common stock will automatically convert into one share of our existing common stock, $0.01 par value per share, on October 19,18, 2026 and all shares of common stock will subsequently be listed and freely tradeable on The Nasdaq Global Market under the symbol “NHP.”
The following table presents certain additional information about the properties we owned as of MarchJune 31,30, 2026 (dollars in thousands):
________ (1)Available units and percentage occupied for the SHOP segment represent the average for the three months ended June 30, 2026. Percentage leased for the OMF andsegment SHOP segments areis presented as of the end of the period shown. For the SHOP segment, weighted by unit count. For the OMF segment, weighted by gross leasable area.
(2)WALTR means the average lease term remaining, weighted based on occupied square feet as of MarchJune 31,30, 2026.
(3)Gross asset value represents total real estate investments, at cost ($2.2$2.3 billion total as of MarchJune 31,30, 2026) net of gross market lease intangible liabilities ($19.6 million total as of MarchJune 31,30, 2026). Cumulative impairment charges are reflected within gross asset value.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025
The following table shows our results of operations for the three months ended MarchJune 31,30, 2026 and 2025 and the period to period change by line item of the consolidated statements of operations (dollars in thousands) (1):
* nm - not meaningful (1)Certain 2025 amounts have been reclassified from general and administrative to property operating and maintenance to align with the current period presentation.
Segment Results — SeniorsSenior Housing Operating PropertiesPortfolio
The following table presents the results of operations and the period-to-period change within our SHOP segment for the three months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):
(1)Excludes one land parcel for both the three months ended MarchJune 31,30, 2026 and 2025.
The increase in SHOP NOI increase for the three months ended MarchJune 31,30, 2026 over the same period in 2025 was primarily due to positivehigher trends inaverage occupancy and revenue per occupied room as well as lowerreduced net operating costslosses attributed to seven SHOP dispositions during and subsequent to the comparable 2025 period.
The following table presents the results of operations and the period-to-period change within our OMF segment for the three months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):
Revenue from tenants within our OMF segment primarily reflects contractual rent received from tenants and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses. Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of such expenses, which may be subject to expense exclusions and floors, as well as certain capital expendituresfloors in addition to base rent. Property operating and maintenance expense reflects the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees. AsFor ofthe Marchthree 31,months ended June 30, 2026, we managemanaged all OMFs directly, without the use of third party service providers.
The increasedecrease in OMF NOI for the three months ended MarchJune 31,30, 2026 over the same period in 2025 was primarily driven by certain nonrecurring revenue recognized only in the prior year period partially offset by the reduced net operating losses connectedattributed to certainsix propertiesOMF solddispositions induring and subsequent to the comparableprior period and not experienced in the currentyear period.
We recorded no impairment charges during the three months ended March 31, 2026 compared to $11.9$3.8 million of impairment charges during the three months ended MarchJune 31,30, 2025.2026 Thisrelated to a held-for-use SHOP community. We recorded $15.2 million of impairment wascharges recordedduring the three months ended June 30, 2025 related primarily to reduce the carrying value of twoa held-for-use SHOPsSHOP andcommunity one($14.1 held-for-usemillion). OMFThe properties were impaired to their contractual sales price as determined by theirthe purchase and sale agreements and were subsequently sold in 2025.agreement.
Acquisition and transaction related expenses weredecreased relativelyby consistent$367 thousand to $130 thousand for the three months ended MarchJune 31,30, 2026 comparedfrom to$497 thousand for the three months ended MarchJune 31,30, 2025.2025 primarily due to non-recurring transaction costs paid to the external former advisor in 2025, which did not recur in the current year, and dead deal costs.
General and administrative expenses increased by $0.6$1.5 million to $5.5$6.6 million for the three months ended MarchJune 31,30, 2026 from $4.9$5.1 million for the three months ended MarchJune 31,30, 2025 primarily due to stock-basedequity-based compensation expense incurred in the three months ended MarchJune 31,30, 2026. Stock-basedEquity-based compensation forwas 2025 wasfirst granted to the executive officers and certain other employees in May 2025, asresulting such,in therea waspartial noperiod stock-basedof equity-based compensation expense incurred duringover the three months ended MarchJune 31,30, 2025. TheAdditional increaseawards waswere partiallygranted offset by lower professional fees forto the threeCompany’s monthsexecutive endedofficers Marchand 31,certain 2026.other employees in April 2026 in connection with the Offering and as part of the Company’s annual long-term incentive equity grants.
Depreciation and amortization expense decreased by $6.0$0.7 million to $17.7$17.8 million for the three months ended MarchJune 31,30, 2026 from $23.7$18.5 million for the three months ended MarchJune 31,30, 2025 primarily due to property dispositions during and subsequent to the firstprior quarteryear of 2025.period.
The disposal of 12three OMFs and three SHOP communities during the three months ended MarchJune 31,30, 2025 resulted in an aggregate gain on sale of real estate investments of $25.0$2.7 million for the period compared to no disposition activity recognized for the three months ended MarchJune 31,30, 2026.
Interest expense decreased by $3.1 million to $12.7 million for the three months ended June 30, 2026 from $15.8 million for the three months ended June 30, 2025 primarily due to a $5.4 million decrease driven by repayment of a $330 million secured term loan in December 2025 and a $1.5 million decrease due to the amortization of a gain on a swap terminated in December 2025. Amortization of a gain on the terminated swap is expected to continue through December 2026. These decreases are partially offset by a $2.8 million increase in interest expense relating to the $150 million Term Loan (as defined below) entered into in December 2025 and a $2.2 million increase in interest expense due to less swap interest proceeds in 2026.
Interest expense increased by $0.1 million to $14.7 million for the three months ended March 31, 2026 from $14.5 million for the three months ended March 31, 2025 primarily due to borrowings under the Credit Facilities (as defined below), partially offset by the paydown of the previous $50.0 million variable-rate warehouse facility with Capital One (the “OMF Warehouse Facility”) and Secured Term Loan 2 due 2026, each event subsequent to the first quarter of 2025 and preceding the first quarter of 2026.
Interest and Other Income (Expense),Income, net
Interest and other income (expense),income, net includes income from our investment securities and interest income earned on cash and cash equivalents heldinvested duringin theshort-term period.money market funds and expenses not covered by insurance, net of recoveries. Interest and other income, net increased by $0.2$2.1 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily due to an increase in cash held in money market accounts.accounts as a result of our April 2026 Offering.
Gain on Extinguishment of Debt
Gain (loss) on Non-Designated Derivatives
Gain (loss) on non-designated derivative instruments includes mark-to-market adjustments of non-designated interest rate caps designed to protect us from adverse interest rate changes in connection with our Fannie Mae Secured Debt which have variable interest rates.
The gain of $0.2$0.3 million recognized in the three months ended MarchJune 31,30, 20262025 reflectsis anin excessconnection with the repayment of casha receivedloan overprior to maturity in conjunction with the quarterly valuation adjustments assessed on the caps, showing an increase in the strengthsale of thea positionproperty. There was no debt extinguished during this period compared to the three months ended MarchJune 31,30, 2025.2026.
(Loss) Gain on Non-Designated Derivatives (Loss) gain on non-designated derivative instruments includes mark-to-market adjustments of non-designated interest rate caps designed to protect us from adverse interest rate changes in connection with our Fannie Mae Secured Debt which have variable interest rates.
The loss of $47 thousand recognized in the three months ended June 30, 2026 reflects a decrease in future expected proceeds on the derivative assets over the current period. The gain of $32 thousand recognized in the three months ended June 30, 2025 reflects an increase in future expected proceeds over the comparative period.
Income Tax Expense
Income taxes generally relate to our SHOP communities, which are leased to our TRSs. We recorded an income tax expense of approximately $47 thousand for the three months ended June 30, 2026. Income tax benefit for the three months ended June 30, 2025 was not material.
Because of our TRSs’ recent operating history of losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of our SHOP communities, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets; thus we have recorded a 100% valuation allowance on our net deferred tax assets through June 30, 2026. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statements of comprehensive loss.
Allocation for Preferred Stock Distributions
Allocation for preferred stock decreased by $0.6 million to $2.8 million for the three months ended June 30, 2026 from $3.4 million for the three months ended June 30, 2025 due to repurchases and our self-tender offer for preferred stock subsequent to the second quarter of 2025.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table shows our results of operations for the six months ended June 30, 2026 and 2025 and the period to period change by line item of the consolidated statements of operations (dollars in thousands)(1):
* nm - not meaningful (1)Certain 2025 amounts have been reclassified from general and administrative to property operating and maintenance to align with the current period presentation.
Segment Results — Senior Housing Operating Portfolio
The following table presents the results of operations and the period-to-period change within our SHOP segment for the six months ended June 30, 2026 and 2025 (dollars in thousands):
(1)Excludes one land parcel at both June 30, 2026 and 2025.
Revenues from tenants within our SHOP segment are generated in connection with rent and services offered to residents depending on the level of care required, as well as fees associated with other ancillary services. Property operating and maintenance expenses relate to the costs associated with staffing to provide care for the residents in our SHOP communities, as well as food, marketing, real estate taxes, management fees paid to our third-party operators and costs associated with maintaining the physical site.
The increase in SHOP NOI for the six months ended June 30, 2026 over the same period in 2025 was primarily due to higher average occupancy and revenue per occupied room as well as reduced net operating losses attributed to seven SHOP dispositions during and subsequent to the prior year period.
Segment Results — Outpatient Medical Facilities
The following table presents the results of operations and the period-to-period change within our OMF segment for the six months ended June 30, 2026 and 2025 (dollars in thousands):
Revenue from tenants within our OMF segment primarily reflects contractual rent received from tenants and operating expense reimbursements. These reimbursements generally increase in proportion with the increase in property operating and maintenance expenses. Pursuant to many of our lease agreements, tenants are required to pay their pro rata share of such expenses, which may be subject to expense exclusions and floors in addition to base rent. Property operating and maintenance expense reflects the costs associated with our OMFs, including real estate taxes, utilities, repairs, maintenance and unaffiliated third-party property management fees. For the six months ended June 30, 2026, we managed all OMFs directly, without the use of third party service providers.
The increase in OMF NOI for the six months ended June 30, 2026 over the same period in 2025 was primarily driven by reduced net operating losses attributed to 18 OMF dispositions during and subsequent to the prior year period.
Corporate Results
Impairment Charges
We recorded $3.8 million of impairment charges during the six months ended June 30, 2026 related to a held-for-use SHOP community. We recorded $27.1 million of impairment charges during the six months ended June 30, 2025 on three held-for-use SHOP communities and two held-for-use OMFs. These properties were impaired to their contractual sales price as determined by their purchase and sale agreements.
Acquisition and Transaction Related
Acquisition and transaction related expenses decreased by $365 thousand to $183 thousand for the six months ended June 30, 2026 from $548 thousand for the six months ended June 30, 2025 primarily due to non-recurring transaction costs paid to the external former advisor in 2025, which did not recur in the current year, and dead deal costs.
General and Administrative Expenses
General and administrative expenses increased by $2.1 million to $12.1 million for the six months ended June 30, 2026 from $10.0 million for the six months ended June 30, 2025 primarily due to equity-based compensation expense incurred in the six months ended June 30, 2026. Equity-based compensation was first granted to the executive officers and certain other employees in May 2025, resulting in a partial period of equity-based compensation expense incurred during the six months ended June 30, 2025. Additional awards were granted to the Company’s executive officers and certain other employees in April 2026 in connection with the Offering and as part of the Company’s annual long-term incentive equity grants.
Depreciation and Amortization Expenses
Depreciation and amortization expense decreased by $6.7 million to $35.5 million for the six months ended June 30, 2026 from $42.2 million for the six months ended June 30, 2025 primarily due to property dispositions during and subsequent to the prior year period.
(Loss) Gain on Sale of Real Estate Investments
NHP 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.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-27 | Anderson Michael Ray |
Shares withheld for tax | 16,041 | $16.03 | $257.1K |
| 2026-08-17 | Campbell Albert M Iii |
Grant/award | 4,693 | — | — |
| 2026-04-30 | Rendell Edward G |
Grant/award | 12,500 | — | — |
Well-known investors holding NHP (13F)
None of the 59 investors we track reported a position in their latest 13F.